How to become irrelevant to your customers.

Aug 2010

How to become irrelevant to your customers.


Beware of the price war.The IT services industry has been impacted by eroding margins on IT hardware and software and managed backup service providers are starting to feel the pinch. This is due to the ever frequent upgrades in technology, resulting in Service Providers being continually tasked with CapEx purchases to keep up with the Jones’s.  Further, increased competition due to the low barriers to entry is adding additional pressure to pricing. Unfortunately, the natural reaction of most MSPs in this situation is to lower prices to compete. This is a death trap.

To add insult to injury, clients/customers today are becoming increasingly knowledgable and demanding. They understand that all types of data don't hold the same value and are increasingly looking for solutions that allow them the flexibility to establish different backup and recoverability capabilities for different data sets.  

So how should data be valued?The true value of any data that is being backed up has to be ascertained through a 3-Dimensional view comprising of Age, Type and Size of data. For example, many clients would assert that data created within the past 30 days has a greater significance to the viability of their business and therefore has a higher value compared to data created 3-5 years ago. This may require them to demand better recoverability objectives for such data. Similarly, mission critical data such as an email mailbox of top management is far more valuable than a document prepared for internal messaging. The size of the data set also contributes to a decision as to where and how the backed up data must be stored and what RTOs and RPOs must apply.

Vendors need to arm Service Providers with the right Arsenal.The challenge in today’s Backup and Recovery landscape is in the fact that most solution providers (software companies), do not provide users the ability to reduce costs over time, thus preventing Managed Service Providers from delivering a tiered pricing structure to their clients. This results in a 1-Dimensional view of the managed backup business, eventually leading to higher costs, competition from low-end substitutes and irrelevancy.

As a managed service provider looking to get into (or already in) the managed backup services business, you need to have the ability to meet the needs of the marketplace. Today, the market demands tiered recovery solutions. And of course, in order to do so, you need to ensure that you work with vendors that allow you that flexibility, both in terms of functionality and pricing.

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