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Disaster Recovery as a Service (DRaaS) Statistics for Managed Service Providers (MSPs) in the USA, 2024

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Introduction

Disaster Recovery as a Service (DRaaS) is becoming increasingly important for Managed Service Providers (MSPs) in the USA1. This is largely due to the increasing reliance of businesses on digital technologies and the growing threat of cyberattacks and other disruptions2. This report examines the current state of the DRaaS market, focusing on key trends, challenges, and opportunities for MSPs. It draws upon a variety of industry reports and surveys to provide a comprehensive overview of the DRaaS landscape in 2024.

One key trend shaping the DRaaS market is the increasing reliance of businesses on MSPs for their IT needs. Over 9 in 10 MSPs believe that businesses are downsizing their in-house IT resources and relying more heavily on MSPs for support with technology implementation and management2. This trend is driven by factors such as the resource demands of navigating a complex technology landscape, as well as growing business needs for IT scalability, cost-effectiveness, and 24/7 support2. As a result, MSPs are becoming increasingly important partners for businesses seeking to ensure the resilience and continuity of their operations.

Disaster Preparedness Among MSPs

MSPs are primarily concerned with preparing for natural disasters, with over half (51.5%) focused on this type of disaster3. This is understandable given the increasing frequency and cost of natural disasters in recent years3. Furthermore, research by the Disaster Recovery Preparedness Council found that 73% of organizations worldwide are not adequately prepared for a major disruption4. These alarming figures underscore the potential financial and operational implications of overlooking disaster recovery planning. Power outages, often a consequence of natural disasters, are the second most common concern (25.9%), followed by cyberattacks (14.9%)3. The average cost of downtime can reach as much as $9,000 per minute, further emphasizing the importance of disaster preparedness and recovery planning3. Data loss, hardware failures, network failures, and human error are less significant concerns for MSPs3.

Types of Disasters MSPs Are Most Concerned About

MSPs face a wide range of potential disasters that can disrupt their clients' operations. These include:

Natural Disasters

Fires, floods, storms, and pandemics can cause significant damage to infrastructure and disrupt business operations5.

Physical Disasters

Power outages, equipment failures, and physical security breaches can also disrupt operations and lead to data loss5.

Technology-Based Disasters

These include ransomware and malware attacks, server hardware failures, data breaches, and network infrastructure failures5.

Ransomware is a growing concern, with attackers using increasingly sophisticated methods to infiltrate systems6. In the context of DRaaS, ransomware is particularly relevant because it can lead to significant data loss and downtime, potentially crippling a business's operations. Different types of ransomware, such as crypto-malware, scareware, lockers, doxware, and RaaS, pose significant threats to MSPs and their clients6. The rise of prolific ransomware has not only posed risks to businesses but to service providers themselves. An intrusion can result in severe consequences, such as service disruptions and lost revenue7.

DRaaS Adoption and Trends Among MSPs

The adoption of DRaaS among MSPs is increasing as businesses recognize the importance of protecting their data and ensuring business continuity. The global DRaaS market size was valued at USD 10.62 billion in 20238. It is projected to grow at a compound annual growth rate (CAGR) of 27.2% from 2023 to 2030 and at a CAGR of 22.4% from 2024 to 20328. This growth is fueled by several key trends in the MSP market:

  • Increased Demand for Cloud-Based Solutions: Cloud-based DRaaS solutions are becoming increasingly popular due to their scalability, cost-effectiveness, and flexibility8.
  • Focus on Vendor Consolidation: MSPs are increasingly looking to consolidate their vendor relationships to streamline operations and reduce costs9. This trend is linked to the desire for stable recurring revenue, as fewer vendors can contribute to more predictable income streams10.
  • Growing Competition: The MSP market is becoming increasingly competitive, with more providers vying for business9.
  • Emphasis on Security: Security is a top priority for MSPs and their clients, with a growing focus on cybersecurity services2. The need for robust security measures is a significant driver for the adoption of DRaaS solutions, as businesses seek to protect their data and systems from increasingly sophisticated cyber threats11.
  • Third-Party Assistance: A growing number of businesses are exploring third-party assistance beyond their primary MSP to enhance their security, data protection, and remote work capabilities12.
  • Cloud Marketplaces: Many MSPs are turning to cloud marketplaces to buy products and services for their customers, with 47% of MSPs using them for this purpose2.
  • Strong Demand for Cloud Services: The increasing use of cloud services by SMBs and the expanding regulatory requirements for security features are driving strong demand for cloud-based solutions, including DRaaS9.
  • MSPs' Preference for Fewer Vendors: A majority of MSPs (74%) prefer to use fewer vendors to meet their technology needs9.
  • Hybrid Cloud Environments: The use of hybrid cloud environments is prevalent, with 72% of businesses adopting this approach9.
  • Cloud Service Spending: Despite economic uncertainty, businesses are increasing their spending on cloud services9.

These trends indicate a dynamic and evolving DRaaS market, with MSPs playing a crucial role in helping businesses navigate the changing landscape and ensure the continuity of their operations.

Percentage of MSPs Offering DRaaS Solutions

A significant percentage of MSPs are now offering DRaaS solutions as part of their service portfolio. Almost 90% of SMBs currently use an MSP to handle some of their IT needs or are considering it13. While specific figures on DRaaS adoption vary across different reports, it is clear that DRaaS is becoming a core offering for many MSPs. For example:

  • 54.6% of MSPs provide disaster recovery planning as part of their DRaaS offering3.
  • 33.9% of MSPs offer cloud storage as part of their DRaaS offering3.

Challenges and Opportunities for MSPs in the DRaaS Market

MSPs face several challenges in the DRaaS market, including:

  • Disaster Recovery Planning: Developing comprehensive and customized disaster recovery plans for clients is a major challenge3.
  • Staff Training: Ensuring that clients' staff are adequately trained on disaster recovery procedures is crucial3.
  • Competition: The DRaaS market is becoming increasingly competitive, requiring MSPs to differentiate themselves and provide high-quality services14. Increased competition in the MSP market (48%) is a significant challenge2.
  • Keeping Up with Technology: The rapid pace of technological change requires MSPs to stay current with the latest DRaaS solutions and trends14.
  • Cybersecurity: Protecting clients' data from cyberattacks is a critical challenge, requiring robust security measures and expertise14. The evolving cyberthreat landscape (30%) is a major concern for MSPs2.
  • Customer Acquisition: Acquiring new customers is a top challenge for MSPs, with 36% of MSPs identifying it as their primary concern15.
  • Cybersecurity Management: Managing cybersecurity effectively is another challenge, with 19% of MSPs highlighting this concern15.
  • Work-Life Balance: MSPs also face challenges in maintaining a healthy work-life balance, with persistent issues related to workload and time pressures15.
  • Negative Client Experiences: A significant portion of businesses (34%) have reported negative experiences with MSPs, primarily due to high costs and quality issues12.
  • Customer Budget Constraints: Customer budget constraints and the global economic situation can impact investment decisions, making it challenging for MSPs to secure new business2.
  • Reluctance to Adopt Cloud-Based DRaaS: Some enterprises are hesitant to adopt cloud-based DRaaS due to concerns about data security, control, and unfamiliarity with the cloud environment16.
  • Impact of Emerging Technologies: Emerging technologies, while offering opportunities, also create new vulnerabilities in the cybersecurity landscape, posing challenges for MSPs in providing effective DRaaS solutions3.

However, these challenges also present opportunities for MSPs to:

  • Expand Service Offerings: MSPs can expand their service portfolio to include a wider range of DRaaS solutions, such as backup and recovery, virtual machine recovery, and testing and validation services3.
  • Develop Expertise: MSPs can develop specialized expertise in DRaaS to attract clients and provide high-value services17.
  • Leverage AI and Automation: MSPs can leverage AI and automation technologies to improve efficiency and enhance their DRaaS offerings14. The vast majority of MSPs (95%) are currently using or planning to use AI services2.
  • Focus on Customer Retention: Building strong relationships with clients and providing excellent service can help MSPs retain customers in a competitive market10.
  • Attract and Retain Talent: Attracting and retaining skilled employees is crucial for MSPs to effectively deliver DRaaS solutions2.
  • Address Customer Concerns: By addressing concerns about data security, control, and cloud unfamiliarity, MSPs can encourage greater adoption of cloud-based DRaaS solutions16.
  • Provide Guidance on Emerging Technologies: MSPs can provide valuable guidance to clients on navigating the challenges and opportunities presented by emerging technologies in the context of DRaaS3.
  • Target Specific Demographics and Industries: Understanding the demographics of MSP workers and the industries they serve can help MSPs tailor their services and marketing efforts3. For example, the age group older than 65 has the highest level of engagement with DRaaS, and the technology sector remains the primary focus for MSPs3.
  • Offer Advice to New MSPs: Experienced MSPs can share their knowledge and insights with those entering the DRaaS space, emphasizing the importance of developing recovery plans, prioritizing compliance, and communicating effectively3.

Successfully navigating these challenges and capitalizing on the opportunities will be crucial for MSPs to thrive in the evolving DRaaS market.

Different DRaaS Solutions and Their Pricing Models

MSPs can offer a variety of DRaaS solutions to meet their clients' needs. These solutions can be categorized into three main models:





DRaaS Model

Provider Responsibilities

Client Suitability

Managed DRaaS

Complete management and oversight of the DR process, including planning, implementation, testing, and recovery.

Organizations with limited IT expertise or those seeking a hands-off approach.

Assisted DRaaS

Support and guidance throughout the DR process, but the client's internal IT team is still involved in some aspects of management.

Organizations that want some control over the process but also require external assistance.

Self-Service DRaaS

Provision of the infrastructure and tools for DR, but the client manages the entire process independently.

Organizations with strong IT expertise and resources.

In addition to these models, MSPs can offer a range of specific DRaaS solutions, such as:

  • Rubrik: Offers a comprehensive solution that integrates data protection with ransomware recovery and automated compliance18.
  • Acronis: Combines DRaaS and cyber protection with a user-friendly interface and strong security features18.
  • Zerto: Excels at secure cloud and data center management with superior replication technologies and simplified failover operations18.
  • Veeam: Provides versatile hybrid cloud-based solutions with robust failover capabilities and easy integration18.
  • Arcserve: Focuses on combining data security with powerful DLP features, storage optimization, and centralized management18.
  • 11:11 Systems: Offers flexible and customizable solutions with a focus on security, compliance, and performance19.

Pricing models for DRaaS solutions vary depending on the type of solution, the level of service provided, and the resources consumed. Some common pricing factors include:

  • Number of protected devices or systems 20
  • Storage capacity 20
  • Recovery time objective (RTO) 20
  • Recovery point objective (RPO) 20
  • Bandwidth usage 20
  • Support and maintenance 20

Some providers offer consumption-based pricing, where clients only pay for the resources they use19. Others offer tiered pricing plans with different levels of service and features21.

When selecting a DRaaS solution, MSPs should consider factors such as the client's specific needs and requirements, their budget, and the level of technical expertise available22. It is also important to have service-level agreements (SLAs) in place to ensure clear expectations and responsibilities11. Additionally, MSPs should consider utilizing disaster recovery tools such as SIEM tools to gain visibility into their clients' networks and mitigate both natural disasters and cyberattacks11. Offsite storage and automated backups are also crucial components of a robust DRaaS solution11.

Conclusion

The DRaaS market presents significant opportunities for MSPs in the USA. By understanding the key trends, challenges, and opportunities in this market, MSPs can effectively position themselves to provide valuable services to their clients and achieve success in this growing industry. As the demand for DRaaS continues to increase, MSPs that can offer comprehensive, reliable, and cost-effective solutions will be well-positioned to thrive in this dynamic market.

The research highlights several key takeaways for MSPs in the US market:

  • The evolving role of the MSP: MSPs are becoming increasingly important strategic partners for businesses, moving beyond basic IT support to provide comprehensive solutions for data protection, security, and business continuity.
  • The growing importance of DRaaS: DRaaS is no longer a niche offering but a core component of a comprehensive IT strategy for businesses of all sizes.
  • The need for specialization: MSPs need to develop specialized expertise in DRaaS to effectively address the challenges and opportunities in this market.
  • The importance of customer relationships: Building strong customer relationships and providing excellent service are crucial for success in the competitive DRaaS market.
  • The impact of emerging technologies: MSPs need to stay ahead of the curve in terms of emerging technologies and their impact on the DRaaS landscape.

By incorporating these insights into their strategies and decisions, MSPs can effectively navigate the evolving DRaaS market and position themselves for continued growth and success.

Works cited

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