Veeam Gears Up For Enterprise Growth

Veeam has categorically declared that it is chasing enterprise customers at its VeeamON conference in Chicago, IL this week.

Co-CEO Peter McKay wasn't shy about naming competitors it intends to take customers away from: Commvault, NetBackup, Avamar, and TSM. He was somewhat more coy about naming other competitors in enterprise data protection, referring to them as “smaller, venture backed companies”. Oddly enough, it's the same message Veeam has been trying to sell since last year's conference but this year Veeam seems to have changed its approach to better appeal to enterprises.

The keynote at the show eschewed the traditional product and feature announcements in favor of outlining Veeam's vision of the future in a move that is deliberately designed to appeal to C-level executives at enterprise companies. While the intent makes sense, the actual execution on the day felt a little muddled. Talking to partners and customers, there was a general consensus that the high-level message presented was a little too high level, and a more concrete explanation of the vision is required.

Veeam coFounder and Senior Vice President, Marketing and Corporate Development, Ratmir Timashev was able to clear things up for me. The five stages of the vision (Backup, Aggregation, Visibility, Orchestration, Automation) are stepping stones for enterprises to follow. Customers start with backup, because that's where they are currently in pain.

“They have the project, and budget, for backup,” Timashev said. “They have the money to buy the next Data Domain, but they're fed up because they're spending millions and it's not working.” Veeam's plan is to come into the enterprise to address this specific problem as the first stage of a multi-step journey. “The actual project that we go to is backup. Just fix backup.”

“However, when you bring the C-level audience in, they would like to hear the data management story,” said Timashev. By having a broader vision to share, Timashev believes enterprise executives can see Veeam as more than just a “fix backup” option that can support their broader goals for data management. There is certainly a lot of interest in the possibilities of making better use of data: knowing what data you have, where it is, how secure it is, using it to gain greater insights, etc.

At enterprise scale, a new data protection system is a strategic investment, rather than just a tactical project that can be killed off if it's not successful. When making this kind of substantial, multi-year investment, executives will want to feel that Veeam can expand into dealing with other issues the enterprise is facing. While it may not have all of these capabilities today, the aspirational message is that once backup is fixed, there is a way to get even more value out of an investment in Veeam, which further reduces the desire to stick with an existing product that makes similar claims.

For years backup companies have tried to be more than data insurance: a hygiene factor and a necessary evil. Adding functions like legal hold and e-discovery have been solid additions, and we can expect that Veeam will add these kinds of functions, but the claims of a single large source of data for things like analytics or copy-data management haven't quite panned out. Enterprises still tend to use other systems, from vendors other than their backup vendor, to perform these functions. The customer aspirations remain, however, so if Veeam can use these aspirations to establish a foothold solving backup problems, that may be enough.

The greatest challenge I think Veeam faces is how to manage its transition to serving the enterprise without losing what it is over 300,000 majority SMB and mid-market customers love about Veeam. By way of comparison, Commvault has around 26,000 customers according to its March 2018 10-K statement. This large established customer base has different desires and needs than the enterprise, and the risk is that by trying to appeal to everyone, Veeam ends up not appealing to anyone.

“Veeam is becoming a modular platform,” Timashev said. This is how Veeam plans to be able to provide features and functions that suit different needs, but will try to keep the same simple pricing approach it currently has. For smaller customers that don't need all the complex features at enterprise scope, Veeam will maintain an offering designed and priced for that segment.

The challenge facing heritage competitors is that their products were designed for the technologies prevalent at the time. They aren't bad per se, but the technology available when backup to tape was the norm created certain limitations. Software designed to work with those technologies required tradeoffs that wouldn't be made today, if we were starting from scratch. That's just the way things are with a fast-moving field like software.

Updating those products to make effective use of new technologies without alienating the existing customer base is hard. It's a similar challenge to the one that faces Veeam: how do you change things to appeal to new customers without losing your existing ones? The advantage of having an existing presence is that inertia is on your side.

Backup is traditionally quite sticky, because if it's used for long-term retention you need to keep the backup software around for as long as the data is to be retained, or the restore won't be possible. For data with legal and regulatory compliance implications, this can be a long time, and enterprises are far more sensitive to these more complex requirements than smaller companies. There are ways to migrate data from one backup system to another, and some customers choose this approach, but it's often costly and operationally complex. Generally, customers tend to draw a line under one system on a given day and move forward with the new approach, eventually retiring the old system once the data is no longer required. This is much easier when archival data is separated from backup and recovery (as it should be).

Veeam will need to convince enterprises that it is the right choice for future needs, and until now it simply hasn't been on their radar because of its perceived position as an SMB product. It will take time to shift this perception, but it is making the right moves. Some honing of the message is required, but Veeam is clearly prepared to make the required investments.

The vigorous competition in data protection is welcome, as customers will benefit no matter which companies manage to gain or lose share. I can personally attest to the pain of older approaches so if we get better products out of this, that will be a welcome result.

I attended VeeamON 2018 as a guest of Veeam.

This article first appeared in Forbes.com here.