How To Sell: Storage - Part 3 - Continuity announcement
The third part in the How To Sell: Storage series looks at business continuity, an increasingly high priority for businesses, and one which offers serious margins for resellers that know how to best present the technology.
Business continuity is moving up the corporate agenda, driven by increasingly interconnected business dealings and global uncertainty.
Suppliers, insurers and auditors are insisting firms have disaster recovery plans, and data's status as the main corporate asset is finally being recognised.
"Over the past 20 years customers have spent heavily on software applications and they have not seen the benefits from it," says Mark Crocker, marketing director at network storage distributor Zycko.
"Business continuity is a way for them to protect that investment."
The key for resellers selling business continuity products and services, according to Crocker, is to show that they bring quantifiable financial benefits: not just the ability to retrieve data and keep functioning if a major incident occurs, but also the streamlining of business processes to lighten the load on servers.
"This is the message that the reseller needs to sell: business continuity makes a business run more efficiently," he says.
Crocker is clear about which kind of reseller should get involved in providing business continuity support. "Lots of IP resellers that have traditionally sold local area networks (Lans) have seen their margins eroded," he says.
"And the new opportunity for them is in selling network storage products and business continuity. They already have their customer base."
Selling business continuity is now a viable business proposition for traditional Cisco resellers with no background in reselling storage, because storage attached network (San) technology has developed so rapidly over the past year that it is now becoming a viable option for SMEs, Crocker claims.
"Technology and demand are converging, and the mid-market is the exciting area," he observes.
"Customers are looking at Sans, and there is a fantastic margin for resellers. The disk has become commoditised but the managing software is new."
The reseller market is also being helped by some large storage manufacturers, which have typically focused on the original equipment manufacturer market, deciding that they want to brand their own products and use the channel, according to Crocker.
"Storage vendors are recognising the benefits of doing it this way," he adds.
Network storage technology, always seen as a black art, is now becoming demystified. The drive is towards interoperability, and the key in terms of cost is the customer being able to run network storage over an existing IP network.
This is what makes the technology attractive to mid-market customers.
But resellers take note: this is a demanding area. There is confusion as to what actually constitutes business continuity and what providing it entails.
The market can be seen as a continuum, with routine data back-up at one end and full-blown disaster recovery at the other. Opportunities for resellers lie in between.
High-end disaster recovery services, which involve duplicate sites, staff and computers, are the preserve of large specialist firms.
Dave Dignam, director of business development at disaster recovery vendor Synstar, says: "The problem resellers face in the business continuity market is that customers want a holistic service, and big suppliers provide that.
"There is an opportunity for resellers to get involved - selling dynamic back-up solutions, for example - but that is not a threat to us. We can pull these products together for customers at a higher level."
Synstar's typical customers, like those of all the major disaster recovery firms, are very large businesses that want to deal with other big companies.
But, he adds, resellers will benefit as affordable network storage products bring virtual mirroring down to the SME level.
"Smart tools that allow data replication on the network and hardware and software components offering high availability are the key for resellers," he says.
Tony Ruane, sales and marketing director at specialist storage provider Redstor, agrees that there are business continuity opportunities for the right kind of reseller.
"The key is understanding applications and how the customer uses them," he advises. This gives the reseller an understanding of its customer's needs, and an edge when it comes to developing a long-term relationship.
"Disaster recovery providers understand how to run duplicate sites and provide physical space, but business continuity is about being able to get data back for the customer, and that is a very special skill," he adds.
So the business continuity function is best left to the reseller, who can then work with a large disaster recovery provider to make sure that the customer is covered.
Ruane claims the key technology driver for business continuity and network storage is the ability to copy San data cheaply across the IP infrastructure.
"Storage needs to evolve constantly," he says. "Customers start with centralised storage and then get nervous because they have all their eggs in one basket.
"So then they want to decentralise their storage, and that is why software replication becomes so important."
Although the take-up of business continuity products and services is on the increase, Ruane warns that users - and resellers providing the service - cannot rest on their laurels. Business continuity is not just about delivering products but providing an ongoing service, he says.
"The biggest issue with business continuity is that the customer does not go the whole way when testing back-up. They are in denial. They set up procedures and think that's all they have to do. But systems and people change. When they do need to recover data or get back and running they may find that their procedures do not work," Ruane says.
There are pitfalls for the unwary Var that wants to provide business continuity services.
"If I was a reseller I would be tempted to jump in and offer business continuity services, but there is a risk that you could come unstuck," warns Ian Glover, director at Insight Consulting, which advises customers on business continuity and designs systems for them.
Glover wants to see more resellers offering business continuity services, but warns that they need to go into it with their eyes open. "It is a logical extension of what some resellers do, and it gives us more options when advising customers," he says.
"But they need to operate in a different way to their usual methods."
One area of concern is the contract between the supplier and the customer. Glover says he spends much of his time as a consultant, negotiating his clients out of bad business continuity contracts.
"A typical problem is when a disaster recovery partner has oversold the protection," he says. Disaster recovery firms work by offering spare capacity - space, staff, PCs - to a number of customers.
"They can sell the same spare capacity to several customers because it is unlikely that all the customers would need the service at the same time.
The problem arises because some firms sell the same desk position up to 30 times to different customers. This overselling can seriously affect the ability of the customer to recover if their back-up kit and space are not instantly available.
Another issue concerns a reseller's contract with the customer and terms for payment. "The reseller needs to get expert advice on this, to make sure that they do not over-promise, and also that their cost model works," says Glover.
Typically there are two types of payment made to the business continuity provider: an upfront fee for providing the service, and an 'invocation charge' if and when the contract is invoked and the customer needs some form of business continuity service - for instance, replacement of PCs and retrieval of stored data.
The invocation charge is often covered by the user's insurance, so the provider may take a while to get paid, particularly if the insurer disputes the claim.
Glover says that although resellers may be well placed to offer business continuity, many need to rethink the way they do business. Resellers, he says, can be very inflexible.
"Many customers would like to have a contract with the reseller so that if they lose kit a replacement will arrive within a guaranteed period. But replacement by the reseller is typically done on 'best endeavours' terms - and that is just not good enough," he warns.
One further customer concern in business continuity procedures is being able to test systems before they go live. "As soon as the Var delivers the kit it becomes second-hand," says Glover.
"This makes it hard for the customer to test it. Resellers have to find a way to let the customer test kit properly before use."
The Business Continuity Institute, which provides certification for individuals working in business continuity, is attempting to improve the way this industry works.
John Sharp, its chief executive, says that although technology has an important role to play in business continuity, it is only one part.
"The disaster recovery market is an important support element to business continuity, but it is not in itself business continuity," he says.
"Resellers should say only that they provide fall-back services to support business continuity management, not that they provide business continuity. That is a very different thing."
He advises that it is down to users to ensure they have business continuity systems in place. They cannot duck the issue or the responsibility, and they cannot offload their responsibility onto the reseller.
"The advance in network technology is driving the move away from simple data recovery to full availability. Customers can no longer afford any downtime. But technology is just one element of business continuity.
"It is not just a question of mirroring data; businesses need to have back-up sites and people in place," he cautions.
Sharp says a number of factors are pushing business continuity up the corporate agenda: pressure on suppliers from large partners; pressure from insurers (with premiums for business interruption insurance rocketing); pressure from auditors and regulators; and the push towards improved corporate governance and accountability among public companies and public bodies.
The government's forthcoming Civil Contingencies Bill, for example, means local authorities will need to have business continuity systems.
So business continuity is a growing concern for customers, and that, coupled with developments in data mirroring technology on the network, means there are opportunities for storage and IP resellers to offer new services.
But the provision of business continuity services can be demanding, and puts a special responsibility on resellers. They also have to ensure that they have their own houses in order.
"Resellers need to ensure that they have business continuity systems in place themselves if they are going to support their customers properly," says Sharp.
When it comes to business continuity it is important to practice what you preach. The Var's own operation could come under scrutiny as never before.
THE BIG ISSUES: STANDARDS AND CERTIFICATION
Two potentially confusing elements of business continuity are accreditation and standards. There is no specific UK standard for disaster recovery, which makes it hard for customers to know what level of service to expect from suppliers.
The BS 7799 general information security standard dictates that companies should have disaster recovery procedures in place, but does not say how they should go about it.
The Business Continuity Institute (BCI) provides individual certification for business-continuity professionals working within user organisations or disaster recovery firms.
Certification is based on general standards for best practice, which are not confined to technology and are widely recognised within the industry.
The British Standards Institute (BSI) has just released a set of guidance notes on business continuity (known as PAS 56) offering advice to companies on best practice.
John Sharp, chief executive of the BCI, says the PAS 56 guidance notes need to be formally linked to BS 7799 so that an effective business continuity and disaster recovery standard is created.
"But business continuity is not being held back by any lack of standards," Sharp argues. "The only thing holding it back is ignorance and lack of investment.
The problem is that business continuity is still seen as a grudge purchase."
Sharp claims resellers that want to provide business continuity support should focus on acquiring vendor-based technology accreditations. "There is no need for them to get qualifications in anything other than the technology they are offering," he says.
Dave Dignam, director of business development at disaster recovery vendor Synstar, agrees that VARs need to focus on technology accreditation.
"Customers want high availability on multi-vendor platforms, and resellers need to prove that they can deliver that," he says.
CONTACTS:
Business Continuity Institute (0870) 603 8783
www.thebci.org
Insight Consulting (01932) 241 000
www.insight.co.uk
Redstor (0118) 377 6500
www.redstor.com
Synstar (0121) 784 7445
www.synstar.com
Zycko (01285) 868 500
www.zycko.com
ALSO IN THIS SERIES:
How to Sell: Storage - Part 1 - Space odyssey
How to Sell: Storage - Part 2 - Management issues