Magazine Article | January 16, 2013

Cloud Backup Doesn't Need To Be A Loss Leader

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By Jay McCall, Business Solutions magazine.

Rather than fearing your customers’ inevitable move to the cloud, heed the advice of industry experts and turn the cloud into a new revenue stream.

MMany VARs and MSPs have reservations about their customers moving their data and applications to the cloud. I spoke with industry experts from hybrid vendors Asigra, Carbonite, and Intronis recently, as well as managed services provider masterIT. Following are their insights into the hottest cloud backup opportunities you need to be aware of, advice on how to add cloud solutions and services to your current offerings, and pitfalls you should avoid.

Cloud Opportunities You Can’t Ignore Any Longer
According to Neal Bradbury, VP of business development at Intronis, one of the biggest opportunities for selling cloud solutions and services is the small business market. “There are still a lot of small businesses that don’t even know there are cloud solutions for their business,” he says. “MSPs can make money by bundling cloud backup with their local backup solutions.”

Carbonite’s director of channel programs, David Hauser, concurs and adds, “Cloud backup among companies with 3 to 100 employees is a segment of the market that is particularly underserved. Unlike their enterprise counterparts, which may have the financial resources to build their own private clouds, SMBs will typically need to use a third-party cloud provider, which creates opportunities for a VAR/MSP to manage this relationship and help the SMB determine which IT resources can be moved to the cloud and which ones are better left on-site.”

In addition to SMBs, healthcare companies are prime candidates for cloud backup solutions. “We’re seeing more doctors moving to the cloud due to HIPAA requirements,” says Hauser. Industry research corroborates Hauser’s findings. A 2012 report conducted by MarketsandMarkets revealed that cloud adoption in healthcare will grow at a compound annual growth rate of 20.5% from 2012 to 2017. Due to the strict data security requirements, VARs and MSPs can play a key role in advising customers about making choices that keep them in compliance.

Virtualization is another key trend that goes handin- hand with cloud backup. “With virtualization, cloud backups can be recovered more quickly,” says Bradbury. “The virtualization boom started a couple of years ago, but is finally making its way down market.” Managed services provider masterIT agrees with this assessment, and founder, chairman, and CEO Michael Drake adds, “Having a virtual server in the cloud allows us to failover a client more quickly because it does not require us to load the data on a server with the exact same hardware, drivers, and operating system.”

Consulting Is Key To Selling Cloud Backup Services
Out of all the experts with whom I spoke on the topic of selling cloud backup, the one thing they all agreed on was that this is an opportunity for resellers to consult with their customers. And why is that important? “Small businesses really don’t know what to back up,” says Bradbury. “Assessments and consultations are a good opportunity for resellers to educate clients.” In some cases, these meetings give VARs/MSPs an opportunity to engage their customers about their current and future business needs as well as potential IT threats to their clients’ businesses. “According to FEMA’s latest research, more than 40% of small businesses never open their doors after being hit by a natural disaster,” says Carbonite’s Hauser. “That information comes in handy before a reseller tells a client that for a few hundred dollars a year, all their data can be protected from such occurrences.” masterIT’s Drake agrees that technology consulting has played a key role in his company’s success. “Through the consulting process, we become our clients’ virtual CIO and help them set their IT road map strategy for the future. It’s also a good opportunity to educate them about which IT services play well in the cloud and which don’t.”

According to Eran Farajun, EVP at Asigra, VARs and MSPs should segue beyond backup when consulting customers about the cloud. “This is a good opportunity to think about SaaS applications and services, too,” he says. “For example, many customers think that just because they’re using a cloud-based CRM application like Salesforce.com, they don’t need to worry about their backups. This is not the case. Salesforce.com does back up its data, but it’s for their benefit, not their customers. If a client willfully or maliciously changes several fields in the CRM and hits save, there is no easy way to ‘undo’ that choice. It costs about $10,000 to have the vendor perform a rollback.” Also, for customers governed by industry regulations (e.g. HIPAA or Sarbanes- Oxley), it’s not enough to say, “Our apps are cloud-based.” The burden of security and compliance does not shift from the customer to the SaaS provider in these situations.

Avoid These Common Cloud Backup Mistakes
According to the experts, there are three common mistakes VARs and MSPs make that can sabotage your cloud backup success:

Don’t confuse enterprise and SMB offerings. “One mistake we see is when an MSP selects a large end user solution and tries to apply it to an SMB client,” says Farajun. “This is often the result of a reseller that’s more enamored with the latest technology than it is in helping customers find solutions they need.” masterIT sees this mistake as well and shares another perspective. “We recently picked up a 350-person healthcare provider as a new client after their new CFO discovered they had overspent on their IT infrastructure by hundreds of thousands of dollars,” says Drake. “Rather than taking advantage of the cost-savings of cloud backup, they were sold a Cisco network with full-blown, on-site redundant hardware.”

Not all data is equal. When a client’s network crashes, it’s critical to understand that not every application and database needs to be restored at the same time. In fact, taking an “all or nothing” approach slows down the restore process and puts undue pressure on your technicians. “Most clients have five critical financial/HR files that need to be restored first,” says Hauser. “VARs and MSPs need to know this information up front and have a backup system in place that allows them to pinpoint these specific files from among the myriad of other data and applications on their clients’ networks.”

Don’t line-item your cloud offering. One of the biggest no-no’s to avoid when selling a hybrid cloud backup solution is an itemized offering that spells out how much the local backup portion of the service costs compared with the off-site backup portion of the solution. This practice only sets you up for the objection: “Let’s start with just the on-site backup, and we’ll talk later about possibly adding the off-site backup.” According to Intronis’ Bradbury, “The most successful MSPs roll the entire backup offering into one bundle with one price. A good model to emulate is how the cable company sells you an Internet package: You get so many email addresses, so much online storage, and so much bandwidth for one price.”

It’s undeniable that more and more of your customers’ IT assets are going to move to the cloud. This reality can be a point of fear and dread, or, if you follow the advice outlined above, it can become a new stream of revenue for your business.

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