Data Backup, Recovery Services Push IT Costs Higher

 
 
By Nathan Eddy  |  Posted 2013-08-15
 
 
 

While the desire to reduce IT costs is high for many organizations, financial buyers of backup and recovery software and services expect to see a substantial increase in purchases in this area over the next five years due to data growth rates, according to a survey commissioned by cloud backup, recovery and restore software provider Asigra and conducted by the Enterprise Strategy Group (ESG).

In the report produced by ESG, IT users were questioned about the financial pressure they are under to reduce IT expenditures amid rising data growth costs. The research revealed that two out of three respondents felt at least some pressure to reduce IT spending and that pressure was found to increase with a corporation’s annual revenue.

"In the backup space, both software and service vendors have competed effectively on price and market position. However, these vendors base their pricing on the volume of data protected. For IT users, this means that more data requires more backup servers, more licenses and increasing costs," Jason Buffington, senior analyst with ESG, said in a statement. "Recovery-based pricing counters agent- or capacity-based pricing models, allowing users to decouple backup pricing from data volumes. In this fair pricing model, IT professionals that manage recovery more efficiently are rewarded with substantial savings over time."

Survey results indicated that respondents from large companies were more likely to say they felt strong pressure to reduce costs across several areas of IT. Three-quarters (75 percent) of respondents said they expect their data volumes to grow at a rate of 20 percent or less annually, and companies with less data (50TB or fewer) have lower compound annual growth rate (CAGR) cost estimates. This group is also less likely to track the recovery of data.

"Linking value to how products and services are priced will be one of the clear metrics in how leading products are defined and selected in the coming years," Eran Farajun, executive vice president of Asigra, said in a statement. "In backup and recovery, there is a growing divide between backup expenditures and the value provided. The value of a recovery-based license model will increase as data grows and capacity-based pricing models put an unfair burden on users who recover less."

A majority of respondents (52 percent) felt that a backup and recovery software license model in which users are charged for backup and recovery separately would be fair compared to today’s backup capacity-based pricing models, and results indicated IT customers recognize that they are unfairly paying for 100 percent data recovery although they are actually recovering only a fraction of their data.

"With respect to cost containment, the research looked at the propensity of organizations to consider software pricing models that offer greater savings and technical advantages in response to exploding data growth," the report noted. "In the area of backup and recovery, recovery-based pricing was presented as an alternative to traditional capacity- or agent-based software licensing."

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