It’s official, the future of information management and infrastructure is software as a service (SaaS). Today, Dell announced its intent to acquire the powerhouse in email continuity and archiving, MessageOne. This acquisition will give Dell the cornerstone that it needs to build out its own suite of SaaS offerings. Dell clearly didn’t want to be left out of race as it watched Iron Mountain successfully building out its SaaS offerings and watched its competitors and partners complete significant acquisitions in the market including Seagate Services’ acquisition of Evault, EMC’s acquisition of Mozy and IBM’s recent acquisition of Arsenal Digital Solutions. Then there’s Symantec who is building out its Symantec Protection Network.
On December 6th, 2007 IBM announced its acquisition of Arsenal Digital Solutions, a major player in the online backup service provider market. Arsenal provides online backup services to customers directly but other service providers (particularly telecommunication providers) rebrand and resell Arsenal's online backup services as their own. So the company is both provider and enabler. Arsenal is profitable, cash flow positive and has not required funding since 2002. It has approximately 3400 customers. IBM did not disclose the value of the acquisition.
It is important to note that the acquisition was made by IBM Global Services (IGS), not IBM Tivoli or IBM System and Technology. This acquisition is not about filling in a product gap (although IBM is lagging in data protection offerings that support deduplication), it's about ensuring a foothold in a critical market. In fact, the engine of Arsenal's service is EMC Avamar - what Arsenal provides is a software as a service (SaasS) wrapper around Avamar, everything you need for SaaS such as multi-tenancy, billing, reporting etc. IGS is clearly indifferent to the technology; they care about a dependable, scaleable online backup service
Backup is a struggle for both enterprises and small and medium businesses. It’s a complex ecosystem of backup software, networks, servers, disk arrays, and tape systems. Most companies report they are having difficulty completing backups in the time available and when backups fail or complete with errors, it’s often very difficult to discover the root cause. Couple those troubles with the fact that the amount of data that you need backed up is growing conservatively at 30% to 50% per year. Aside from these challenges, most companies are also interested in keeping backups longer for version history and companies are interested in the ability to perform much faster restores if they could.
Given the headaches associated with backup, many small and medium business and even some enterprises are choosing to outsource their backups all together to a service provider. There are already numerous players in the marketplace from Evault (which is resold by a number of different service providers) to Iron Mountain, to your telecommunication provider, and to emerging entrants such as Berkeley Data Systems and its Mozy service offering. This opportunity is so huge that even Symantec (which acquired Veritas) launched a beta of its own online backup service called the Symantec Protection Network. EMC’s acquisition of Berkeley Data Systems is just further proof that the online backup market is a huge opportunity.