Guest Column | January 15, 2014

Breaking Down The Barriers To Offering Cloud Services

By Casey Burns, Product Marketing Manager, Virtual and Cloud Solutions, Quantum

Cloud Backup-as-a-Service continues to be a hot topic for managed service providers (MSPs), as more now specialize in providing cloud services to an increasing number of customers. A recent Enterprise Strategy Group analysis of cloud indicated that 60 percent of end user respondents are either currently using cloud or are in the process of implementing a cloud strategy (Enterprise Strategy Group, Data Protection-as-a-Service (DPaaS) Trends, Sept., 2013, Jason Buffington).  Backup- and Disaster Recovery-as-a-Service (BaaS and DRaaS) are faster growing market segments within the cloud space, and MSPs and their customers are quickly capitalizing on these offerings. 

A Flexible, Cloud BaaS Model That Works For MSPs

From an end user’s perspective, the allure of cloud BaaS is pretty straightforward: they can move to a capacity usage model that requires they only pay for the capacity that is needed versus paying up front for the capacity they anticipate needing in the future. The budget is changed from a CAPEX model to an OPEX model, freeing resources for more strategic projects.  One MSP partner of ours, Hipskind in Chicago, was early to recognize the opportunity with cloud-based service offerings and has been a model for other MSPs delivering BaaS and DRaaS to a segment of the market that had been vastly underserved: the SMB space. Hipskind has built an infrastructure that enables smaller companies to leverage technology such as deduplication and virtualized backup in order to protect their data with enterprise-class efficiency and security.

However, for many MSPs, building the infrastructure needed to offer these services can often be cost prohibitive. A number of companies have either discontinued cloud services or completely closed their doors due to the up-front capital expenses required to develop and maintain cloud services combined with the delayed cash flow from the OPEX charge model. 

The capacity-based pricing model is perfectly suited to end users and helps to alleviate the capital costs typically associated with IT projects. However, in the case of MSPs, they must bear the costs associated with the infrastructure. Developing and maintaining cloud backup service offerings requires a high up-front capital investment, and depends on quickly building a customer base to pay for the investment on a monthly basis. To date, most cloud technology providers have sold their products in this fashion, full payment up-front, but some MSPs are realizing that this model is too risky, and now some vendors are arriving at a similar conclusion.  Capacity-based, subscription pricing programs from vendors like Quantum are now available to MSPs in order to lower this barrier to entry. This approach can enable MSPs both large and small to get into the cloud BaaS game and become successful, quickly delivering value for their customers. The capacity-based model keeps costs much more linear for the MSPs, with expenses scaling as their customer base grows. 

Addressing The Barriers To Cloud BaaS For End Users 

As MSPs begin delivering cloud BaaS, they quickly learn how important security is to their customers. When customers consider cloud BaaS, there are certainly barriers that need to be overcome that many technology vendors fail to address. According to ESG’s recent findings, 50 percent of current cloud users indicate that security is a concern, and the other 50 percent who don’t use cloud cite security as a deterrent to cloud adoption. Customers want to know that their data is secure both in transit to the cloud and when it reaches the cloud, and they want to know that their MSP has their data protected in case disaster strikes the MSP’s data center. End users concerned with security around cloud offerings should ensure that their MSP utilizes technology with encryption when replicating. Further, for data protection they could consider a model with a dedicated cloud storage appliance backing up the data in the data center. While such a deployment may cost more, some customers may place a high enough value on security and performance to consider it worth the expense. For security, there are a number of laws that require that data reside within the country of origin. Canada, for example, has strict laws that state Canadian companies must keep their data within Canadian borders. BlackBridge, an MSP of ours, was an early entrant into the market and has focused its business on ensuring customers that their data is not only secured all the way down the line, but that the data never leaves Canada.   

Private, Public Or Hybrid Cloud: Delivering What’s Best For The Customer

There are essentially three different approaches to cloud backup services: private, public, and hybrid.  Building a private cloud offers the end user complete control of their data, provided they have the resources to buy, build and manage the infrastructure. Public clouds offer advantages such as such as pay as you grow, CAPEX vs. OPEX expenditure, and managing offsite DR. Public clouds have numerous benefits, but a common pitfall is that when data needs to be recovered and the monthly billing statement arrives, customers may be surprised by how their costs have increased due to the download charge imposed. 

A hybrid approach to cloud BaaS is an increasingly attractive option for end users. This solution combines the flexibility of fast, local and non-charged restores as well as complete control over data, with the off-site disaster recovery copy and pay-as-you-grow benefit of public clouds.  Localized appliances utilizing deduplication technologies, versus cloud storage gateways that use a simple compression and some small cache, enable up to 90 percent data reduction for local storage.  Because only changed blocks are replicated to the cloud, both the footprint and the monthly costs are significantly minimized.   

MSPs and VARs have barriers to offering cloud, just as end users have barriers to adopting it. In order to deliver these services with minimal business risk, MSPs and VARs should consider the benefits of a subscription model for building their cloud infrastructure. They typically are intimately knowledgeable about their customer base and are enthusiastic about the potential for cloud and what it can offer them. This puts them in a good position to recognize the perceived barriers associated with cloud and break them down. Delivering technologies that eliminate their customers’ security concerns associated with cloud BaaS is critical. A hybrid cloud option can provide customers with more control over their data and reduce their overall monthly bill, providing an approach to cloud-based services that satisfies customers and can be highly marketable for MSPs.

Casey Burns is Quantum’s product marketing manager for virtual and cloud solutions. Burns has extensive experience and knowledge in the storage industry, and a professional focus in the areas of data deduplication, virtualization, and cloud. His writing has appeared in publications including Data Center Post, Computer Technology Review, Virtualization Review and WindowsIT Pro.