MAKING THE MOST OUT OF THE DRUVA PARTNERSHIP · two-thirds of companies use cloud-based storage and...

MAKING THE MOST OUT OF THE DRUVA PARTNERSHIP A 2112 Go-to-Market GuidePrepared by The 2112 Group for Druva

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Getting Started 17

Overview 2

The Cloud Backup Opportunity 4

Capitalizing on Cloud Backup With Druva 6

Partnering With Druva: The Right Choice 7

Identifying Druva Customers 9

Calculating Druva Sales Potential 10

Perpetual Return on Investment With Druva 11

Best Practices for Working With Druva 15

Disclosures 18

About 18

CONTENTGO-TO-MARKET GUIDE

Low-Effort Compounding Revenue 13

Making the Most Out of the Druva Partnership | A 2112 GTM Guide 1© 2019 2112 Enterprises, LLC.

1 OVERVIEW

reliable – to a degree – but expensive. Storage area networks, servers, tape libraries, jukeboxes, and virtual tape arrays take up huge footprints in the data center. They require tremendous administration and management resources. And they’re slow to retrieve information. A loss of data could cost today’s businesses millions of dollars.

Increasingly, businesses are turning to cloud computing to achieve their data backup goals. Through cloud computing services, businesses gain access to storage volumes at scale that they can’t build or maintain on their own. They can index and retrieve data faster with lower recovery point and recovery time objectives. Including cloud as part of a data protection strategy delivers data integrity and, most important, predictable costs.

Information – or data – is the fuel, product, and raw material of business. Millions of connected devices ranging from traditional PCs to mobile devices to Internet of Things sensors generate 2.5 quintillion bytes of data every day. To put it in perspective, think of each byte as a mile. Now think of the planet Jupiter, which has a diameter of nearly 87,000 miles. The daily volume of IoT data is nearly equivalent to 28.7 trillion Jupiters lined up in a row.

Business is reliant on data. Without it as a raw material, businesses would lack the ability to analyze past events, develop new products, or fuel the engines that drive their business.

The reliance on data is what drives backup and disaster recovery. Businesses need assurance that they will have access to data whenever they need it. Backup is an essential component of the data management triad of integrity, confidentiality, and availability. Today’s 24/7 digital businesses need a continuum of availability to ensure they can recover from any disruption – whether caused by human error, ransomware, or natural events – eliminating any impact to their revenue stream.

For decades, businesses used local tape- and disk-based systems to back up data. Tape and disks are


Adding cloud to any data protection strategy does come with some challenges. Manually converting virtual machines to a cloud provider’s format, such as Amazon Machine Image (AMI), isn’t easy. The process requires specific skills, technology, and tools, as well as definitions of the types of data being stored. Even with those tools and skills in place, businesses need to define where and how to effectively manage data backed up in the cloud.

Data is at the core of any digital transformation. Druva manages and protects that data across endpoints, data centers, and cloud workloads. It eliminates dependence on complex hardware infrastructure and time-consuming manual administration tasks.

Built on Amazon Web Services (AWS), Druva delivers globally accessible, infinitely scalable, and completely autonomous enterprise data protection. It lowers costs by 50% or more by eliminating the need to purchase, maintain, and complete capacity planning tasks for both hardware and software. Customers can streamline data protection and governance, improve cyber resiliency, and acquire insights that will help them capture new opportunities and accelerate smarter, clearer decision-making.

The market opportunity for transitioning from hardware-based data protection to cloud-based solutions is enormous. Enterprises and midmarket accounts need expert guidance in selecting, configuring, and administering cloud-based backup strategies. And they need systems that will enable them to include multi-cloud alternatives for their data protection needs.

Druva provides customers with the services and tools they need, while providing partners with a strong solution to capitalize on this market opportunity.

This special 2112 Go-To-Market Guide will define the total addressable market opportunity, set out business models for capitalizing on the Druva relationship, and offer guidance on how to identify and close customer opportunities.


2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5

$ 1 .2 B

$ 1 .6 B $ 2 .0 B

$ 2 .4 B

$ 2 .9 B

$ 3 .6 B

$ 4 .5 B

$ 5 .5 B

$ 6 .8 B

Cloud Backup Market Size, 2017-2025

SOURCE: storagenewsletter.com

OPPORTUNITYTHE CLOUD BACKUP

2

CLOUD BACKUP IS BIG BUSINESS. In 2018, businesses spent more than $1.6 billion on cloud-based backup solutions. By 2025, the cloud backup market will have grown by 325% to $6.8 billion, making up nearly one-third of the total data storage and archiving market.

Clearly, cloud backup is a definitive growth opportunity for partners. According to The 2112 Group’s 2019 Channel Forecast, one in five solution providers sees backup services as a top growth opportunity, and cloud-based services are already the top offering among managed service providers.

The opportunity for partners is in transitioning customers away from hardware-based solutions such as tape, SAN/NAS, and converged/hyperconverged systems. Nearly one-quarter (23%) of customers still use tape-based systems, while a combined 62% use disks for their data protection solution. Just because two-thirds of companies use cloud-based storage and backup services doesn’t mean they’re fully converted. A desire to maintain local control and lack of mature skills result in customers backing up data locally to tape or disk and then migrating to the cloud at a future time.

1 in 5The number of solution providers that see backup as a top growth opportunity in 2019The 2112 Group 2019 Channel Forecast Report


1 0 %

1 0 %

1 5 %

2 3 %

2 7 %

3 5 %

3 6 %

3 7 %

4 4 %

5 6 %

6 1 %

Clou d storage

HDD

Flash/SSD

Disaster recovery

SAN

File

NAS

Software-defin ed storage

Tape

Con verged/Hypercon verged

Block

Object 6 8 %

Storage Technologies in Use Worldwide, 2018

SOURCE: Statista estimates; enterprisestorageforum.com

The number of customers using cloud as part of their data protection strategy continues to grow. The use of cloud services for data storage and mission-critical applications will increase at rates between 40% and 50% annually for at least the next three years. As more applications and data move into hybrid environments, the demand for data protection and backup services will increase correspondingly.

The market opportunity arises from a combination of two things: the conversion of legacy on-premises tape and disk backup systems and the continuous expansion of data that needs to be protected.


The average solution provider earns about 40% of its gross revenue from cloud and managed services. To put that another way, $4 out of every $10 generated by solution providers is recurring. By 2022, recurring revenue services will account for 60% of solution provider revenue.

3 CAPITALIZINGON CLOUD BACKUP WITH DRUVA

Subscription-based data protection services offer partners significant opportunities to generate substantial recurring revenue. Today, local backup is the most common service offered by partners, which means they have appliances locally storing the most critical data or stored in a co-hosted solution.

According to the 2019 annual RightScale State of the Cloud, 91% of all respondents have adopted cloud, with 69% of these companies using at least one public and private cloud. Among respondents, 84% indicate that optimizing cloud costs and governance are growing challenges, while 39% are adopting a cloud-first strategy and 35% are looking to deploy automated policies for governance and cost optimization.

Druva delivers globally accessible, scalable, and separate data protection instances. It lowers costs by over 50%, eliminating the need to purchase new hardware, maintain software, and perform capacity planning tasks. Druva’s patented architecture delivers data protection and management across endpoints, data centers, and cloud workloads. Customers can streamline data protection and governance, improve cyber resiliency, and acquire insights that help businesses capture new opportunities by accelerating smarter, clearer decision-making.

Customers experience the following benefits when using Druva for their data management:

○ A unified data model breaks down organizational silos and simplifies data protection management by reducing operational costs up to 90%.

○ Global deduplication across all AWS regions reduces network bandwidth and storage costs on S3 resources.

○ On-demand infinite scaling allows for storage in the multi-petabyte range.

○ An isolated data model separates metadata and customer data, providing fail-safe security.

○ The encrypted S3 storage architecture limits access to S3 nodes to Druva storage.

○ Nothing executes in Druva’s cloud, eliminating further paths to S3 storage for bad actors.

Unlike other cloud backup providers, Druva gives partners and customers options for backing up their data where and how they want. Solution providers working with Druva can give enterprise and midmarket companies the options they want and need in the multi-cloud world.


Identification of Backup

Need

Account

Planning and

Management

Backup Assessment,

Planning, and

Implementation Services

Relationship

Nurturing and

Renewals

Whether it’s an existing customer or a prospective account, partners play a key role in identifying and understanding customers’ need for better cloud-based data protection. Customer discovery is the first step to filling a sales pipeline. (Customer identification techniques will be discussed in a later section.)

Under the Druva channel model, partners don’t administer the accounts or service. However, that doesn’t exclude partners from participating in the customer relationship or managing the customer experience. Through periodic check-ins and utilization reviews, partners can help identify new capacity and service needs.

Partners play a key role in guiding customers through backup assessments and optimization engagements, which lead to understanding and quantifying a customer’s capacity and management needs, as well as selecting the right Druva service and package.

Druva has a high customer satisfaction and renewal rate, which makes repeat business relatively easy and allows partners to expand Druva’s footprint within accounts. Discovery techniques can help partners quickly identify upsell or renewal opportunities within accounts.

PARTNERING WITH DRUVA:

4 THE RIGHT CHOICEDRUVA IS A PARTNER-CENTRIC VENDOR. Today, 95% of all Druva sales are influenced or closed by channel partners. Partners are core to the Druva business model and success. Going forward, Druva will work with solution partners to identify new opportunities, convert more legacy technology, and expand consumption of the cloud for data protection. The partner’s role is essential to Druva’s go-to-market model and success. Partners perform several functions on behalf of Druva and customers.


Professional Services

Incident Response Support

Complementary Product/Service Sales

Although Druva is seamless and easy to use, it still provides opportunities for professional services in the areas of capacity planning, needs assessment, and IT optimization.

Data gets lost, corrupted, or compromised all the time. Customers often need professional help not just recovering data but also restoring services and operations to normal.

Druva presents an opportunity to sell additional products and support that complement or are adjacent to Druva’s offerings and cloud backup services. Given that Druva touches everything from endpoints and data centers to cloud resources, partners can provide additional hardware, software, and managed and cloud services identified through the backup assessment and Druva customer qualification processes.

$

The Druva partnership also opens additional opportunities for partners. These “value add” opportunities increase the average sale price and profit yield of engagements:

Druva provides opportunities to participate in the growing cloud service and backup market, and opens new revenue-generating opportunities for partners. Through the Druva relationship, partners have broad vistas for growing their product- and service-based revenue streams.


5 IDENTIFYINGDRUVA CUSTOMERS

EVERY COMPANY GENERATES AND USES DATA, WHICH

MAKES BACKUP SERVICES APPLICABLE TO VIRTUALLY

EVERY COMPANY. But that’s not enough. Customer identification goes beyond just saying every business needs some form of backup to qualifying the critical need and the probability of success.When working with prospects and customers, Druva partners should look for the following attributes to determine the applicability and need for cloud-based backup services. Each attribute increases the probability of a company aligning with Druva’s services.

Size – Enterprise or Midmarket

Existing AWS Customer

Legacy Tape or Disk Backup Systems

Data Center Consolidation

Data Loss/Corruption Incident

Druva is ideally suited for larger organizations with 250 users or more, mobile and cloud-connected workforces, and high volumes of data.

While Druva is cloud-agnostic, it’s well-aligned and integrated with AWS to leverage its multi-tenant cloud architecture and microservices. Druva delivers a scale-out service without any single point of failure or performance bottleneck.

Many enterprise and midmarket organizations still use tape, virtual tape libraries, and disk-based systems for data backup and archiving. The cloud has disrupted data protection economics, making data protection more affordable to organizations of any size.

Data centers put companies in the real estate business, and that business is expensive. Many organizations are looking to cloud services as a means of reducing their data center footprints and cutting costs. Companies undertaking a cloud migration to reduce their data center size are good Druva candidates.

The time many organizations think about updating or changing their backup systems is after an incident. Businesses that have suffered a data loss, theft, corruption, or ransomware incident are promising candidates for upgrading or changing backup systems and adopting cloud-based services.

Not all companies will exhibit any or all of these attributes. Sometimes the best approach to identifying a customer is talking about their data protection concerns and needs. Through such exchanges, Druva partners can learn customer preferences, experiences, and priorities, increasing the chances of turning a prospect into a customer.


CALCULATING DRUVA

6 SALES POTENTIALTHE BEST WAY TO SKETCH THE POTENTIAL RETURN ON

INVESTMENT IN THE DRUVA PARTNERSHIP IS LOOKING

AT EXISTING ACCOUNTS. According to 2112’s Channel Forecast, existing customers are more likely to buy a product or service faster than a new customer. The majority of partners – 72% – tell 2112 that the average sales cycle for an existing account is under four weeks. Partners say selling to new customers takes a minimum of five to eight weeks.

Starting with the correct assumption that every enterprise and midmarket organization requires backup and data protection services, and that 60 percent of the market has adopted some form of cloud-backup service, partners can begin to calculate the short- and long-term value of the Druva relationship.

Let’s presume at least 30% of customers need net-new upgraded or replacement cloud-based backup services. Now assume that 5% of those in need of backup will convert to Druva – on the partner’s recommendation – within three months. To calculate the immediate bookings and short-term ROI on the Druva relationship, use the following formula:

( Number of Customers x Percentage Needing Backup Services )x Percentage Closable in One Quarter = Short Term Sales Conversion Rate

Additionally, we can apply a monetary value to the sale to determine the probable first-year value of the short-term sales conversion: If the average total value of a Druva sale is $50,000, and the average yield to the partner is 20%, we can calculate the share of recurring revenue:

( ( Total Number of Short-Term Sales ) x ( Average Sales Value ) ) x (Average Margin as a % ) = Total Value of First-Year Sales


In real numbers, the equation would look like this:

( ( 2.5 Sales in First Quarter ) x ( $10,000 Average Sale Value ) ) x (20% Share of Recurring Revenue ) = $5,000 Over 12 months

Not all customers will buy a product or service, and sales prices and yields will vary with the size of each individual engagement. However, 2112 research finds that end-user organizations will buy or strongly consider a service recommended by their existing solution provider 90% of the time. Additionally, a conservative estimate is that a solution provider actively working existing accounts on a new service offering will convert 20% in the first year. Extrapolating from the formulas above, the first-year bookings value is $20,000.

7 PERPETUAL RETURNON INVESTMENT WITH DRUVA

UNLIKE OTHER CLOUD SERVICE PROGRAMS, DRUVA’S IS

BASED ON REWARDING PARTNERS FOR THE ENTIRETY

OF THE CUSTOMER ENGAGEMENT. As long as there are no breaks in service and the customer remains engaged through the same partner of record, Druva will continue to share the recurring revenue throughout the initial and renewed service engagements.The Druva revenue-sharing approach is substantially different from those of other vendors, which often pay partners one-time referral fees or limit revenue sharing to the first year. Some vendors will share recurring revenue through the initial contract period, but will reduce the percentage each year, and some vendors won’t allow partners to participate in renewals or receive the full reward.

( ( 150 Customers ) x ( 33% Requiring Backup ) ) x (5% Close in the First Quarter ) = 2.5 Sales


Rev

enue

Year 1 Year 2 Year 3 Year 4

30%Increase

18%Increase

No Change

Perpetual revenue sharing is a significant benefit given Druva’s high level of customer satisfaction and retention.

Druva enjoys a 98% customer retention and renewal rate. If an account generating $5,000 per year renews every

year for five years, the total lifetime value of the customer to the partner is $25,000. Better yet, the total cost of

revenue for the partner decreases each year. Since Druva administers the account, the cost to serve decreases to

nearly zero after the initial engagement.

The chance of a Druva service contract remaining static over the lifetime of the engagement is low. Businesses will

continue to generate increasing volumes of data. Backup is a necessity across the entire computing spectrum –

structured and unstructured data, endpoints, and the cloud. Currently, Druva customers increase their utilization

at rates of 18% to 30% annually. In such cases, partners can expect to see their Druva revenue sharing increase

accordingly.


LOW-EFFORT COMPOUNDING

8 REVENUEDRUVA OPERATES WHAT’S KNOWN AS A “SELL-

THROUGH” CHANNEL SALES MODEL, IN WHICH IT SELLS

SERVICES TO THE PARTNER AND TO THE CUSTOMER.

While Druva provides most of the pre- and post-sales professional services (from needs assessment and deployment to ongoing technical support), partners control the customer relationship and billing. As such, partners retain control over the financial aspects of the customer relationship through the lifetime of the Druva contract.Druva has one of the most progressive and generous partner compensation plans in the industry relative to the level of initial and ongoing effort. For solution providers participating in the Druva PartnerSync Program, registered deals can earn margins of 35% to 55% on inSynch agreements and up to 25% to 45% on Phoenix service contracts.

Opportunities without deal registration on inSync and Phoenix sales earn a flat 20% discount. In addition, solution providers selling backup services are often commanding street prices that are 50% to 100% above cost. In other words, for many Druva partners, the actual yield on a Druva service dollar is up to $1.

For Elite Druva partners, a hypothetical compensation model is as follows.

Monthly Unit Street Price

Deal Registration Discount

Price to Partner

Markup Rate

Partner Price to Customer

Average Net Margin for Partners

Partner Profit

inSync Phoenix

$100

45%

$55

50%

$82.50

20%

$16.50

$100

55%

$45

50%

$67.50

20%

$13.50


0

500

1000

1500

2000

2500

3000

Year 1 Year 2 Year 3

0% 18% 24% 30%

0

100

200

300

400

500

600

Year 1 Year 2 Year 3

Druva Gross Compounding

Recurring Revenue for Phoenix

Druva Gross Compounding

Recurring Revenue for inSync

The pricing, discount, and profit scenario doesn’t tell the whole story. The true value of the Druva relationship is

the perpetual sharing of recurring revenue. Unlike other cloud and software service vendors, Druva does not step

down the discounts partners receive as part of their engagement. The recurring revenue rate remains the same for

both initial and renewal contracts.

In this case, the financials for an Elite partner over a one-year contract look even more favorable.

Monthly Recurring Revenue

Monthly Recurring Profit

1-Year Gross Yield

1-Year Gross Profit

1-Year Net Profit

As noted above, Druva does not step down or eliminate partner commissions when contracts renew. Druva has an

impressive 98% customer retention rate, increasing the probability that customers will renew at the same rate near

lock. History shows that Druva customers typically increase their capacity utilization and spending by 18% and 30%

when renewing, allowing partners to receive a commensurate increase in revenue and profit sharing.

As shown below, if a customer of an Elite partner renews its contract for three years, partners will see a dramatic

increase in booked revenue and profits as the income compounds over time.

inSync Phoenix

$82.50

$16.50

$990

$330

$198

$67.50

$13.50

$810

$270

$162

Partnering with Druva pays off as high customer retention rates and above-average capacity utilization translate into strong recurring revenue and profits for partners.


SUCCESS WITH DRUVA IS AS MUCH ABOUT SALES AS IT

IS ABOUT TECHNOLOGY. Successful partners are those that focus on customer identification, assessment, conversion, retention, and expansion. By focusing efforts on the different stages of the customer engagement process, partners build compounding recurring revenue with minimum investment or operational expense. In other words, the Druva share of recurring revenue is highly profitable.

Druva partners can do a few simple things to ensure they have a productive, successful, and profitable relationship with the vendor.

BUSINESS PLANNING AND GOAL-SETTING

ACCOUNT MAPPING

Establishing a business plan and goals for the relationship is one of the best ways to achieve success. Partners that establish joint business plans with their vendors typically experience two to five times more business than partners without business plans. Joint business plans establish measurable targets, assign roles and responsibilities, and set out schedules for touchpoints.

The best source of Druva sales opportunities are existing accounts. By mapping accounts with a Druva sales representative or a partner account manager, solution providers can target specific accounts for short-term sales conversion. Account mapping provides Druva with an opportunity to prioritize resources to assist with penetrating and converting partner accounts.

9 BEST PRACTICESFOR WORKING WITH DRUVA

CAPABILITIES MARKETING

Druva drives business to partners. A best practice that helps partners capture downstream business is marketing to Druva sales and channel reps. This includes letting Druva know about one’s sales capacity and coverage, technical capabilities, customer wins and engagements, and expansion plans. Letting Druva know what’s going on in an assigned territory means the company will be more inclined to share sales leads and market opportunities.


TERRITORY PLANNING AND SALES TARGETING

JOINT MARKETING

DEAL REGISTRATION

Partners can work with Druva to identify customers that currently don’t purchase from Druva. Through territory planning and account targeting, partners can identify prospective accounts they’d like to penetrate and enlist Druva’s support and resources.

Partners should leverage the marketing resources available to them through the Druva partner program. Marketing resources include everything from product brochures to market development funds. Where applicable, partners should develop joint marketing programs with Druva to promote the brand, backup need, and solutions. Partners that don’t leverage Druva marketing struggle with lower sales volumes and longer sales cycles.

By registering sales opportunities, partners gain opportunity protection and additional sales incentives. Deal registration also apprises Druva of the frequency and volume of a partner’s sales activity, which enhances partner value in the eyes of sales reps. Enhanced value leads to more downstream sales opportunities and leads.

In the Druva partnership, technology knowledge and skills are important, but the service aspect of the Druva model makes customer relationships and sales more important. The best practices listed above are all about sales and marketing efforts that uncover opportunities, expose accounts to the Druva value proposition, and drive sales conversions.


GETTING

10 STARTEDDRUVA IS DEDICATED TO WORKING WITH PARTNERS

IN DELIVERING ITS MARKET-LEADING CLOUD-BASED

BACKUP SERVICES.

To find out more about becoming a Druva partner, visit https://www.druva.com/partners/partner-program.

To find out about available resources and support in working with Druva, contact your channel account manager.

For more information about Druva’s partner program requirements, resources, and benefits, check out the Druva PartnerSync Program guide: https://www.druva.com/documents/program-guide-channel-print.pdf.

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Druva™ delivers data protection and management for the cloud era. Druva Cloud Platform is built on AWS and

offered as-a-Service; customers drive down costs by up to 50 percent by freeing themselves from the burden

of unnecessary hardware, capacity planning, and software management. Druva is trusted worldwide by over

4,000 companies at the forefront of embracing cloud. Druva is a privately held company headquartered

in Sunnyvale, California and is funded by Sequoia Capital, Tenaya Capital, Riverwood Capital and Nexus

Partners. Visit Druva and follow us @druvainc.

ABOUTDRUVA

The 2112 Group is a business strategy and research firm focused on improving the performance of technology

companies’ direct and indirect channels through a portfolio of market-leading products and services. The 2112

Group leverages proprietary intelligence with qualitative research, market analysis, tools, and enablement

programs. Industry experts approach each engagement by applying innovative solutions customized to meet

the needs of clients. By looking at the technology market from the viewpoint of vendors, partners, and end

users, The 2112 Group is uniquely positioned to develop go-to-market strategies that are beneficial to all

parties from both a channel and enterprise perspective. Learn more about 2112 at the2112group.com and

follow us on Twitter @the2112group.

ABOUTTHE 2112 GROUP

2112 Go-To-Market Guides are resources for understanding optimal market conditions, product sales

potential, and the value of partnership with a vendor. A 2112 GTM Guide is not a guarantee of return on

investment and partnership with a vendor. The opinions and analysis expressed in this document are

subject to change. Druva commissioned 2112 to produce this guide. Although 2112 produced the guide

independently, Druva did have input in the content.

DISCLOSURES


Phone: 347.770.2112

E-mail: [email protected]

Web : www.the2112group.com

MAKING THE MOST OUT OF THE DRUVA PARTNERSHIP2112 Go-To-Market Guide

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