By Eran Farajun, Executive Vice President, Asigra
If you make software purchasing decisions or influence your company’s data and recovery solutions, there are some recent studies you should know about.
The Enterprise Strategy Group (ESG) recently surveyed economic buyers, technical buyers, and financial buyers about their data-growth expectations, cost pressures, pricing preferences, and recovery rates. They discovered:
- - 3 out of 4 respondents expect data to grow at a rate of around 20% a year.
- - 2 out of 3 respondents felt “some” or “strong” pressure” to reduce IT spend.
- - Financial buyers were the most likely group to expect a “substantial increase” in backup & recovery costs over the next 5 yrs.
With these data points in mind, let’s now look at another report by Forrester Research: Demand Pricing That Matches Business Value—The Radical Sourcing Trend for 2013. In this report, Duncan Jones explains why the traditional pricing models currently dominating the software market are “obsolete” and “no longer match products’ cost to the business value they deliver."
Jones notes that technology market shifts such as cloud and big data affect the way that IT managers and other purchasers buy software. He goes on to recommend that software buyers demand new pricing models that better match business value.
Performance-based pricing models continue to surface in the IT industry, such as recovery-based pricing for backup and recovery users: Recovery-based pricing can be categorized as a performance- or behaviorally driven pricing model that puts greater cost controls in the hands of the user. That’s because this approach has been decoupled from the number of machines protected or the capacity of data to protect. Instead, pricing is connected with the volume of data actually recovered.
Recovery-based pricing allows users to pay for what they are purchasing the solution to do – recover their data. It also helps software purchasers rationalize their IT budget for data and recovery because they will be billed for data that is recovered. This model aligns with a recovery metric, no longer solely based on the backup of data. If a company’s recovery needs are less, then users will pay less for these services. What’s more, it offers a fixed cost of backup with a variable cost for recovery based on the amount of data recovered on an annual basis.
Eran Farajun is the executive vice president for Asigra. The company can be reached at firstname.lastname@example.org or 416-736-8111.