There is a fallacy being propagated in the channel that hosting your own cloud backup services is a foolish decision.
There are many reasons given for this, such as it’s too difficult or complex to host and deliver your own cloud backup service, too costly and too time consuming. But is any of this actually true?
There was a time when cloud backup was perhaps too complex and costly to host on your own. That may have been the case 10 years ago. But today, a cloud backup strategy is vital for any business or organization in the digital world. Having your data, files, databases in an off-site location for preservation in case of disaster is as necessary as outfitting your staff with a computer. And, there are many providers of backup that can help improve a customer’s data protection strategy, while also removing stress and workload on the IT staff.
It’s time to change the narrative on backup and for the channel to regain control of their business, says Eran Farajun, executive vice president of Toronto-based cloud backup and recovery software vendor Asigra Inc.
Farajun believes there are two main reasons why this fallacy is still being promoted by some channel-only cloud vendors. This can also apply to VoIP and monitoring services as well. The first is that these channel-only vendors believe that channel partners are not smart enough, or their businesses are not mature enough, to handle offering a cloud backup service.
The second involves the business model and the channel’s ability to manage monthly recurring revenue streams.
“These reasons have been used by channel-only vendors since 2005. They want partners to be brokers of their own service. But, channel partners have improved their monthly recurring revenue business in the last 10 years. These are not the old seesaw days either. It’s become more stable and the resellers have long ago crossed the revenue chasm,” Farajun said.
Back in 2005, channel-only vendors went to their partners and said: ‘do not stand up your own services; just resell ours and you’ll get instant monthly recurring revenue streams without risk’. Today, these vendors do not position themselves any differently, according to Farajun.
He advises to brand your own service and this way you own the IP on the process and the customers are all yours. In 2005, offering backup would mean a big $200,000 to $250,000 in upfront capital for a channel partner. Speed the clock up to today and you can start at $500 a month in costs. The channel partner can mark it up to $1,000 a month and make 50 points of margin.
The alternative with channel-only cloud vendors is to sell the service for $1,000, but only make 20 points or less.
Farajun added that channel partners have wised up and become much more savvy developing new ways to properly compensate their sales teams on monthly recurring revenue along with hiring service-oriented technicians.
There is another factor at play here for channel partners according to Farajun. The technology in the marketplace has also evolved in the last decade with more automation that reduces the cost of delivering your own cloud backup service. This service can also go onto AWS, Azure or in a co-location environment.
Listen to a recent webinar we did with Asigra: https://e-channelnews.com/webinar-how-to-sell-your-msp-for-a-higher-price-by-leveraging-the-right-mrr-strategy/