Acronis Seeks to Disrupt the Enterprise Backup-Restore Software Space

After all these years where companies have used backup and restore software products, you would think that some market equilibrium among the vendors would have been achieved and that there would be little room for market shifts. That may not be the case. A recent CA-sponsored study showed that an emerging approach to backup-restore processes called "recovery management" might cause companies to shift vendors. In the CA study, about 70% of the respondents agreed or strongly agreed to the statement "You would consider switching your backup solution to one that integrates with your replication solution." So a strategy for upsetting current market equilibrium is to replace straight backup-restore with broader recovery management solutions.

In contrast, Acronis is attempting a different strategy. The company is a player in SMB backup and restore, but with a new product introduction is attempting to not only maintain its traditional strengths in the SMB space, but also to make significant inroads into the enterprise.

Acronis' approach qualifies as "disruptive innovation," a term coined by Clayton Christensen and popularized in his seminal book "The Innovator's Dilemma." In one example of disruptive innovation, a company at the bottom of the market moves up by offering a product that may be simpler than competitors' but delivers "good enough" performance with compensating benefits, such as lower price.

Now purists may debate whether or not the Acronis approach really qualifies as "disruptive innovation", but, if it succeeds, the distinction may be moot. And of course there are significant challenges in the way of the company's success, such as trying to gain traction and mind share in the face of larger and better financed competitors. But regardless of the outcome (and Acronis may not have to acquire that much market share in the enterprise space to justify its entry), it is still illustrative to look at what the company is trying to achieve.

Acronis' traditional product is called Acronis?? True Image Echo, which focused on the backup and restore needs of SMBs although enterprises could use it in remote and branch office situations. Now the company is offering Acronis?? Backup & Recovery??? 10, which it describes as an evolution of and replacement for Acronis True Image. Existing customers will find 100% of the functionality of Acronis True Image in the new product and can upgrade to Acronis Backup and Recovery 10 as part of their existing maintenance agreements.

However, about half the Acronis Backup and Recovery 10 code is new and Acronis also describes the product as using a new architecture, a necessary point because the company claims that Acronis Backup and Recovery 10 scales to 10X the number of machines over Acronis True Image Echo. That makes sense as SMBs typically do not require the horsepower that enterprise-class backup and restore installations provide.

While necessary, however, increased scalability alone is not sufficient to play in the enterprise space as well as among SMBs. Additional functionality is also required, and one Acronis Backup and Recovery 10 enhancement is in the ever more popular area of data deduplication. From a pricing perspective, Acronis claims to be the first vendor to bring affordable deduplication to the masses by simply offering it as an optional add-on charge on the workstations or server side rather than on the storage side. The result is a known fixed cost (based on which advanced workstation or advanced server version of the software is used) instead of a variable cost which grows as the need to protect more data expands.Acronis Backup & Recovery 10 also offers centralized management and support for virtual environments that are increasingly part of the jacks-or-better-to-open requirement to play in the enterprise space. Overall, Acronis' claims of delivering high data deduplication performance at a more affordable price than competitors seem compelling. However, we believe that the company will have to clearly and demonstrably back-up its claims as there are not yet standard benchmarks that can be applied in these processes.

Mesabi Musings
Now competitors are likely to claim that Acronis Backup & Recovery 10 does not have the richness of functions and features of their products and, without detailed examination, let's assume that they are right. However, in our experience extra capabilities are often initially added to meet the demands of one or two large customers and then included in the commercial release. Which begs the question: what portion of application functionality does any software customer really use? The answer: probably a fraction and in many cases, a small fraction.

As a result, a challenge for Acronis is to demonstrate that Acronis Backup & Recovery 10 offers the key functionalities and features that are necessary to get the job done right for a large majority of potential customers.

Of course, another challenge the company faces is to be able to get the distribution channels to get the product to a broad market, since direct sales (except in targeted cases) is not likely to prove viable. But Acronis knows how to deal with large volume resellers and with regional VARs, and every one of those channel partners is always looking for ways of increasing its business.  Acronis also has the advantage of an established SMB base that it can build upon, an understanding of the management of G&A expenses that any successful small company requires, and the knowledge that dipping its toe into the enterprise waters doesn't have to be excessively expensive.

All in all, as the saying goes it is not the size of the dog in the fight; it is the size of the fight in the dog. If Acronis nips a few percentage points of market share from larger vendors' "heels," with Acronis Backup & Recovery 10 will qualify as worthwhile exercise in disruptive innovation.