Data Protection: Two Strategies For Building A Better Solution

Data protection is a growing market segment for MSPs. Service providers have two ways into the business: Offer data protection as part of a larger bundle, or provide it as a stand-alone solution.

November 14, 2014

3 Min Read
Data Protection: Two Strategies For Building A Better Solution

By Dell Guest Blog

The data protection market seems like a golden opportunity for managed services providers.

Data continues to accumulate at an astounding rate. Organizations need to look after data stored not only in conventional systems, but in virtualized environments and the cloud. MSPs opting to focus on data protection solutions have the chance to tap into an enormous market. Just the software side of the backup and disaster recovery (BDR) market is pegged at $4.7 billion, according to Gartner.

The target market is big, but service providers need a strategy to realize its potential. That task for MSPs: Develop a go-to-market approach that will enable them to capture customers’ data protection spend. There are a couple of ways to approach the data protection business:

1. The Complete Solution

This approach embeds data protection as part of a much broader managed services offering. Here, an MSP’s BDR or business continuity solution becomes just one component of a larger bundle, which could include outsourced help desk operations, managed networking, managed security, managed desktops and managed servers.

This model lets the MSP provide a range of services that meet the customer needs under one monthly fee. An MSP can structure pricing based on the number of users at the client site or the number of devices under management. The advantage for customers is that they see a total solution, rather than individual line items and point products. The MSP benefits from the opportunity to capture every penny of the customer’s IT spend, not just the data protection piece.

2. The Unbundled Solution

In this case, the MSP focuses on BDR as the tip of the spear for entering new accounts. This is a niche marketing approach and one that can lead to sales later on. A service provider who successfully sells data protection can grow the customer relationship, offering different products and services.

BDR as a standalone offering has the advantage of simplicity: The solution is presented as a focused, easy-to-grasp package. This simplicity makes for an easier sales cycle and a quicker entree into new customers. Over time, MSPs also have the opportunity to sell a la carte services on top of their unbundled data protection solution. One Dell MSP partner sells testing, disaster recovery drills and reporting services, for example.

Weigh Your Options

MSPs have a couple of ways into the data protection market, but the customer base may dictate the service provider’s ultimate direction. How do your clients want to buy BDR? Are they interested in a discrete solution or a broader package that covers more ground?

An MSP also has to keep profitability in mind. Do the packaging job right and your MSP operation could see 50 to 70 percent gross margin. On the other hand, a poor packaging job–cramming too many services into a bundle and not paying attention to labor costs–can erode margins.

Data protection, while a promising market, is not without its pitfalls. BDR and business continuity can prove a solid line of business for an MSP, but only if the service provider carefully packages its solution. 

Guest blogs such as this one are published monthly and are part of MSPmentor’s annual platinum sponsorship.

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