Alcion Capitalises on MSP Demand For Cloud-Based Security and Backups

Alcion, a security-focused Backup-as-a-Service product for Microsoft 365, has
launched a managed service provider (MSP) partner program in response to
significant demand from MSPs after Alcion’ recent launch.

After emerging from stealth in September 2023, Alcion has seen substantial demand for its product from MSPs, especially those with SMB and mid-range customers moving from on-site Exchange servers to cloud-hosted email. The demand from MSPs surprised Alcion, which moved quickly to adapt its approach in response.

“I expected to be talking to people about MSPs at least three months from now, not today,” said Niraj Tolio, co-founder and CEO at Alcion. “If you had asked me this question four or five months earlier, I would have said ‘Look, we’ll start working Q1 [2024] and we’ll do something maybe in Q2.’”

Driving the demand is a confluence of pressures affecting MSPs. Their customers are moving away from on-site Exchange and Sharepoint to cloud-hosting, usually via the same trusted MSPs they’ve worked with for some time. MSPs are having to adapt their offerings accordingly, moving from an endpoint model to a user-based model, having bundled tiers instead of a list of line-items, and other more cloud-like, as-a-service approaches.

Cloud vendors have long been talking up the benefits of having someone else operate your infrastructure, yet backup of customer data in services like Microsoft 365 has been an afterthought. Microsoft itself only started offering a first-party backup for 365 as a public preview in November last year, years after launching Microsoft 365 in July 2017. Other vendors, such as Veeam and Commvault Metallic have been working to fill the gap.

While cloud vendors did back up their own infrastructure, restoration of customer data (when possible at all) tended to be of the entire account, not smaller subsets of data within the account. This “all or nothing” approach wasn’t especially useful in anything less than a total disaster, such as restoring a single accidentally deleted email. Such workaday recovery scenarios are what make up the majority of operational work performed by backup administrators, especially those at MSPs. They need reliable tools to do their job, and the standard has increased compared to what was tolerable in years gone by.

“Robustness is a bigger thing than I thought it would be,” said Tolia. “Especially from the partner side, just generally speaking, fragility in other people’s software has led them to find someone else.”

Operations staff are responsible for more systems now, thanks to virtualisation, cloud and greater use of automation. Busy MSPs have far less tolerance for vendor systems that waste their time with repeated, avoidable downtime.

Customers are also far more security conscious than in previous years. The security focus of Alcion helps MSPs position themselves differently with customers. Budgets are larger for security-related topics, which helps margins squeezed by other economic pressures. The message finally seems to be getting through to businesses and governments that security challenges like ransomware have to be addressed with tangible action.

Customers are also better educated about what’s possible, and used to self-service purchasing online. Alcion says 70% of customers accounts (and around 90% of users) choose its annual product rather than a month-to-month subscription, and most choose the full security tier offering from the outset. “I don’t think I’ve seen a single essential [tier] to security [tier] upgrade,” said Tolia.

“It’s funny, even 150-200 seat customers will not want to talk. They’re just too busy. They’ll respond to emails and stuff, but they won’t want to talk,” he says.

Customers tend to commit to buying Alcion after quickly checking that the product does what it claims with a short trial. Alcion offers a free trial period, but reduced its duration after observing customer behaviour. “[The trial period] used to be three weeks. It is down to two weeks right now because we saw it didn’t make any difference,” said Tolia.

Alcion’s success indicates to me that there is a big shift happening in the mid-market. Tolerance for unstable products that lack polish has decreased markedly. Acceptance of cloud-based approaches and software-as-a-service has reached maturity. Several years of forced, rapid adaptation to remote working has broken through barriers to change.

While the crisis period of the pandemic has essentially passed, there are new, significant forces pushing customers to rethink their existing approach. Broadcom’s rapid-fire changes since closing its VMware acquisition are affecting the mid-market substantially. Broader economic pressures are pushing customers to become more efficient. Security concerns weigh more heavily on the mind.

There is plenty of opportunity for savvy vendors and MSPs to present new solutions to customers who have rarely been so open to change. Customers are ready to buy, but only if they can prove to themselves that the value is real.