The $5 Billion Signal of a Market Change

Technology markets shift with maddening slowness, right until they move with overwhelming speed. That’s why the disruption of the data protection market feels both inevitable and shocking. We know everything is moving to cloud and that most traditional vendors won’t survive the transition. The question has always been – “When is the tipping point?”

Veeam being acquired by Insight Partners for $5 billion signals three things. First, cloud is going to open new opportunities that drive hypergrowth in the data protection market. Second, the shift to cloud requires companies to re-orient their core architecture and business model. Third, we’ve hit the tipping point; data protection is shifting to cloud. As the market rockets toward change, the question will now be – “Who can best help me move to data protection in the cloud?”

Cloud creates new customer requirements…

Organizations are adopting cloud-backup to meet their new business requirements. Backup has always protected your entire environment. With the explosion of new cloud applications, backup must now extend to the cloud.

Organizations must protect themselves from expanding cyber-attacks. By backing up on-premises applications to the cloud, they can create an air gap to protect from ransomware.

Companies face expanding privacy regulations. They must detect and manage PII and PHI data across their vast pools of data. They can analyze cloud backups to meet the privacy regulations without affecting their production environments.

To meet these business requirements, customers need a cloud-centric solution.

… that need a new approach to solve …

By changing both the technology stack and consumption model, cloud disrupts the data protection market. In the early 2000s, the market shifted from tape backup of servers to disk backups of virtual machines. New leaders emerged by developing a new product architecture with new pricing models to match.

As we evolve to cloud data protection of applications, the on-premises virtualized model is the new legacy. Managing backup software and storage does not allow administrators to invest in meeting the new business requirements. Charging by CPU sockets does not work when applications scale up and down dynamically. The old model does not work.

Cloud requires an automated SaaS data protection solution. It manages the backup for you, and charges only for what you protect. It also rides the cloud cost curve, relentlessly applying cloud optimizations to reduce the cost of backup. Cloud’s technology and consumption models are disrupting the data protection market yet again.

… which creates opportunity …

VC money has flooded the backup market because investors see a large, growing market in transition. Multiple vendors have taken investments in excess of $100 million in the past 18 months because this is the time to invest in new solutions that will shape the market for the next 20 years.

Not only will the market shift create new leaders, but it will expand the overall market. Cloud finally enables companies to unlock the value of backups. For twenty years we’ve yearned to use backup data for disaster recovery, test/development, and analytics. Unfortunately, backup silos, complexity, and resource costs made it impossible to realize the dream of “multi-use backups”.

Cloud backups, however, are centrally accessible, hosted next to the most powerful AI/ML and compute tools on the planet. The additional value makes data protection a hypergrowth market.

… which will challenge some companies …

In a market like this, why would a leader like Veeam, with $500 million in funding, sell to private equity?

Like the server/tape backup vendors before them, Veeam has recognized the need for a major overhaul of its business to be successful in an ever more “cloudy” world. To succeed, vendors need both a core architecture and a business model that is built for cloud. If the models do not match, the customer experience is like walking barefoot through a room full of Lego bricks. Without a complete commitment to cloud, a vendor cannot thrive in the growing market.

When customer requirements, technology, and consumption models change at once, those companies that do not change get left behind. Nobody knows that better than Veeam.

… but benefit others

This is the most exciting time ever for the data protection market. Market upheaval and investment always creates interest. More important, however, we finally have an opportunity to deliver the vision that everybody in the industry has talked about for decades.

SaaS allows us to finally simplify backup. No more managing tape, disk, or cloud. No more babysitting complex software deployments. Specify your backup service-level and SaaS takes care of the rest.

Cloud allows us to extract value from your backup. Searching for PII/PHI data for privacy regulations? We can search your backups, so you don’t affect your applications and users. Interested in on-demand disaster recovery? We can spin-up an application in an alternate location, when you need it. Want a copy for test/development? We’ll spin that up on-demand.

SaaS vendors like Druva are positioned to ride the wave of the market change.

The time is now

There has never been a better time to ask – “Where do I want my data protection to be in the next 12 months?”

The signs of rapid change are all there. VCs are investing at a historic rate. New backup companies are growing at breathtaking speeds. The SaaS data protection market continues to get new players. Druva recently announced reaching $100 million in ARR. Therefore, Veeam selling off to Insight Partners is just the latest and most powerful signal that the data protection market is transforming with overwhelming speed. A cloud-centric data protection future is no longer a question of “If?” or “When?”. The time to plan for that future is now.

You need a new approach to data resiliency, and Forrester Research explores this in their Forrester Wave: Data Resiliency Solutions report, highlighting the “immense value and quick time-to-market” of Druva’s SaaS solution.

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