Back(up) to the Future: The Emergence of Data-as-a-Service (DaaS) in Backup and Disaster Recovery

First of all, what is DaaS? With new tech terms surfacing regularly, not everyone has heard of Data-as-a-Service, or DaaS (this should not be confused with the other DaaS, Desktop-as-a-Service, which addresses computer vendors). DaaS applies the principles of SaaS (Software-as-a-Service) – integration, ease-of-use, nimbleness – by enabling firms to more easily access and manipulate internal data and apply it for a useful business purpose (e.g., DevOps, business intelligence). While DaaS can be applied to various business sectors, this paper explores the potential of DaaS for the backup and data recovery (B&DR) sector.

Third-party data B&DR vendors have offered enterprise backup solutions for at least the last 20 years. While this was a significant development for the software sector, it defined storage and backup as more of a defensive need. Today, the backup market is amidst a second transition, moving from a narrow focus on automated backup to a more proactive emphasis on making enterprise data more accessible to all users across the business, enabling greater efficiency and more effective decision making.

Backup Data Provides “Little Value”

Altman Vilandrie & Company has worked with B&DR vendors and their customers for the past several years. While there has been progress on the technological capabilities and reliability of backup solutions, very little attention has been paid to the usability of the data these solutions create. In fact, one IT executive recently told us: “80% of the data on our servers are redundant backups that create little value for our business.” This has been the common refrain for CIOs and IT infrastructure directors since the 1990s. While essential for business security and operational integrity, maintaining these redundant backups leads to inefficient storage spending, makes it difficult to track down the right information, and takes a long time to restore when needed. Traditional backup and recovery providers all have taken a similar approach to data backup and recovery.

Data snapshots are taken at specific times (daily, hourly, etc.) and stored either on virtual storage, on physical servers, or in some instances on tape. Customer portals on traditional back-up solutions are sophisticated enough to ensure smooth government, industry, and internal compliance standards are met; but data recovery is inefficient, often making the data useless for any immediate business purpose.

New Disruptors Creating Value from Data

A new breed of vendors is changing that dynamic. Buoyed by significant venture capital funding new players like Veeam, Rubrik, Actifio, and Cohesity are beginning to challenge the historic market leaders by enabling customers to reduce the conflagration of backup data and empowering them to use the data efficiently for value creation.

This new breed of B&DR vendor is accelerating the transition from an industry focused on automated backup, recovery, and business continuity, to one centered on DaaS. DaaS vendor’s core benefit is to deliver strategic employment of “copy data management” (CDM), which efficiently stores and delivers data while reducing a business’ total cost of ownership.

Each vendor approaches the solution slightly differently. Some providers use traditional methods to copy and capture data while others employ copy data virtualization and incremental changes to master copies to streamline the data capture and ingestion process. These nascent vendors are continually improving integration and support for a range of databases, environments, and application types, and primarily serve mid-market customers. An influx of funding is accelerating emerging DaaS vendors’ move upmarket, directly challenging the traditional players. Traditional players are also refreshing their offerings to cater to the evolving needs of their customers.

Although traditional B&DR providers increasingly compete directly with the emerging DaaS vendors, partnerships are not uncommon. Traditional B&DR services provider HPE recently invested directly in Cohesity and likely plans to leverage Cohesity’s software solution while selling its storage products. This dynamic is one of the primary reasons for increased interest in the DaaS space.

The B&DR market is a crowded one, with as many as 70 or 80 major vendors competing for share across different verticals and company sizes. The majority of these vendors are more traditional, with only a handful of true, emerging DaaS providers. This market fragmentation should result in a range of paths for DaaS providers. The strongest emerging DaaS vendors may be acquired, see increased venture and private equity funding, or ultimately go public, as Rubrik is rumored to be exploring. This investment activity is well founded: emerging DaaS vendors are true market disruptors, shaking up a traditional infrastructure solution category by driving additional value creation for the customer. The largest barrier to growth of the category is enterprise and mid-market trust in new vendors and this new approach – a barrier likely to continue falling over time (as has been the case with public cloud adoption).

DaaS Market Still in Flux

Where does that leave us? Despite the growth prospects and to-date success of vendors in the industry, each DaaS player is approaching the market slightly differently – either with differentiated capabilities or go-to-market strategies. Because the landscape is changing rapidly, both emerging and traditional B&DR vendors need to constantly evaluate competitive dynamics and ensure their go-to-market strategy enables them to remain relevant in the market.  Additionally, a future wave of consolidation will require potential strategic and financial investors to understand exactly which emerging DaaS companies are positioned for success and which are trailing from a go to market, pricing, technical, or other strategic perspective.

Altman Vilandrie & Company is the leading strategy consulting firm based in the U.S. that focuses exclusively on the Telecommunications, Media and Technology (TMT) space. Since 2003, we have worked with global leaders in enterprise software and hardware, developing a deep expertise in these evolving sectors. For more information about industry trends, or to get in touch about a potential engagement, contact info@altvil.com.