Veeam’s new pitch to CIOs: Outcome-based backup and recovery offerings

Veeam is all set to shift its selling strategy to appeal to CIOs with performance guarantees that could penalize the data replication, backup and recovery company if it fails to meet agreed-on outcomes.

“CIOs more and more seek outcomes, not just services,” said Anand Eswaran, CEO at Veeam. “They need to hedge their risks. They are starting to demand outcomes from their technology providers. If it is a vendor in backup and recovery area, historically, you would simply charge for a backup solution. Going forward, you’ll need a recovery outcome, and you’ll be paid based on the recovery outcome or you’d be penalised.”

Veeam has already been working on an outcome-based engagement with select clients, where it helps them meet stringent business continuity requirements with an RTO/RPO (recovery time objective and recovery point objective) of less than 15 minutes. “We are now trying to formalize this and letting people know that this actually something you should focus on,” Eswaran said. 

In an outcome-based engagement, Veeam’s global systems integrator (GSI) partners work with end customers to understand their business objectives—such as their RTO/RPO requirements, appetite for data loss and time loss in case of an incident—and then work backward to build the data architecture required to meet the objectives.

“On top of our product, we work with our GSI partners to make sure the architecture, the workflow, and the processes put in place are the right ones to meet the customer objectives. Currently, there are no penalties clauses in these contracts but that’s where CIOs are trying to push on and that’s where we are thinking through this,” Eswaran said. 

While Eswaran refused to give the exact timeline of the official launch of the new offering, he said it will be a part of the company’s larger objective of doubling its market share and expanding its revenue from the current $1 billion to $10 billion.

Veeam eyes 25% market share

Veeam, which is one of the very few data replication players in the market continuing to see growth momentum, came out as the close second behind Dell Technologies in IDC’s semi-annual software tracker for data replication and protection for the second half of 2021, with about 12% market share. The company is now betting on innovations such as outcome-based engagement to more than double that market share to more than 25% and expand its revenue tenfold.

Eswaran is confident that despite economic headwinds, the company will continue to win new business and expand its product lines, given the continued risks posed by ransomware attacks. “It’s true that companies are being more cautious with macroeconomic environments in play, there are pauses in capital expenditure, hiring etc. But the reality is given what’s happening with the geopolitical environment, the nation state actors are on the rise, malicious actors are on the rise. This category of ransomware, data protection, ability to recover data without delay is now a board priority, not just an infrastructure admin or IT priority,” Eswaran said.

Eswaran agrees, though, that the goal of achieving 25% market share is very ambitious. “We are talking about more than doubling our market share, which is pretty ambitious, pretty aggressive, but we feel very confident about that for a variety of reasons. First, we are on a steady increase of market share over the past two-three years. So, if we just execute as we have been on product innovation, we will see us cross 20% market share in not very distant future,” he said.

Over the past few years, Veeam has been aggressively expanding its product portfolio—it launched native backup for Microsoft 365, native backup for GCP, native backup for Azure, and is expected to soon launch native backup for Salesforce. “Microsoft 365 alone is billions of dollars of total addressable market for us. This accelerated pace of innovation is also one of the reasons why we are going to take several points of market share, beyond execution,” Eswaran said.