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Is SaaS a good fit?
Two good starting points when considering a SaaS strategy are looking at your current backup costs and getting a true picture of whether or not there are gaps in your system, says Stephanie Balaouras, principal analyst at Cambridge, MA-based Forrester Research Inc.

When considering costs, there's almost always no investment in hardware or software needed to start doing business with a SaaS provider, says Balaouras. The average pricing for online server backup today is approximately $7.50 per gigabyte per month, according to a recent Forrester report on backup software as a service, although some companies are offering lower prices to lure new business. Capacity pricing, where a vendor charges a fee for each gigabyte of capacity per machine per month, has the advantage of being predictable; however, a pricing model based on vault capacity is probably a less-expensive option for users, says Balaouras. For example, under the vault capacity pricing model, if you have a file server that has 100GB of capacity and you achieve at least a two times compression ratio, you would be charged for only 50GB in the first full backup (see "SaaS negotiating tips," below).

Geokinetics' Lewis figured out that over five years, the SaaS model will likely be more expensive than keeping his backup in-house. But the cost analysis doesn't take into account that new hardware

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investments and upgrades will be required after five years, he says. Also, there's the cost of possible human error, which is tough to nail down.

"I don't have anyone swapping tapes," says Lewis. "I don't have to monitor all those humans who [occasionally] make mistakes."


SaaS negotiating tips
Cash in on cheap disk. The price of storage continues to drop. Revisit your storage-as-a-service (SaaS) contract every year to renegotiate, and don't sign a contract that stretches longer than two years at current prices.

Got dedupe? Ask whether the vendor has a deduplication strategy that will help you consume less storage at their site. Compare those numbers with your fees for raw storage services.

Learn the limits. After determining the cost of a GB per month, find out your cost if your needs exceed a predetermined amount. (This is like going over the minutes in your cell phone plan.)

Trim costs with tiers. Try to negotiate a discount based on tiered storage, as well as the different recovery time objective requirements of your various business units' data.

Throw your weight around. Push for a discount if you're a large customer. All vendors are discounting large-scale environments.

Sources: Forrester Research Inc.'s 2008 Market Overview: Backup Software-As-A-Service report and Gartner Inc.'s Online Server Backup Services Vie for SMBs, Remote Servers 2Q08 update

This was first published in August 2008

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