Data growth is driver for recovery-based pricing

In the report produced by ESG, IT end-users were questioned about the financial pressure they are under to reduce IT expenditures amidst rising data growth costs. The research revealed that 2 out of 3 respondents felt at least some pressure to reduce IT spending and that pressure was found to increase with a corporation’s annual revenue. Those from large companies were more likely to say they felt strong pressure to reduce costs across several areas of IT. While the desire to reduce IT costs are high for many organizations, financial buyers of backup and recovery software and/or services expect to see a substantial increase in purchases in this area over the next five years due to data growth rates.

Research summary:
• 3 out of 4 respondents expect their data volumes to grow at a rate of 20% or less annually.
• Companies with less data (<50 TB) have lower CAGR cost estimates. This group is also less likely to track the recovery of data.
• The pressure to reduce costs increases with annual revenue. Respondents from large companies (higher revenue) were more likely to state that they felt “strong pressure” to reduce costs.
• IT customers recognize that they are unfairly paying for 100% data recovery although they are actually recovering only a fraction of their data.
• A majority of respondents (52%) felt that a backup and recovery software license model which charged for backup and recovery separately would be fair compared to today’s backup capacity-based pricing models.

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. In the area of backup and recovery, recovery-based pricing was presented as an alternative to traditional capacity- or agent-based software licensing.

With industry standard backup pricing models based on backup capacity, costs increase as data volumes grow even if organizations’ recovery rates remain stable. In contrast to this, the Asigra Recovery License Model® (RLM) meets the expectation of technology buyers that backup and recovery pricing should reflect the business value provided. RLM pricing gives IT professionals the ability to better control backup and recovery costs, even when organizational data grows rapidly. With this approach, fees are based on a Recovery Performance Score that is calculated over a 12-month period (every 6 months in the first year). A waiver is provided for the single largest recovery event in any licensing term and only successful recoveries are included in the calculations. This allows customers who recover less to pay less, and costs are capped so customers never pay to recover more than 25% of their data which provides predictable costs. Organizations who adopt this pricing model can anticipate immediate savings of 40% and long term savings of 60% to 70%.

“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,” said Jason Buffington, Senior Analyst, Enterprise Strategy Group. “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.”

“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,” said Eran Farajun, EVP, Asigra. “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. The Asigra Recovery License Model has addressed this economic conundrum with a financially innovative approach that closes this gap and directly links recovery to product value.”