Backup As A Service Billing Models 

Creating MSP Billing Processes That Reflect Actual Costs

The Bocada Team | October 9, 2019

Creating MSP Billing Processes That Reflect Actual Costs

As the go-to backup monitoring and reporting automation tool for enterprise MSP backup as a service (BaaS) teams, we’re on the frontlines of seeing how MSPs struggle to create streamlined billing when faced with very different backup hardware and software that each approach reporting differently. This is further compounded by the challenge of developing billing models that actually reflect their service and delivery costs. 

The confusion is a byproduct of the heterogeneous backup environments most MSPs are managing. With native backup and storage tools reporting on the same metrics like bytes backed up, compression rates, bytes recoverable in different ways, reconciling everything that is going on into one synthesized picture by hand is next-to-impossible. 

However, by normalizing metrics under a single pane, MSPs will enjoy a streamlined way to track backup costs. End customers will enjoy increase transparency. MSPs will enjoy the improved margins that come with better billing models. 

What Impacts Backup As A Service Costs

A large number of variables drive up the actual costs associated with delivering backup as a service to enterprise customers: 

  • Labor: Naturally one of the most obvious BaaS costs orients around the backup administrators, storage architects, and other personnel responsible for monitoring and safeguarding backup operations. However, let’s also not forget about the burnout rates common in our field. With teams being asked to manage more with fewer resources, attrition and onboarding costs are present, but likely hidden behind the scenes. 
  • Technology: Consider all of the software and licensing fees that go into backup activity, things like SQL servers and assorted backup product servers. These all add up to make technology a major expense line item in any backup as a service organization. 
  • Storage: Enterprises backup tens of terabytes of data, and growing. As data grows, the budget line item for storing that data grows too. Even with migrations to cloud-based backup and storage, organizations have yet to find a way to mitigate the ever-rising costs of backup storage. 
  • Retention Schedules: Related to storage utilization is an organization’s backup data retention schedule. The longer the retention schedule, often mandated by government or trade regulations, the more storage usage and monitoring costs you can expect.
  • Long Term vs. Short Term Storage: Of course, storage costs vary by your need to access data. Data with a higher likelihood of needing to be accessed will go into more expensive short term storage. Data that’s ready for long-term retention can be moved to cheaper secondary storage. 

It’s one thing to assess these components and their relative costs when you’re managing a single organization’s backup environment. It’s another when you’re an MSP juggling potentially hundreds of heterogeneous backup environments. 

How Backup & Storage Products Obfuscate BaaS Costs

As if the broader backup environment factors weren’t enough to manage when assessing costs to deliver backup services, the backup and storage tools themselves further muddy the waters. Consider two common issues backup administrator face when managing customer environments: 

  • Misalignment Between Backup Product Metrics: Different backup products process backup data differently. Like we recently wrote about, older backup software like Networker report on backup data transferred. Meanwhile, new products like Avamar that feature de-dupe capabilities report on backup data protected. MSPs don’t have a go-to way to reconcile and normalize these highly disparate metrics in a streamlined way that can be rolled into a billing model. 
  • Storage Visibility Black Boxes: Some tools, especially Data Domain, do a poor job of offering backup administrators complete visibility into what is being stored. As a result, MSPs have no clean way to report on backup data storage usage, a key driver of backup costs.

These homegrown product issues coupled with the natural juggling that comes with managing a portfolio of backup environments makes creating reliable, consistent billing reports an everyday MSP BaaS challenge. 

A Billing Model That Reconciles These BaaS Challenges

Any BaaS billing model should include two key components. First, it needs to be easily verifiable by anybody who asks to audit the underlying data. Second, it needs to capture the full breadth of costs—software, hardware, labor—required to offer best-in-class data protection. Here’s one such billing model that sums three distinct components to do just that. 

  • Total Backup Jobs. This component reflects broader costs like labor and software licenses needed to manage everyday backup activities from implementing backup policies to ticketing to troubleshooting failed jobs. As data volumes grow so do labor costs. This pricing component takes this dynamic into account. 
  • Retained Backup Data. This component offers a consistent way to be compensated for backup storage costs, and factors in growth in backup data volume as well as short and long term retention periods. 
  • Total Short Term Backup Data Usage. This third component addresses that variable cost associated with hardware and software that supports more costly short term data storage needs.

With automated backup data collection and normalization, Bocada allows MSP backup as a service teams the ability to develop and automate these their BaaS billing models. Instead of labor-intensive month-end scrambles to build customer bills based on estimates, teams can enjoy an efficient, streamlined process to submit highly accurate bills on time. Customers gain confidence while MSP teams ensure profitability without the month-end fire drill.