How xSPs can use data backup to develop a new profit center

Computer Technology Review, April, 2004 by Peter Means

In the service provider industry (ISPs, ASPs, etc.), there are multiple tiers of xSPs fighting for the same subscriber base. These include Internet giants like AOL, MSN, Earthlink and Yahoo, as well as smaller regional and local xSPs.

In this competitive jungle, brand loyalty means little. Whenever an xSP offers a new service that subscribers perceive as better value, they will switch.

The cash-rich giants can add new fee-based services because, with their huge subscriber bases, they can often afford to absorb what to them may be a small loss as part of the cost of doing business. Large regional or local xSPs may also be able to absorb such losses.

Smaller Tier 2 or Tier 3 xSPs are caught in a Catch-22 situation. Increasingly, they must add services to attract and maintain subscribers, but they can't afford to absorb the costs of these new services and still remain competitive. Either they have to raise their monthly fees, charge for the new services, or face the possibility of being driven out of business. If this describes you, what can you do?

Today there exists an opportunity for you to offer a premium service that can increase revenues from current subscribers, attract new subscribers, and offer rapid ROI that adds to your cash flow profitability. The opportunity: Offering your subscribers automatic, remote data backup over the Internet as a premium service.

The Growing Need for Data Backup

For many companies, data is becoming their most important asset. They develop large databases of clients and prospects, transactions, records (legal, medical, etc.), warehouse and inventory control--the list goes on. Much of this data is impossible to replace or reconstruct, if lost.

What affect does losing data have on a company? According to a recent study by the National Archives and Records Administration, only 43% of businesses suffering a disaster ever recover sufficiently enough to resume business. In addition, 93% of businesses that lose their data center for 10 days or more file for bankruptcy within one year.

What's truly frightening is that data is so easy to lose. A natural disaster like a hurricane, flood or wildfire can destroy a company's records. A sudden loss of power, a hard disk crash, a malicious hacker or even a disgruntled employee can wipe out critical data. Even simple human error can be ruinous. According to one study, some 4,000 notebook computers are left in London cabs in any given month.

Another powerful impetus for backing up data is the growing list of laws, regulations and industry rules that require firms to securely archive files for specific periods of time. Such files include legal papers, medical records, tax data and even e-mail. Loss of this data can lead to fines, sanctions or even business shut down.

A third consideration is the growing number of mobile workers and telecommuters who have created a greater demand for regular data backups, as well as access to data stored on network servers.

On a more personal level, the explosion of digital media has created an ever-increasing demand from end users to protect and preserve their critical, private and personal data (such as photos) against loss.

You would imagine that these pressures would ensure that everyone backed up data--and you would be wrong. IDC statistics from June 2002 indicated that 99% of all corporate PCs--both desktops and laptops--are not backed up in any form. This can spell disaster for them--and opportunity for you.

The Demand is There, and You Can Fill It

The demand for data backup exists. By offering remote, automatic data backup over the Internet, you can better serve current subscribers and keep them from jumping to a competitor. You can attract new subscribers (both newbies and competitors' subscribers). And you can create a new profit center that helps your bottom line.

To be successful, you must offer subscribers an easy-to-use backup system that they can basically set and forget. As an xSP, you already have the vital Internet infrastructure. What you need to add is a software solution, secure servers, and customer service.

The Software Solution

To meet demand for data backup, companies like NovaStor have developed Internet-based backup software. Such software takes daily snapshots of critical data to protect networked, remote and disconnected subscribers. It minimizes lost productivity, as people waste valuable time looking to replace lost data. And it promotes business continuity when the inevitable disaster occurs (and it will).

Software backup solutions are based on server-client architecture and require software residing on your servers as well as downloadable modules that reside on subscribers' computers.

On the server side, backup software should:

* Offer fast, reliable and cost-effective backups over any TCP/IP connection--including broadband and dial-up

* Allow you to easily add, remove or modify subscribers

* Enforce storage quota limits (especially important when you're selling backup storage space on your servers)

* Support multiple user authentication techniques