Datto's Borcherding: 85% Of SMBs Lack Backup, BC/DR

We recently sat down with Brooks Borcherding, chief revenue officer for Datto, to check in on his first few months on the job; he signed on at the end of November 2015. Borcherding, while new to Datto, has deep experience in IT, cloud computing, channel and services. He was previously the president of consultancy Cloud Advisory Services, senior vice president of enterprise and carrier sales at Time Warner Cable, and he led NaviSite through its global expansion and 2011 acquisition by TWC.

He also had successful stints at Avaya, Cisco and Accenture.

Borcherding, who as CRO is charged with overseeing revenue growth for Datto’s sales, marketing and business-development teams, takes an expansive view of his role and says partners may consider him a resource for advice around business topics, such as transitioning to a recurring revenue model. Why’s that important? He sees annuity-based businesses as intrinsically better suited to weather rough economic weather versus depending on hardware sales, which can sink along with business’ stomach for capital expenditures.

Channel Partners: What’s new with you and Datto since we spoke in January, when you did the SIRIS price reductions? You mentioned that you were looking to drive Datto toward an as-a-service model. Have you made progress there?

Brooks Borcherding: It’s been a very fast-moving few months. That price reduction has been incredibly well-received. We brought that out at the beginning of January. I just got back this weekend from a trip to the U.K., meeting there with our partner advisory board, and the feedback generally has been as good, if not better, than we had hoped. We’re really helping to reduce the barrier to entry for them with their customers, helping them compete more aggressively in the space and drive the business.{ad}

We’re continuing to be quite aggressive in our posture in the marketplace. We’re starting to do a lot in regards to partner enablement, to help them compete. We’re providing a lot of new, fresh, competitive information, for example.

CP: As chief revenue officer, how are you reaching out to partners? For example, many are stressed about transitioning to monthly recurring revenue.

BB: First of all, we’ve launched our Partner Community Forum, our own internal social community for partners to engage with us, or with each other, on a variety of different topics. There’s a section in there for sales and marketing, for example. There’s a section for technology and products. There’s a section in there for overall advice in regard to developing businesses. That forum has been very well-received.

I personally have been very active in that forum just as a way to, one, introduce myself, but also to engage and …

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… interact with many of these partners.

Personally, as I mentioned, I just got back from the U.K., and I continue to work with my team to get out and meet as many of our partners as possible. So I think we’ve created a lot of opportunity for engagement and feedback.

Separate and distinct from that, we are really starting to accelerate our engagement through different vehicles. For example, we have a webinar series, and in those webinars we provide a lot of content that is focused around building a successful MSP business; that helps them embrace becoming an as-a-service or service-oriented business. Last week we had an end-user-focused webinar as well that gave them the ability to invite their customers into a conversation, talking about backup and data recovery services, and I think that was exceptionally well-attended. And, it gave partners an ability to expand their own brand with those customers that they’re trying to influence. We offered customized invitations for their end users.

We’re also being very aggressive with our MDF and joint marketing, for example, with our partners in trying to talk about ways we can go to market together and use our combined resources to scale our businesses more effectively.

We’re continuing to invest a lot in tools, too. We have some great enhancements to TCO worksheets, as well as some other tools that we’re going to be coming out with in the second quarter that we think they’ll find quite valuable.

CP: We’ll look forward to hearing about them.

BB: A key part of my strategy this year has been around branding — to help create demand, to get both Datto’s brands known better out in the community, but to also create awareness of what’s possible from a backup/DR/business continuity perspective these days, to try to help our partners generate demand. We’re starting to get some good traction in that regard.

Content is also becoming a big focus for us in regards to, how do we represent ourselves on the Web? How do we talk about products? How do we talk about technologies? How do we continue to help sharpen the competitive advantages that we have as a company, and the way we’re able to help communicate that directly to the market and through our partners?

We’re continuing to look at refining that holistic view of our competitive differentiation and how we enable our partners to compete better in this market and continue to take share.

CP: Speaking of taking share, let’s talk midmarket. Are you seeing progress there?

BB: I think there’s growth. There are a few parallel tracks. One is continuing to …

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… take share in the traditional SMB space. In the U.S., of the 5 million SMBs, maybe only 15 percent have a backup/DR/business continuity service. So even in that space, there’s a significant opportunity for us to continue to grow and to take share.

As we move up market, into mid and enterprise, it is a matter of continuing to execute on the same strategy — which is going to market with managed service providers. But we have to start targeting the providers that serve that space, the larger MSPs and cloud service providers, that offer the capabilities and credentials to serve that marketplace today. I have a team that is specifically tasked with creating those relationships.

The good news is that many of our products and services are built as enterprise-grade solutions, so it’s not as if we have go and create a new offering for the space. It’s more the holistic service and support element and engaging with partners that will enable us to be successful there.

What are the expectations of a larger enterprise from a customer-care prospective, for example? What integrations into other management tools would be required to enable us to fit into the larger ecosystem of services that they consume?

Those type of things, where we look at ourselves less as a standalone solution and more as part of an integrated set of services that a larger enterprise would be consuming.

There are some immediate opportunities there that fit us very well, what I call the “small-large” type of opportunity. For a large enterprise, maybe we’re not going to go in and displace their backup services for their data center. But it is likely that they still have essential business data held at their branch-office/small-office locations, which is critical for them as a way to create survivability and business continuity for those locations in isolation. Those are really interesting opportunities for us. Hotel franchises, for example, or legal firms with their distributed offices, or any distributed large enterprise is really a significant opportunity. We know the value that we provide there and the immediate type of return that they would receive from us.

CP: Absolutely. Branches and retail locations are no longer islands to themselves. Do you see upcoming deals with distributors and master agents, to help you move toward that market?

BB: Our model’s going to hold, and it will be primarily with managed service providers. That’s not to say that we would exclude a value-added distributor like Avant, which has a very unique and high-touch model, if they have relationships these MSPs.

My main criterion is making sure that the channels we have fit an MSP mold. That we have the installation, service and support required to address the needs of a managed-service type of business model.

I think we’re going to see many of the agents and VARs in traditional channels continue to evolve to become more like …

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… MSPs. And as they evolve, you’ll see us set standards in our channel-partner program that are going to drive expectations of what it takes to be considered a Datto channel partner, and we will make sure we hold a high standard for all the MSPs that we go to market with.

CP: In your four months, what’s surprised you most about Datto?

BB: It’s only three months. I’ll tell you four months a month from now!

I think what’s really surprised me is the robust opportunity that is available to us. I don’t think I truly grasped the enormousness of the potential opportunity for the company, when we look at our posture in the marketplace, at the assets that we have. There’s really a significant amount of opportunity for growth; we mentioned going up market to midmarket and enterprise. There [are] a couple of others that are in parallel to that. One is the continued global expansion. We are yet to even be present in significant addressable markets of the world, including Asia outside of Australia and Latin America, for example. So geographical expansion is a significant opportunity for us, and we know our model is portable in that regard.

There’s also significant growth opportunity in adjacent services that would be complementary to traditional backup. You’re already aware that we’re bringing a router to market this summer, which has been announced, but you can just imagine, now, suddenly we have the premises-based backup, the cloud-based business continuity, the cloud-based application backup, and now we have the continuity of connecting all that together with the DNA router.

That positions us very uniquely in the landscape, and I think creates a lot of really interesting potential opportunities.

CP: Speaking globally on a more macroeconomic level, do you think the industry should be worried about a downturn?

BB: Well, it definitely feels a bit unsettled with global markets, as we’re seeing from the financial markets as a whole and with everything that is transpiring. I don’t think the disruption necessarily is a significant concern for us because of the opportunities I mentioned before. We are an annuity-based business primarily, so we have some certainty in regards to our business model. And, the industry has continued to shift to annuity-based consumption of services.

That’s not to say there won’t be some headwinds created with the buying behaviors of the marketplace as a whole. But I feel pretty comfortable in the continued value that our services provide, and I think our ability to continue to be disruptive in an established market will continue to be an opportunity, regardless of if the global economy is strong or soft.

CP: An annuity-based business is going to be more shielded than someone that’s depending on large hardware sales.

BB: Right. And ours is an established market that’s relatively fragmented. We will continue to see, I think, consolidation that could only accelerate if …

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… there was continued economic concern. That makes it a pretty interesting space for us now, as an aggressive player.

CP: Speaking of consolidation, you had great success with NaviSite. You had 10 top-tier data centers. What’s your take on companies that are thinking, “Hey, we should become cloud service providers!” Do you see a future in that business if your name isn’t Amazon, Google or Microsoft?

BB: I think the hyperscale providers have made it very difficult to be an infrastructure-as-a-service player, especially as a new entrant. Amazon has rapidly commoditized the basic core IaaS market as far as the consumption of virtual computing resources and offers a very strong service in that regard. So I do think the hyperscale providers are the ones that are going to continue to dominate that space. That’s forced a lot of the initial generation of cloud-oriented service providers to become truly that – managed service providers across the cloud ecosystem – and define a place where they can provide value-added services to the companies that are consuming more commoditized cloud services. So I think that continues to be the play in the marketplace, and a way for those cloud companies to navigate their path forward.

CP: Is there anything else that you want to share?

BB: I mentioned content before. You’re going to see us evolving the way that we communicate through the Web and other media to accentuate the competitive technical differentiation in our offerings.

We have actually elevated “technology” to the top bar to bring more focus to that. You’ll start to see us really enhance that content as we move forward in the coming days and weeks. Inverse chain is out there, and you’ll see us have eight to 10 of these key technological differentiations that we really focus on.

We’re also starting a monthly technology webinar series that kicks off this Thursday around inverse chain. We’re really targeting the technologist out there in the marketplace to say, “What is inverse chain technology? Why is it cool, and why does it make for a better backup service for the end user?”

It’ll be a monthly webinar. Check it out.

Follow executive editor @LornaGarey on Twitter.