Cloud applications are in high demand by SMBs; therefore providing a unique opportunity for MSPs (managed service providers) today. According to IDC, a marketing intelligence firm, the growth rate in data volumes across businesses will grow five-fold in the next four years. This represents $5.5 billion in revenue for MSPs by 2012!

This forecasted growth demonstrates the vitality of online backups for IT managers due to the increasingly large amounts of data being accumulated.

MSPs are Moving to the Cloud

IT resellers are at a critical point in their business. They are realizing that current developments in both SaaS and cloud environments are jeopardizing the current solutions they sell. SMBs are now demanding SaaS, managed services and cloud computing, not local hardware.

This has brought the IT industry to a critical point. Do they add on extra services which SMBs are in dire need of, or continue to sell ‘old’ software and risk being put out of business by competitors using new technologies?

Below, we will explore the conundrum MSPs are facing and how the industry is appearing to shift.

First, there are many appeals to SaaS, managed services and cloud applications that are drawing both SMBs and MSPs away from traditional software and towards these new technologies.

• Customers can use these new services without an immense upfront cost. They enjoy the try first, pay later model and the “pay as you go” model. At Backupify we have that same cost structure which has found to be very favorable among customers.
• There are several financial strategic benefits including permanent cost-efficiency with “pay as you go” as well as easy cost control. A study by NovaStor (see below) found that customers experience a cost savings of up to 20% when they move to the cloud.
• IT departments minimize infrastructure burdens. Managing on-premise hardware and software can be time consuming and frustrating but these new technologies reduce time spent managing and fixing programs.
• Cloud computing software gives businesses a competitive advantage as they can operate business more efficiently and at a cheaper cost – both of which are crucial when trying to succeed in a competitive market.

Backup Vital for MSP Customer Retention

As a whitepaper published by NovaStor points out, “Storage as a service is easier for customers to understand, and, therefore, easier for the dealers to sell than more complex solutions, such as CRM systems.” However, the study goes on to examine the fact that data backups, while vitally important, are not part of a business’ core strategy. When it comes to the explosive growth in data, there will become more complexities and a higher need for storage and management.

The option for MSPs to offer cloud backups are vast. Some of the main benefits include:

• The backup/storage market is due to grow by up to 30% in the next few years.
• Long-term contracts with backup providers ensures MSPs regular earnings which will grow with increasing data volumes.
• MSPs can offer clients low initial storage investments in comparison to managed services and software devices that can charge thousands for backup installation and up-front costs.
• SaaS (storage as a service) adds additional value for existing customers, encouraging them to stay with and trust their MSP even more.
• Integration of a backup system with an existing platform is generally simple and non-time consuming.
• Backup tools have a minimal learning curve meaning there is not a high demand for technical and sales training to get up and running.

The competitive advantage an MSP could experience if selling a backup service along with their core product will become a determining factor of their long-term survival. Also, by offering this type of padding against any data loss and treating online data with the same security as on-premise data, they are at a significant advantage.

If you are a MSP, have you seen a shift in this industry? If you are a customer of one, have you experienced a change in their market offerings? How would you like to see this industry progress in the next 3-5 years? We’d like to hear your feedback in the comments section below.

Tagged as: Backup, competitive advantagereseller, infrastructure, MSP, retention, SaaS, SMB, VAR