Overview

End-users are adopting the Software as a Service (SaaS) model for backup and recovery to take advantage of its inherent benefits and efficiencies.  SaaS backup differs from on-premises, licensed solutions in that applications are hosted and operated at a central location and accessed via a Web interface. Clients get to utilize a shared, scalable infrastructure and pay only for what they actually use.  ESG research found that interest in SaaS for backup and recovery is growing, with half of respondents leveraging a pure SaaS model while another 40% use combinations of SaaS and on-premises storage (hybrid SaaS) or on-premises software and cloud storage (electronic vaulting) (see Figure 1).[1]

Outsourcing the responsibility for backup infrastructure to a third party that specializes in it removes a significant portion of the data protection burden from IT.  An online backup service is funded from an operational budget and typically requires no capital investment and minimal implementation time.  Subscribers get an off-premises copy of data that reduces the risk of data loss and downtime if the primary copy is compromised. As shown in Figure 2, ESG research respondents note the DR capabilities inherent in SaaS models, improved management/reporting, and service levels as the top three factors driving adoption.[2]

Managed service providers (MSPs) transform how IT services are delivered.  They assume responsibility for providing a set of services to their IT clients and their consumption models offer a more predictable fee structure.  This recurring revenue model and the efficiency and scalability of service delivery have the potential to bring better margins and more predictable revenue for MSPs—making the business model popular today.

Analysis

One of the key ingredients of a successful MSP model is the technology that is the basis of the service’s delivery. There are plenty of qualified backup software solutions on which to base a data protection service offering, but MSPs need to look beyond the popularity of traditional on-premises backup software to solutions built for the consumption model.  Considerations for selecting technology to power backup SaaS include:

Little barrier to entry.  Easy and rapid deployment of the software and hardware to support backup SaaS means that MSPs can initiate services faster.  Backup software solutions that don’t require complex installation, configuration, and integration or rely on complex and costly hardware can aid MSPs in getting their service up and running sooner.  Software vendors that offer flexible licensing and deployment options, and branding customization for the MSP could be most attractive.

Scalability and reliability.  Understanding how the solution performs in a high-growth environment is key—especially since a cloud model implies compute elasticity.  How easily can the solution expand as the subscriber network—and subscriber data—grows? Similarly, what degree of reliability can be expected?  Can continuous protection be achieved? The answers will lie in the underlying architecture of the solution—both the recommended hardware infrastructure and the software configuration.  Scale-out compute and storage models, (such as clustered multi-node systems) deliver fault tolerance, load balancing, and the ability to easily scale performance and capacity. For MSPs, scale-out architectures that leverage commodity components in redundant configurations go a long way toward enabling lower TCO and business elasticity, as well as service reliability.

Minimized management and cycles.  Operational efficiency is core to the MSP business model, especially since operational staff costs are typically the largest part of an operational budget.  Solutions that enable MSPs to reduce time devoted to management tasks could make all the difference in meeting profitability goals.  It’s imperative to investigate the features of the software and the prescribed architecture of the environment in order to understand the potential hidden costs of managing the backup service and back-end infrastructure.  MSPs should look for solution features that streamline and automate installation, management, monitoring, and reporting—and be aware of which of these can be accomplished remotely.  A review should also include user and administrator interfaces; if they’re not intuitive, an MSP can expect to be receiving support calls from its subscribers or making calls to its backup SaaS technology provider.

Support for privacy/security compliance.  Security and compliance requirements will vary from business to business.  Larger companies, public companies, those operating within regulated industries, or those entrusted with sensitive data are most likely to require privacy and security features.  Since the SaaS model leverages a shared set of resources, it’s important to verify that the solution has a multi-tenant architecture: shared, scalable infrastructure that keeps data virtually separated.  This ensures that one company’s data does not mingle with another’s.  Limiting access to data to protect it from unauthorized disclosure is often another important requirement.  Role-based access control and encryption to restrict access to data should be on every MSP’s shopping list.

Efficiency.  Efficient transfer and storage of data is paramount in an online backup and recovery service.  Using any means to reduce the data that traverses a LAN and WAN, and achieve lower storage capacity requirements could make a difference in the feasibility of the solution being applied in certain environments and the cost requirements for both the end-users and MSP.  Features such as incremental or differential data capture, data deduplication, and compression can ensure that the least amount of data is captured, transferred, and stored.  For an MSP, the storage requirements on the back-end of the solution will also make a difference.  Flexibility in the storage configuration and the ability to leverage low-cost storage options can create efficiencies.

Cost.  The economics of backup SaaS for the MSP will depend on a few factors.  The MSP’s start-up and ongoing costs for service delivery, the swiftness of getting the service operational, and ability to attract subscribers with a differentiated solution will all contribute to the speed of ROI for the MSP.  In addition, ease of expanding the solution to accommodate new subscribers and subscribers’ data growth is vital.  The backup SaaS technology should have a scalable licensing model that allows the MSP to expand the solution as needs dictate.

Performance.  For the MSP, performance requirements focus on the ease and speed of data recovery for the end-user.  The ability to rapidly serve up the requested data for recovery requests is vital.  Look for features in the backup SaaS technology that easily enable requests and for back-end architectures that provide assurances for rapid recall as well as recoverability and integrity of data.

Service-oriented features.  Some of the more important features of an MSP-enabled backup solution are its management portal and service management features.  The ease with which MSPs can manage subscriber accounts, activate services, monitor usage, run reports, and perform all phases of accounts receivables including billing calculation, invoicing, collection, and reconciliation will draw the line between the true SaaS solutions and the “wannabes.”

Competitive feature set.  The backup SaaS market has become more competitive as more MSPs enter the market.  MSPs should look for backup technology partners that have demonstrated the ability to keep pace with market trends and customer requirements.  Selecting a technology partner with the right functionality today and a roadmap that promises innovation in the future may save an MSP from competing on price.

Ease of doing business.  The success of an MSP model is often linked to the partnerships formed to deliver the service.  It is essential to partner with a technology vendor that understands the MSP model and the needs of an MSP. Selecting the technology partner could be as important as choosing the backup/recovery technology itself.

The Bigger Truth

The managed backup service business is very popular today.  IT organizations are attracted to the model since there are often cost advantages to outsourcing all or a piece of the backup and recovery function.  Information can be accessed from any Internet-connected device, the solution has built-in security and compliance features, and the offsite copy enables disaster recovery.

For MSPs, the recurring revenue and margins, and the opportunity to expand their businesses with little risk are attractive.  The hallmarks of successful MSPs are typically efficiency and scalability.  These features allow MSPs to more effectively run their businesses and make money.

The business imperative is to select an enabling backup technology developed for an MSP model and, just as importantly, a technology partner that understands MSPs’ needs.

[2] Ibid.