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5 Predictions for the Cloud Backup Industry from a Savvy Industry Veteran, Part 2

Nov 16, 2016, 18:01 PM by Trenton Baker

What a Decade of Cloud Backup Experience Tells Me We Can Expect

In my previous blog article, I discussed my first two predictions for the future of the cloud backup industry. I also asserted that as founder and owner of an IT Services business for almost a decade, I had seen firsthand the evolution of cloud services from a great concept (which most companies saw as too risky to try), to its state today of widespread acceptance, if not adoption.

To recap my first two predictions from that first post: 1) Cloud backup will replace traditional backup solutions as the standard data protection strategy, and 2) Disaster Recovery-as-a-Service will replace cloud backup. Here are my next three predictions.

3. Software-as-a-Service will replace hosted servers, and robust cloud backup services will be automatically included.

The movement toward Software-as-a-Services (SaaS) can only be described as a phenomenon. It wasn’t long ago that companies had to purchase, implement and manage their own on-premise servers to run their many corporate software applications.

But with the arrival of Microsoft Office 365, Salesforce, Google and a host of other SaaS solutions, these convenient alternatives are decreasing the need for in-house IT infrastructure management. Today, many companies have a hybrid environment of in-house servers and outsourced SaaS solutions. But we should expect the SaaS trend to pick up speed and soon become the dominant model for software consumption.

SaaS, however, is not without its drawbacks. One major problem: The solution does not guarantee data protection. Many SaaS providers, including the ones mentioned above, still encourage companies to explore third-party cloud backup solutions to protect the data in those cloud apps.

I am confident that most SaaS providers will soon realize they need to provide robust data protection services, both as a competitive advantage and as a revenue-generating engine. As a result, these SaaS solutions will come “out of the box” with great cloud backup services included, either packaged with a respectable cloud backup provider’s services (think the “Intel Inside” model), or with their own flagship service, which they probably will acquire rather than build internally.

Hence my next predictions....

4. Industry consolidation #1: MSPs will consolidate.

MSP consolidation has already begun. The truth is, the MSP industry is mostly made up of thousands of small IT service companies, and many successful MSPs have recognized that growth-by-acquisition is a sound business strategy.

This has kicked off a wave of acquisitions in three distinct areas: 1) the creation of mega MSPs (e.g. Scalar Decisions) who grow to achieve geographical and/or specialized expertise dominance; 2) increased cloud vendor presence (e.g. KeepItSafe/j2 Global) with acquisitions to accelerate revenue growth and industry relevance; and 3) the entry of non-traditional players (e.g. Konica/Minolta) into the MSP space to facilitate growth opportunities into new markets.

More MSP consolidation will follow.

5. Industry consolidation #2: Vendors will consolidate into mega vendors and telcos.

As MSPs get larger and more powerful, vendors will follow suit. The cloud backup vendor space has become overcrowded with the likes of Datto, StorageCraft, KeepItSafe, Axcient, Intronis, Barracuda, Code 42, and many others. It is becoming increasingly difficult to distinguish among all of these vendors.

Thankfully, vendor consolidation has already begun, kicked off in a large way with the acquisition of Intronis by Barracuda in the fall of 2015. This trend will continue, and the ultimate winners will be the channel and end users, because vendor options will be reduced to fewer but stronger competitors with clear and concise value propositions. Keep an eye on KeepItSafe/j2 Global as one of the final vendors left standing when consolidation activities settle.

To take this trend one step further, I believe that all cloud vendors will eventually end up joining a telecommunications company. Despite what they tell you, telcos care only about bandwidth traffic — and its associated revenues! — and they will not stop until they acquire every last endpoint on the Internet so they can own as close to a traffic-monopoly as possible.

Owning cloud computing companies is one cog in this wheel, but there are many others — including television stations, radio stations, media companies, sports franchises, etc. Telcos are among the few types of organizations that have the deep pockets, resources and determination to pull this off. We’ve seen the signs already. Trust me with this one: Telcos will be the true business terminators when all is said and done.

And there you have it. The crystal ball to lay out the future of the cloud backup industry over the coming years. Someone famous once said, “With great knowledge comes great responsibility.” So use this knowledge wisely.

Greg Onoprijenko

Regional Sales Manager, Canada for KeepItSafe

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