I got triggered by some recent discussions we had with partners about the right arguments to convince customers to use their online backup service. We sometimes encounter upon system administrators who’d still prefer their good old tapes over an online backup. Experience has shown that it is not worth our effort in most cases to convince him/her of the better alternative, because there is simply no problem to fix. 

Today lots of people mistakenly pitch online backup as an alternative to tape backup. At the surface it makes much sense to do this, since we are accustomed to tape backup so much that it is a natural response to do this. Tape backup and online backup take away the risk of damage caused by data loss, but this would simply be too marginal in favor of online backup. If it would be just an alternative it would probably not do as well as an industry as it is doing today. 

The reality is that online backup provides high value in areas where tape backup can simply not go: 

1: Serving the have-nots

Online backup is the only reasonable option for lots of small and midsize businesses. Tape backup equipment and software can be quite costly and does not come in a subscription form at all. Lots of customers of BackupAgent simply did not have a backup solution in place beforehand.
 

2: Disaster recovery at a different angle

So what does it take to recover from a total meltdown? A lot, actually! And because of this it will take a business a lot of time to replace lost systems. The highest damage a business suffers is loss of time during the recovery when a complete employee staff are swiveling their chairs in utter boredom. BackupAgent provides lots of features to hand out portions of actual data to serve urgent matters while the IT service desk is quietly and conveniently bringing everything back to normal. 

3: Far more detailed insight on the quality of the backup 

As a evolutionary side-effect, most online backup services provide thorough and detailed reporting of the quality of the backup sets. This finds its cause in the fact that initially people were a bit weary to try online backup and vendors had to prove to the detail that backups were stored safely in their datacenters. By now this has become a valuable feature for IT service companies to manage multiple backups of customers remotely, despite the fact that they spend more time explaining and fixing small issues during backups, which used to be hidden in case of tape backup. 

Overall, it appears to be more plausible to focus on above value items in search of customers, because the best customer is the one that experiences high value of online backup services. After all, most system administrators I know value the adagium: “if it ain’t broke, don’t fix it”.

BackupAgent is looking at an exciting agenda when it comes planned events, second half of 2010:

Date	Event	Place
June 24th, 2010	Business Matters LIVE	Luton, Bedfordshire, UK
July 11-15, 2010	Microsoft WPC 2010	Washington D.C, United States
July 19-21, 2010	HostingCon	Austin, TX, United States
September 24-26, 2010	Parallels APAC Summit 2010	Singapore
October 12-28, 2010	Parallels EMEA Partner Forum	Multiple
November 24, 2010	SaaS4Channel	Lelystad, Netherlands

We are looking forward to meeting you on one of these events and you can always schedule a meeting with us, by contacting us.

As we are looking at current developments within BackupAgent we frequently have discussions about our customers and the total market. Over the years many companies have started offering online backup services and some of them do so using BackupAgent’s software platform. It is hard to guess how big the current market is, because of the diversity of players operating in it. Very often, online backup is a part of a wider cloud or SaaS offering.

Online backup and cloud computing

If you are at the forefront of IT and software you might already consume some of your services in the cloud. In that case online backup might make less sense. This triggers the question whether there is an end to the online backup product life cycle. Fortunately for us, there is a far larger group of companies that still have not even heard of cloud computing. Also, the most popular current paradigm is that of mixing on-premise software with cloud computing to benefit from the ‘best of both worlds’.

Positioning of online backup

Since the majority of companies and users still have to adopt cloud computing, there is a large chance that they will start doing this by consuming the most comprehensible services. I spoke with a local glass house farmer the other week and gave him a glance at my life. I also asked him about software he is currently using and we talked about potentially bringing that in the cloud. This was clearly a bridge too far for him, although the guy is my age and does have an active Facebook account. When I proposed simply to backup his administration over the internet, he was far more interested, but still brought up the ‘trust’ argument.

Crossing the chasm

The point is that it is these people who will feed growth to cloud computing in the future. On the other end maybe a small portion of early adopters will no longer require online backup, because they have moved all their IT needs into the cloud. One can only wonder how fast or slow online backup users will move in and out of the product lifecycle. It looks like a classic example of ‘a chasm’ in a new market.

Once this chasm is crossed the next question will be how long it will take for the online backup market to mature. My estimation is that this will take at least another 5 to 10 years. This is because the masses are very slow in their adoption of something new. It will take at least 1 year for them to realize, consider, overcome the objections and purchase a service like online backup. At that time they only scratched the surface of cloud computing and it will take a lot of effort to move them once again. If you add that to the fact that most of our early customers still have to ‘move on’ to pure cloud computing eliminating the need for online backup, we can safely say that this service is here to stay and grow for the next decade.

At the recent Parallels Summit 2010 WHIR TV interviewed my colleague Roland Sars. Together with Nick Lallas of Parallels he explained why the combination Parallels Automation and BackupAgent is so powerful for service providers and hosters. It’s an interesting video covering some company background and the vision on the service provider and hosting market. The video (posted below) is less than 5 minutes long, enjoy!

At BackupAgent we find it very important to nurture the relationships we have with our partners. Lately we are noticing that some partners are benefiting from this, because they’ve listened to our advices. They’re obtaining more and more positive press and it mainly concerns the price/quality ratio for online backup services they provide.

Things that matter

• Usability:
  This is by far the most important requirement when it comes to obtaining significant numbers of customers. You must assume your SME customers will be trying multiple tools and if they feel comfortable using the application, they will go with it.

• Total cost of service:
  Our partners’ selling price and margins really matter, because they can beat competitors on price, while your sales staff is highly rewarded. At BackupAgent we specialize in keeping all costs low. This involves hardware investments, datacenter costs, project overhead etc. Our software allows you to be competitive with a minimal investment. Our approach to reach this goal is to advise our partners to be ready using a scalable and high-available environment from the start.

• Provisioning (either directly or through resellers):
  Allowing customers to buy services easily is one of the most critical success factors when it comes to providing online backup services. Offering a similar experience to resellers proofs to be even more valuable.

Things that do not matter

• License costs of the BackupAgent software:
  Whether you buy from us or from one of our competitors, the license costs of the software will be at highest 30% of the total costs of service. This means it is far more valuable to focus on lowering costs of the remaining 70%, in which we specialize.

• Branding features:
  We have partners that rebrand the services and we have partners that decided to go with our brand. We can’t see any difference in success or pickup ratio amongst these partners.

• Data traffic and peak load:
  Our partners all show a data load graph which looks like a normal distribution. Peak loads will not be too high and hit at night.

These shortlists are extracted from our experiences with successful partners. Using our software they provide best bargains for online backup.

As BackupAgent we embrace the concept of SaaS. From the beginning on we offered our BaaS (Backup-as-a-Service) Model, and there is still a strong believe in this way of approaching the market. Furthermore we notice the acceptance and adoption of SaaS large, and growing.

To empathize our relation with SaaS, BackupAgent is keen to support events that help expanding an innovating the SaaS concept. SaaS4Channel is such an event; therefore BackupAgent is one of the sponsors. The event will take place on coming November 24th at the Aviodrome on Lelystad Airport. SaaS4Channel – also a social network - offers an interactive program, which subscripted visitors can help shaping. The content comes from market experts (including the visitors), enhanced with the opinions of analysts, vendors (including BackupAgent), and partners. The event will wind up with a talk show which in the speakers will be challenged with questions from spectators.

I imagine this event is very interesting for partners who employ, or consider employing, the SaaS model. Please contact us to gain 25% discount on your subscription.

Offering an online backup solution is like designing a house. The possibilities are numerous, and the accompanying prices various.

A common mistake is to make decisions for the customer about what solution they need. All is working well, until the customer realizes he cannot retrieve his document as it has been fallen out of the scope of the online backup selection, configured by the (mostly external) administrator who tried to save the customer some expenses in his monthly subscription; expenses the customer would have gladly paid (especially afterwards!) to safeguard that particular data. The other way around is also commonly seen, providers offering their customers a - in the perspective of the customer - huge monthly rate, while some customers only intend to back-up a few financial documents every now and then.

Potential customers need to be informed about the possibilities and their consequences, before an exact and suitable offer can be made. These possibilities contain mainly: the size of their total data, the preferred amount of versions and the backup window. Asking for this information to the customer doesn't make any sense; as with mostly all ICT solutions, the end-user probably hasn't got a clue on what to answer. A translation must be made and this is where the ICT partner can show his true value, for example:

1. Size of their total data:

• Which folders do you want to have backed up?
• Do you want to include your e-mail?
• Which applications should have their data be backed up?

2. Amount of versions:

• How many do you want to keep?
• How long do you want to go back in your file history?
• If this is a long time, is it sufficient to have weekly/monthly backup?

3. The backup window:

• When is the backup allowed to run? Explain that during this time his internet connection is highly used so browsing can be slow.

(Please note that BackupAgent is able to provide a document containing references in speed, data size and duration of backups.)

When these questions have been answered, you can present your potential customer exactly what the benefits and impact on costs would be. The customer is then able to make thought through decisions, like: please increase the amount of versions as we accept the increase in our monthly expense, or: exclude this part of the data as it isn't worth the extra costs. Other conclusions can be made as well, like if the current internet connection is sufficient to satisfy the objectives and needs to be improved.

All customers prefer to hear this in advance, instead of being unpleasantly surprised and disappointed afterwards, especially if they need to make extra changes and costs.

After all it is all about managing customer expectation!

BackupAgent is exhibiting at HostingCon, which is held August 10-12 in Washington D.C. HostingCon is the premier conference and trade show for the hosted services industry. The best and brightest from the industry will be in attendance to learn about the latest news, ideas and technology affecting their businesses. HostingCon is celebrating its Fifth Anniversary, and with a projected attendance of over 2,000 Internet professionals from over 30 countries, the 2009 show promises to be the best yet.

BackupAgent will be exhibiting on booth # 129 and promoting its offering for Service Providers; a world-class online backup offering for SOHO and SMB companies. Multi-tenant, private-label and very scalable…

BackupAgent can provide you with a discount code for the registration fee; a very valuable offer to our clients and partners that are interested in attending the show. Contact us for to obtain the discount code.

We're looking forward to meeting you in Washington D.C.!

Last week BackupAgent sponsored the Tier1 Hosting Transformation Summit Europe 2009, the premier forum for executives in the hosting, datacenter and Internet infrastructure sectors. Besides attending and exhibiting in the exhibitor’s lounge, I also took part in the on-stage discussion panel ‘Hosting Apps & SaaS: Hosted Exchange, CRM, Sharepoint, and Backup Applications’. I discussed with the other panelists, other ISVs and a hoster, the benefits for hosters and service providers to start offering hosted applications. Here are some of the key topics that we spoke about:

Boost ARPU

As traditional services like shared hosting, dedicated hosting and DSL are commodities, the price has dropped and service providers cannot make high margins with these services anymore. By offering new, value added services such as Hosted Exchange, Hosted CRM, Hosted Sharepoint and Online Backup, service providers can make more money from the same existing customer base.

Reducing churn

When offering new services, the customer already trusts his/her service provider with its business critical data (email, crm, etc). Therefore the likeliness they will switch providers will reduces to the situation where the service provider only offers low-price commodity services.

Team-up with resellers

Teaming up with resellers (local system integrators, IT-administrators) is a smart thing to do for service providers. Resellers have local presence, a close relationship with the customer that is based on trust. The service provider has the ability to host a scalable platform, offer a competitive price and automatically provision and invoice users. This combination has proven to be successful. (by the way; BackupAgent has a partner program for this: Backup Service Distributors).

Licensing of software for service providers

An important item for ISVs that sell software to service providers: match your licensing to the service provider’s offering. Service providers are earning monthly revenues based on subscriptions, therefore service providers don’t want to pay large upfront perpetual licenses but rather go for a pay-as-you-grow model whereby the ISV’s business grows along.

Online backup and Microsoft Services

Many service providers are offering the Microsoft hosted services portfolio: Hosted Exchange, Hosted CRM, Hosted Sharepoint. ‘Hosted Backup’ or ‘Online Backup’ is the missing piece in that offering and BackupAgent’s experience is that the conversion of existing customers of hosted Microsoft services to online backup can be significant as these customers are already used to store important data externally.

Last month, while visiting the Microsoft Hosting Summit in Bellevue, WA, I ran into Larissa Primeau. Larissa is a journalist for the website Web Host Industry Review (WHIR) and she was really interested in the BackupAgent proposition. As a result we agreed on making an interview for WHIR tv, their online broadcast providing a unique perspective on the rapidly evolving Web hosting industry. Since then, the interview has been posted on their website, I also have included it below.

The demise of The Linkup, formerly known as StreamLoad and MediaMax, shows that hosting free online backup and storage services will create a imperative cost burden in the long run:

http://www.demo.com/community/?q=node/160512

This should raise legitimate questions on Carbonite’s and Mozy’s business models. Carbonite has had comparable bad attention and although Mozy is now backed by EMC, that doesn’t seem to reduce the likelihood of a termination. The recent shutdown of Upline by HP demonstrates this risk.

For BackupAgent it means that our continuing advice to our partners will be to ignore the competition in the market that are hosting the services for free. We know local companies in the Scandinavian and European markets with these business models and we always steer clear from a pitfall discussion on competing with free services.

Free services kill the perception on value these services provide. Any small business or professional user will understand that securing data is a value-add to their continuity. They are more than happy to pay for it and are willing to pay a little more for good service and swift responses in case of an emergency. So far this business model is far more straightforward and profitable then the free alternative.

I recently wrote a whitepaper on mass deployment of hundreds to thousands of laptops using Microsoft System Center Configuration Manager. This whitepaper is the result of several cooperative initiatives we deployed with our partners.

We frequently get the question from our partners on how to deploy BackupAgent clients on large numbers of laptops and desktops. A lot of those questions also involved Microsoft System Center Configuration Manager (SCCM). As a result we now support this mass deployment scenario by a whitepaper explaining every detailed step on how to accomplish this.

The whitepaper does not apply on SCCM in particular. Our description for packaging our software for silent remote installation can also work within other software distribution environments.

We also created tools to do mass provisioning of accounts based on a comma-separated values file (*.csv). It even allows us to pre-generate encryption keys, since system administrators do not like to be dependent on user- chosen encryption keys for recovery of lost data.

In case you’re a BackupAgent partner and you’re interested in this whitepaper and/or the tools for mass provisioning, you can obtain this by requesting it from your Partner Account Manager.

I visited Pulsen, a Swedish company, two weeks ago in a joint effort to roll-out their online backup service based on BackupAgent. Pulsen, amongst many hosters, ISP’s and Telco’s, use the Microsoft Hosted Messaging and Collaboration (HMC) platform to offer service such as Hosted Exchange. HMC also offers an open provisioning platform which allows services like BackupAgent to be offered to customers in a similar fashion as the customer consumes Hosted Exchange.

BackupAgent offers a very short time-to-market for hosters that already invested in an HMC platform, since we reuse the complete infrastructure which they already built and invested in. Because of this, hosters can shorten their return-on-investment regarding HMC because they can offer an additional service using the existing platform.

Interesting effect of platforms like HMC is that it changes the perspective for hosters regarding the launch of new services. Core competences and requirements regarding provisioning and monitoring are already in place, which lowers risks, implementation times and technical effort to enable a new service. As long as an ISV like BackupAgent supports the platform, the hoster can focus most of its efforts on the commercial proposition and marketing.

Some BackupAgent partners I spoke fear the upcoming of Microsoft as a service provider. Personally, I think that only a limited part of the market can be served by Microsoft in this respect. The way I see it, they encourage the hosting community to differentiate, instead of entering competition based on price. Microsoft offers hosted services to enforce a shift in paradigm in the price-focused, volume-driven hosting companies. They challenge companies to gain new competences, both technically and commercially. Since I’ve seen how some hosters are struggling with this theme, I think it will lead to a more mature hosting community with products and services that have a higher added-value for the customer.

Not so long ago I visited my grandparents to celebrate their 50th wedding anniversary. While we were enjoying my grandma’s eminent apple pie, my grandfather started asking me questions about the functioning of the BackupAgent Software. Considering the questions he asked, I noticed that he was very well informed about online backup! This really surprised me, since he just bought his first computer a couple of months ago.

I think this emphasizes the fact that online backup is becoming more and more common in the consumer market. Since computers have taken a prominent role in the everyday life, people now really start to realize the value of their data. Online backup is replacing the old rusty safes with documents and photo books.

As marketeer I expect that the need of explaining what online backup is will diminish and that the focus will be more on the technical specifications and usability. Luckily BackupAgent gets high scores on both subjects, so I see a bright future for us and our partners.

We run a very international business. I travel around the world to meet (potential) partners and explore opportunities in various countries. Nowadays we have BackupAgent partners in 17 countries. We are gradually expanding our partner network across Europe and North-America.

Occasionally we get foreign visitors in our office. Last week we had a visit from the president of an IT firm in Canada. He decided to travel to our headquarters in Delft to learn all there is to know about BackupAgent. I can highly appreciate such an initiative since this shows a lot of commitment and interest in our company. He was pleased to hear that we also fully support the French language for his potential customers in Quebec.

It is nice and helpful to see a face behind a partner company, because it gives us a better understanding of the people and the business they are doing. We strongly believe in a thing called 'vitamin R' (which is not Ritalin but Relation). We want to know all the whereabouts of our partners so we can fully support them as they are developing their online backup business. It is very interesing for us to know how our partners approach the market, what level of support and service they provide and if they combine with other services or products. And obviously it is highly appreciated when partners take the time to travel to our office.

This 'vitamin R' approach is also very important for us to qualify our partners. Each partner has unique competencies and can cover a specific segment of the market, either geographically, by target market or otherwise. It allows us to cover a broader market.

Although this post may look like a regular book review, it’s not. Yesterday night I read the brand new book Seven Software Business Models and I found this a very good reflection on how the software market is currently changing. The book attempts to simplify the entire industry into seven basic models. The models range from the traditional model which has dominated business software and created modern day giants like SAP and Oracle, to the outsourcing model, to the newest software-as-a-service players like Webex and Salesforce.com.


The book explaines that SaaS actually has a massive impact on the entire software industry, whether you manufacture, sell or buy software. Moreover, it explains that SaaS is not just something that just can be implemented in company that has sold software on the ‘traditional way’. The implementation requires understanding and adaption on all areas within the company: R&D, Operations, Sales, Marketing, Finance HR. The book focuses with each chapter on such a focus area. In addition, you'll also find lots of ‘campfire stories’ from people who did these jobs at leading companies.

Looking at the above image I realized that software vendors will earn less per user when they adopt a SaaS business model, which requires them to attain a certain scale and to run a more efficient operation. Logically speaking, the cost factor is the one of driving forces for the SaaS business model. End-users expect to pay less, since they only pay for what they use.

If you want to have a simple and realistic view on the software industry and the (disruptive) trends that take place in it, you can read Seven. Whatever your function in the industry, Seven contains high-level understanding and recommendations regarding marketing, sales, engineering etc. The book is easy to consume.

During my holiday on Curaçao I drove around the island and noticed the numerous small shops and companies at the side of the road. Even larger enterprises have representation on the island in the form of a single, small office building. Considering the market coverage in the Caribbean I concluded that we could service the complete business market, since it consists only of small companies.

I shared my findings with a couple of locals and for the larger part of the discussion they saw the great potential of the opportunity. Unfortunately one important factor for providing online services is completely insufficient. Apparently, the complete internet traffic of Curaçao is transferred to the rest of the world using 30 mbits of line capacity. This makes it almost impossible to backup large amounts of gigabytes. Therefore online backup services can only apply to small accounts, limited to just a few gigabytes.

Even with this limitation the market size can still be considered reasonable, since many companies are very small and have only a small data set to backup. However, IT and automation is not as much a significant part of these companies as it is in the US or Europe. I realized this when I checked in on my flight from Curaçao to Aruba. The local airline used a hand-written list to check off my name when I boarded.

Reviewing all this I concluded that the market for online backup in the Caribbean has its limitations. So far, the largest and most important industry of the island, tourist business, does not seem to be very dependent of its backups, since the sun will shine, no matter what will happen.

BackupAgent is developing its business currently mainly by helping their partners selling online backup services. Some BackupAgent partners are struggling to gain success with selling online backup services and Software-as-a-Service in general. That’s why we are decided to share our lessons learned with our partners. We’ve seen partners succeed and fail.

It’s a new market, in which new economic rules come at play. Business models develop slowly, while capital investments will be much higher. The pay-off for SaaS businesses is in the recurring revenue, which has to reach a certain threshold. Once this threshold is reached, revenues and profits are predictable and sustainable.

For selling online services, your operations should be in excellent shape, before you can run your marketing campaigns. For example, your success rate for online advertisement does not rely on your budget, but on your conversion rate. High conversion rates can only be reached if your website, ordering process and delivery process are very appealing and effective. A simple glitch in these processes can scare away an interested prospect and this will flunk your campaign.



Selling subscriptions online is also more complex as selling products online. Psychology of customers buying online services is totally different. Imagine yourself buying a CD or buying a telephone subscription online. People feel far more comfortable buying products online, since the business relation will last only until the transaction is completed. Once you bought a service, you are stuck with the company you bought it from. This is why people are more hesitant to subscribe online.

Alternatively, people and companies tend to buy software-as-a-service from a trusted relationship. They preferably buy from companies they know and already do business with. This is especially true with our small and medium sized business customers. For this reason we are now actively working with our partners to complement their online sales with indirect sales.