Offsite Data Backup Options

Although still a niche, the market for online server backup is growing; it is being fueled by a variety of infrastructure, regulatory and budget factors. Some of the factors include the pervasiveness of the Internet, higher network speeds at lower prices, the profusion of Internet data centers and ever-dropping storage hardware costs, and the growing attractiveness of disk to disk backup. Also, regulatory changes have elevated the importance of backup/restore and records retention to the boardroom. As a result, IT departments that once insisted on doing everything internally are more willing to outsource various aspects of their architectural and functional environments to gain economies of scale and live within their budget and skills constraints. However, service providers must still overcome many barriers.

Perhaps the biggest obstacle that storage backup outsourcers have to overcome is "unawareness." IT management many not be aware of how much they are at risk. Management may not know how many of its servers are scheduled for backup or how many of those are successful. And, they may not fully appreciate the risk they are taking by neglecting backups in favor of more "important" issues. A corollary to this "unawareness" is the amount of preparation that must be done by an overworked and resource-constrained IT staff prior to negotiating a cost-effective contract with backup service providers.

If unawareness is the No. 1 inhibitor, security would have to be No. 2. In survey after survey, security remains the perennial challenge facing managed storage providers. Although it is a tougher problem for primary server storage-on-demand service providers, even backup and recovery providers must answer the security concerns of moving corporate data beyond the firewall. Service providers are addressing this concern through advanced encryption, firewalls and digital certificates.

Further complicating the decision to outsource backups is a natural aversion to change and risk, particularly when its impact on recovery strategies and budgets is not fully understood. Many users simply have no idea what they spend on data protection, which includes software, hardware resources, full-time equivalent employees, consumables (tape cartridges and communication costs) and off-site data storage. The same organizations are also likely to have little confidence in their ability to predict storage growth rates and hence the long-term cost of outsourcing backups.

When we initially presented a comparison of online backup service providers and their offerings, user choices were fairly slim and mostly restricted to backing up Windows servers using proprietary software. Today, users have many more choices and can pick and choose among service providers with thick service portfolios. As illustrated in Table 1, all service providers support Windows, Unix, NetWare and Linux platforms. Now users can choose to back up either the entire server or only changed data. They can choose continuous backups or more traditional techniques, such as daily incremental and weekly full backups. They can back up to tape or spinning disk. They can opt for proprietary software optimized to the task of remote backup or choose standard data center backup solutions including those based on Tivoli, Veritas and CommVault.

The service providers in Table 1 are representative of services available in North America today and are not an exhaustive listing of all service providers. Because the list was so long, we intentionally limited the service providers presented according to unique service-enabling technologies. One of the reasons there are so many service providers is that many of the service providers listed in Table 1 resell their services or license their technologies to partners. For example, Iron Mountain is a provider of the LiveVault solution, and Amerivault's backup service is powered by eVault technology. Partner listings are available on the service providers' Web sites.

Providers have made huge improvements in online backup technology, and service provider portfolios have considerably increased in size. For example, LiveVault, EVault, Arsenal Digital and others have added on-site storage appliance options to augment remote protection. This means that customers can restore large volumes of data quickly while still protecting data off-site. Many service providers have expanded their geographic reach through acquisitions and partnerships. For example, LiveVault partners with British Telecom to extend its service capabilities to Europe.

However, the most pleasant improvement may be in pricing. Online backup list prices that were once close to $70 per gigabyte per month plummeted during the past two years and have stabilized at under $17. Tape-based backup is even cheaper, with suggested retail pricing as low as $4 per gigabyte per month.

User Considerations

Large businesses considering outsourcing their backup/restore operations should first do a self-evaluation to determine whether they are a good candidate for outsourcing. Key questions of this self-evaluation should include the following:

Are internal backup and recovery SLAs established and being met? If not, service provider assistance could be a solution.

Are in-house backup costs higher than the outsourcing alternative?

What impact would changes in forecast growth rates or scope of work have on vendor selection? Can the service provider easily scale up and down to match changing requirements?

Are the financial assumptions made in evaluating an outsourcer's proposal likely to change?

Users evaluating online server backup service providers should focus on determining their ability to meet commitments and their financial viability by asking themselves the following questions:

Do they have references with similar backup/restore requirements?

How long has the vendor been in existence; how long have they been in the online backup market? How large is their customer base?

Can their infrastructure support their planned revenue growth?

Are they cash-positive? Do they have sufficient assets to remain in operation through the contract period?

Does the service provider have an option for on-site storage appliances working in tandem with the service offering?

Do they have an exit strategy that protects their customers?

Recommendations for Service Providers

Backup and recovery seem to be the "sweet spot" of storage outsourcing services today and may well lead to further outsourcing opportunities in the future. Service providers still face an "uphill battle" to convince SMBs to make the switch from in-house to outsource. In a recent study of SMBs, only 11 percent of respondents indicated some level of interest in managed backup services (see "User Survey: SMB Demand for Storage Services, North America, 4Q04," G00126597). By contrast, 40 percent of respondents to a 2004 survey of enterprise storage service users said they were either using or considering managed backup services. (More information may be obtained in "User Survey: Storage Service Opportunities, North America, 2004," G00124682.)

Recovery-Disaster.net research suggests that server backup and recovery functions are the ones most likely to be outsourced to an outside service provider. Moreover, these findings have been validated by the storage service provider (SSP) experience. Most SSPs, such as StorageWay and StorageNetworks, long ago exited the market. However, companies such as MSI, Arsenal Digital Solutions and BluePoint Data that focused on managed backup services are still around and continue to grow.

One of the biggest challenges for online server backup providers continues to be successfully articulating their pricing models and, therefore, their value propositions. As is shown in Table 1, some pricing models are based on the amount of data on the client's server. Others charge for the amount of data kept at the service provider's site. Still others charge according to the largest single backup in a one-month time frame. All of the models share a commonality: their attempt to associate their charges with the "work" of moving and storing bits, and not the hours consumed in developing policies and procedures, selecting and purchasing software, training, taking and managing backups, and disaster recovery planning and testing. This disconnect between internal expenditure and outsourcing makes it exceedingly difficult to compare option, particularly when the enterprise does not have firm grasp on the full-time equivalents they are using to support backups and restores.

Another challenge for many managed backup service providers is overcoming the startup onus. Although Iron Mountain has been around for more than half a century, most managed backup service providers have been around less than five years and remain dependent on investor funding. Moreover, multiple studies rank a service provider's financial stability among top vendor selection criteria. Users have a right to understand the market viability of companies with which they do business. Successful service providers should be more then willing to share financial information with prospects to help alleviate trepidation.