Asigra has been offering cloud backup since before cloud backup was cool. The Toronto-based vendor launched in 1986, and has sold through partners such as managed service providers, cloud service providers and VARs from the start. In 2013, Asigra said it passed one million end-customer deployments sold through almost 1,000 partners.
The rise of cloud use has provided greater competition for Asigra Cloud Backup, prompting the vendor to change its pricing structure. Last year, Asigra switched from capacity-based pricing to a recovery license model (RLM) that charges end users according to how much data they recover rather than how much they back up. We recently spoke to Asigra Executive Vice President Eran Farajun about the reaction to RLM among Asigra partners and end users, as well as the vendor's plans for end-point backup, file sync and share and a deeper move into cloud-to-cloud backup.
How are your partners and their customers reacting to your recovery license model?
Farajun: Traction has been pretty good -- it's the No. 1 thing that people call us about since we launched it.
Are your partners and end users moving from capacity licenses to RLM?
Farajun: We have partners that stayed with what they had for the existing customer base that they had. And then they added RLM as a new type of licensed service, and they're starting to go out and talk to new customers. Some of them don't want to move existing customers because they don't want to rattle the cage of those customers. Some haven't extended the new pricing model to customers because they don't want to take money off the table. Our partners are in the profit business, and they want to keep their margins. Some of them have used it to pad their margins and not talk about it to their customers. Others use it as a defensive tool. When customers talk about leaving because of growing costs, then they move them into RLM.
All new customers pretty much go into RLM. There's no point for them to go into CLM [capacity license model] even though we still offer it. We tell them: "Here's the blue pill and here's the red pill. Which pill would you like?" Pretty much everybody picks the RLM pill.
How much are customers saving if they use RLM?
Farajun: The initial six months of RLM are a benchmark period. We charge the customers as if they recovered 25 percent of their data. Only after six months does it actually drop to whatever their performance is, based on the tracker information. In all cases, customers have recovered less than 10 percent of their data, in some cases it's below five percent. For most customers, the first six months ended around February.
Any time a new pricing model comes, it takes time to get into the market and it hasn't been 12 months yet.
Are some customers better off with capacity licensing? Maybe if they recover a lot of data?
Farajun: Nobody recovers a lot of data. The reason partners are keeping their CLM licenses is not because they recover a lot, they clearly recognize they don't recover a lot. But they keep the CLM model because they've made an investment in CLM licenses through the years working with us, and they've amortized it off their books. Their profit from selling gigabytes or terabytes per month is margin-rich because they're just paying for maintenance and support on that given TB. If they move to RLM they have to re-buy that license capacity and begin the amortization period all over again. So we say to them, "Fine, keep paying us maintenance and support."
New partners and customers totally get it. If you're starting fresh out of the gate and have no historical baggage and no investment in CLM, it's a no-brainer. They don't even look at CLM. We're using CLM as a reference point for people, to say "I'm happy to take your money if you want to pay like you're recovering 100 percent, but here's another option." It's obvious when you put RLM next to CLM it's more fair.
Why switch to a pricing model that lowers your margins?
Farajun: The long-term view is we either give discounts -- and eventually you discount yourself to death -- or you begin to change the way you price. If you change the way you price, there is no way to do it without taking a hit. We had the courage and the financial stability to take the short-term hit. As we come out, it will grow through volume. It's just a fair pricing model.
Some of our partners understand that, but there's not enough pressure on them yet to talk about it publicly. They do it only when their customers force them to by saying, "I'm leaving unless you drop the price."
Innovation doesn't have to be technical. Financial innovation is also innovation.
Do you expect competitors to adopt RLM?
Farajun: It's interesting how competitors have reacted on the street, if not publicly. I've worked on three opportunities where we have lost for price, and the reason we lost on price was the incumbent vendor was forced to radically lower the price. Two of the three cases happened with a vendor in the top ranking of the Gartner Magic Quadrant. In one case, the vendor had to discount 96 percent. We said fine, but how many times are they doing to do that? It's unsustainable; you can't do that forever.
We found one case where the customer was just using us to beat down their existing vendor with an implied threat. But that's just part of being in the game. Sometimes you get used and abused, and sometimes you win.
Is cost the main reason people switch backup providers?
Farajun: People end up moving fundamentally for one of two reasons -- either a broken promise or just cost. The customers that are seeing cost pressure are looking around and are curious: How does it work; how would it work for me; can you give me quotes?
Is there more competition among vendors targeting service providers now that cloud backup has matured?
Farajun: We saw a long time ago that service providers would play a big role in delivering IT. My dad [Asigra CEO David Farajun] had that vision. In the early days, people were laughing at us, but now we feel vindicated. We see more people positioning traditional backup products into service provider space. EMC is doing it, CommVault is absolutely is doing it, and Actifio is going after the server provider industry and saying you should use us to back up data that you have as a service provider. EVault has had [cloud backup] for a long time.
Are you getting requests for online file sync and share?
Farajun: We are. We have it on our roadmap; stay tuned. Nobody's making money on it, but you need to have it as a feature. It's like CDP in the old days. Companies like Revivio came out and said, "You need continuous data protection" and everybody and their sister started to do CDP, and it was a hot thing. Then the major backup vendors added it as a feature. I know we did, it's a free feature in our product. Same thing with deduplication. That came out with Data Domain, and then you had to have dedupe.
I think file sync and share is a feature inside a backup platform. We've been sitting on it about two years to see if people actually want to use it. We're starting to see customers and partners ask for it to be integrated. We have a history of integrating things like this as free features in our platform. So stay tuned.
You added cloud-to-cloud backup in 2012. Were customers requesting that?
Farajun: People are recognizing that data is sitting in other clouds like Salesforce, Google Apps and Office 365. Companies like Backupify, Spanning and CloudAlly are talking about it. Those guys are service providers themselves; they have their own repositories. Some of them some sit in Amazon, and they want to back you up. We added that capability in our platform as a free feature. Our partners are saying to customers, "If you have data in Office 365, if you have data in Salesforce, if you have data in Google Apps, we can back that up for you."
There's a misperception that if your data sits in Office 365 or Salesforce, you don't need backup for it. You do, and you need to treat it like you treat other enterprise data. The vendor that's offering you a service has a backup, but for themselves, not for you. So you do need a backup for that locally.
We're broadening the totally addressable market for our partners. A gigabyte's a gigabyte, whether it's an Oracle gigabyte or a Google Apps gigabyte.
What about endpoint backup?
Farajun: You'll see some announcements around new functionality. Geo-location, wiping and things like that have become features that people want in the platform.
The people who purchase endpoint backup and recovery are different people than those who purchase enterprise backup and recovery. There's the storage team and there are endpoint people. And they have different requirements. It's not just backup and recovery. It's more endpoint management functionality. You'll see that get built into our backup platform.
You're also starting to talk about software-defined data protection. How do you back up without hardware?
Farajun: Backup appliances are hot. It's the topic of the day. EMC has one and Symantec has one, and there are a bunch of others. But I think because of cost, people are looking at software-defined storage and software-defined data protection. We see software-defined where the customer doesn't have to pay the inflated cost of hardware to get the software. Customers are telling other vendors, "Why do I have to buy hardware from you? Why can't I buy software and put it on any commoditized hardware or virtual machine and use my own hardware?"
I think over the next 24 months it will become an interesting point. We're seeing it as questions in RFPs coming across.