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9 Sep 2024

The Complete Guide to OEM Backup Solutions and Licensing

 

Table of Contents

  1. What Are OEM Backup Solutions
  2. Importance of Backup for OEMs
  3. Key Features of OEM Backup Software
  4. Common Licensing Structures
  5. Factors Affecting OEM License Costs and Value
  6. How OEM Licensing Differs from Retail Licensing
  7. Ensuring Data Security
  8. Meeting Industry Standards and Compliance Requirements
  9. What Compliance Factors Should OEMs Pay Attention to in a Backup Software Supplier?
  10. Ensuring Data Security
  11. Support in OEM Partnerships
  12. Making the Right Decision for Your Business

 

Introduction to OEM Backup Solutions

Today, data is the foundation of our interconnected world, with the volume of data generated globally expected to reach 175 zettabytes by 2025 (equivalent to 1,000,000,000,000,000,000,000 bytes). From healthcare and transportation to finance and entertainment, data drives innovation, informs decision-making, and powers the technologies we rely on daily. Given this reality, the loss of critical information can have catastrophic consequences, making effective backup solutions not just a luxury, but a necessity. For Original Equipment Manufacturers (OEMs), integrating backup capabilities into their products has evolved from being an added feature to an essential component of their offering.

 

What Are OEM Backup Solutions?

OEM backup solutions are data protection and recovery tools that manufacturers integrate directly into their hardware or software products. These solutions are particularly crucial in operational technology (OT) environments and other business-critical settings. In sectors such as healthcare, power generation, and manufacturing, integrated backup is essential for maintaining system integrity and ensuring operational continuity.

For OEMs serving these industries, built-in backup capabilities address a critical need: protecting data and system configurations without altering the validated state of the equipment. This is especially important in regulated environments where introducing user-installed software could compromise compliance or operational stability. By including backup as part of the original equipment, OEMs ensure that critical systems remain in their approved configuration while still providing robust data protection and quick recovery options.

This approach not only safeguards against data loss and minimizes downtime but also simplifies compliance with industry regulations, offering significant value to OEMs and their customers in high-stakes operational and business settings.

Let's look at some examples to illustrate this concept:

  • A production line equipment manufacturer integrates backup into automated assembly systems. This allows quick recovery from failures, minimizing costly downtime and production losses. For instance, an automotive assembly line could recover from a software glitch in minutes instead of hours.
  • A medical device OEM could include backup solutions in their diagnostic equipment, automatically protecting patient data and device settings. This integration ensures quick recovery from system failures, minimizing downtime that could lead to delayed patient care. For instance, an MRI machine with integrated backup could be restored rapidly, allowing operations to continue.

 

Importance of Backup for OEMs

The global data backup and recovery market is expected to grow from $13.57 billion in 2023 to $25.23 billion by 2028, presenting a unique opportunity for OEMs to capitalize on this growing market by integrating reliable backup solutions into their products. For OEMs, offering integrated backup solutions can provide several significant benefits:

Maintain visibility post-deployment

Once an OEM's equipment reaches the end user, visibility into its operational environment can be limited. This lack of insight can leave problems and necessary solutions out of an OEM's control, including hardware and software-related issues, and even whether the product is connected to the internet. Integrated backup solutions with remote monitoring capabilities can provide OEMs with valuable data on product performance and usage patterns, enabling proactive support and informed product development decisions.

Enhance product value and differentiation

In a competitive market, built-in backup capabilities can make a product stand out. Imagine two similar laptops at the same price point - the one with integrated, easy-to-use backup software is likely to be more attractive to consumers. This combination of efficiency and increased functionality can be a key differentiator in crowded markets.

Meet growing customer demand for data protection

As awareness about data security and the importance of backups grows, as reflected in new regulations like NIS2, customers increasingly expect robust backup features as standard. Gartner reports that the average cost of IT downtime is $5,600 per minute, which can vary significantly depending on the size and nature of the business, highlighting the critical need for reliable backup solutions. By meeting this demand, OEMs can position themselves as responsive to customer needs.

Strengthen customer trust and loyalty

If software fails to perform as promised, it can result in remedial costs and frustrations for the end user. It also has the potential to significantly impact an OEM’s support cost base and their reputation irreparably. By integrating a robust backup and recovery software as part of their products, OEMs can reduce the risk of higher support costs and dissatisfied customers.

As we progress through this guide, we'll explore in detail how OEMs can leverage backup solutions to address these points and more, creating robust, secure products that meet the evolving needs of their customers.

 

Key Features of OEM Backup Software

When evaluating backup solutions for OEM integration, several key features should be considered. These features can significantly impact the value an OEM can offer to their customers and the smoothness of the integration process.

Scalability and performance

  • Efficient data handling: The solution should be able to handle large volumes of data without significant performance degradation. This is especially important for enterprise-grade products.
  • Fast backup and recovery: Quick backup processes and rapid data recovery are crucial, especially in business environments where downtime can be costly. These efficient processes minimize productivity slowdowns and reduce processor usage, ensuring that your systems continue to run smoothly during backup operations.
  • Incremental and differential backups: These features allow for more efficient use of storage and faster backup times by only saving changes made since the last backup.
  • Reliability: In an OEM backup solution reliability is crucial. It ensures that systems can be recovered when needed, minimizing the risk of data loss and business disruptions. A dependable solution should allow users to test backups in simulated real-world scenarios, verifying that the system is truly fit for purpose and can be trusted in critical situations.

Installation and Activation

  • API availability: A robust API (Application Programming Interface) allows the OEM to seamlessly integrate the backup solution with their own software and systems.
  • Compatibility: OEMs should consider the compatibility of the backup software with their product. For example, for products using a Windows operating system, look for backup software that specializes in Windows backup.
  • Storage flexibility: Support for different storage types (local servers, hard drives etc) gives OEMs and their customers more options for data backup, as well as enabling customers to action recommended security practices such as the 3-2-1 backup strategy.

Customization and white-labeling

  • Ability to rebrand the interface: OEMs should be able to add their own branding if desired to make the backup solution feel like an integral part of their product.
  • Custom reporting and alerts: The ability to tailor reports and alerts to match the OEM's branding and specific customer needs is crucial.

 

 

OEM Licensing Models for Backup Solutions

When an OEM decides to integrate a backup solution into their product, they typically don't develop it from scratch. Instead, they license existing backup software from a specialized provider. This approach allows OEMs to focus on their core competencies while still offering advanced backup capabilities. However, OEM licensing can be complex and quite different from standard software licensing. Let's explore this in more detail.

 

Common Licensing Structures

Licensing structures for OEMs come in all shapes and sizes depending on the business need. When looking for a backup software supplier, OEMs should look for vendors who understand the nature of their operations and can be flexible. Here are some commonly seen licensing structures and how they work for OEMs:

Long-Term Servicing Channel (LTSC) Licensing

This model is designed to meet the specific needs of OEMs by providing stability and predictability:

  • Feature stability ensures that functionality remains consistent over time, maintaining product compatibility and user experience.
  • Predictable updates focus on security patches and critical fixes, reducing the need for frequent product adjustments.
  • Extended support periods align well with OEM product lifecycles.

Example: An OEM licenses a backup solution with a 5-year LTSC agreement, ensuring consistent functionality and support throughout their product's lifecycle.

Perpetual Licensing

This traditional model offers indefinite use rights for a one-time fee:

  • One-time cost simplifies budgeting in the short term.
  • Flexibility in choosing when to upgrade, but new versions often require additional payments.
  • Limited security patches and bug fixes as well as risk of using outdated software if upgrades are not purchased regularly.

Example: An OEM pays a set amount for the perpetual right to include a backup solution in their product line, but faces reduced maintenance and additional costs for major version upgrades every few years.

Subscription-based Licensing

This model involves recurring payments for continued access:

  • Regular updates provide access to the latest features, but may introduce unwanted changes.
  • Scalability allows some flexibility to make adjustments to licensing needs.
  • Ongoing costs can impact long-term profitability and require careful financial planning.

Example: An OEM pays a recurring fee for backup services, but experiences feature instability due to regular updates, leading to customer confusion and requiring frequent retraining of the OEM team.

Usage-based Licensing

Costs are tied to actual usage metrics:

  • Pay-for-what-you-use model can be cost-effective, but may lead to unpredictable expenses.
  • Automatic adjustment to business growth or shrinkage.
  • Requires robust usage monitoring, which can be complex and add administrative overhead.

Example: An OEM pays $0.10 per gigabyte of data their customers back up, facing challenges in predicting and managing monthly costs as usage varies.

When evaluating licensing options, OEMs should prioritize long-term value, considering factors such as feature stability, product maintenance, support costs, and pricing predictability. While each model has its place in specific scenarios, the LTSC model stands out for its ability to provide the stability and long-term support that many OEMs require for seamless integration and sustained product excellence throughout their product lifecycles.

 

Factors Affecting OEM License Costs and Value

When evaluating backup solution providers, OEMs should consider not just the upfront costs, but the overall value and long-term financial impact. Here are key factors to consider:

  • Service and Support Costs: Look for providers that offer comprehensive support without requiring extensive specialist training for your team. Remote support tools can significantly reduce ongoing service costs. This approach can lead to lower total cost of ownership and improved efficiency in supporting your customers.
  • License Flexibility and Upgrades: Some providers offer licenses that allow for major version upgrades within the contract period. This can be particularly valuable for solutions built on Long-Term Servicing Channel (LTSC) builds, ensuring you have access to the latest features and improvements without additional costs.
  • Predictable Pricing Models: Consider vendors that offer locked-in pricing over the term of your contract. Tiered pricing structures based on volume or features can help you control costs and plan your budget more effectively. Look for contracts that provide price stability for extended periods, such as 3 or 5 years.
  • Volume Commitments: Larger volume commitments often lead to lower per-unit costs. Evaluate how different providers structure their volume discounts and how this aligns with your production plans.
  • Feature Sets and Customization: Assess which features are essential for your target market. Some providers offer comprehensive packages that include a wide range of features and customization options without additional charges. This can be more cost-effective than paying for individual features or customizations.
  • Integration Support: The ease of integrating the backup solution with your hardware or software can significantly impact overall costs. Prioritize providers that offer robust APIs, comprehensive documentation, and integration support as part of their package.
  • Long-Term Partnership Potential: Consider the long-term value of partnering with a provider that offers ongoing support, regular updates, and a commitment to evolving their product alongside industry needs. This can lead to a more stable and beneficial relationship over time.

By carefully evaluating these factors, OEMs can select a backup solution provider that offers not just competitive pricing, but also long-term value, stability, and support. The right partner will help you maintain predictable costs, reduce ongoing support burdens, and ensure your products stay up-to-date with the latest backup technologies.

 

How OEM Licensing Differs from Retail Licensing

OEM licenses are quite different from the software licenses that end consumers typically buy. Understanding these differences is crucial for OEMs considering integrating backup solutions:

 

  • Lower per-unit costs: OEMs usually get significant discounts for buying in bulk. While a consumer might pay a certain price point for a single backup software license, an OEM will pay only a fraction of this when buying thousands of licenses. This economy of scale allows OEMs to offer added value to customers without significantly increasing product costs.
  • Customization and rebranding: OEM licenses often allow the manufacturer to customize the software's appearance and functionality. They might be able to add their own logo, change the user interface, or even modify features to better fit their product. This level of customization isn't typically available with retail licenses and can help OEMs create a more cohesive product experience.

 

Understanding these nuances of OEM licensing is crucial for manufacturers looking to integrate backup solutions into their products. It affects not only the initial cost but also ongoing support, customization options, and the overall user experience.

In the next section, we'll explore how these licensing considerations intersect with crucial aspects of data protection and compliance, factors that are becoming increasingly important in the OEM landscape.

 

Data Protection, Compliance, and Trust for OEMs

In an era of increasing data breaches, cyber threats, and stricter privacy regulations, ensuring robust data protection and compliance is critical for OEMs offering backup solutions. Let's explore these crucial aspects in detail.

 

Ensuring Data Security

Data security is paramount in any backup solution. For OEMs integrating these solutions into their products, the security features can be a significant selling point. Key security aspects include:

  • Strong encryption: Backup solutions should use encryption methods to protect data. This prevents backups from being compromised from threats such as ransomware and ensures data remains unreadable and unmodifiable without the proper decryption keys. With recent reports stating that global ransomware damage costs will reach $265 billion by 2031, with attacks on businesses occurring every 2 seconds, OEM products that utilise a strong backup software can leverage this a crucial selling point to customers.
  • Secure transmission protocols: Using secure protocols like HTTPS for web interfaces and SFTP for file transfers helps protect data as it moves between systems. This is particularly important when backing up to remote locations.
  • Access control: Features like role-based access control help prevent unauthorized access to backed-up data. These features are especially crucial for enterprise-grade products where data access needs to be tightly controlled.

 

Meeting Industry Standards and Compliance Requirements

Compliance with industry standards and regulations is no longer optional for many businesses. OEMs need to ensure their backup solutions help customers meet these requirements:

  • GDPR compliance: The General Data Protection Regulation affects any company dealing with data from EU citizens. Backup solutions need features like the right to erasure and data portability to help OEMs comply with GDPR.
  • HIPAA compliance: For OEMs in the healthcare sector, compliance with the Health Insurance Portability and Accountability Act is crucial. This includes features like audit trails and encryption for protected health information.
  • NIS2 Directive: The upcoming Network and Information Security (NIS2) Directive broadens cybersecurity requirements for organizations in Europe and those doing business with the region. It places a greater emphasise how organizations manage their data, including their backup strategy and which suppliers they work with to secure their data. Organizations must comply by October 17, 2024, with failing to meet these requirements resulting in significant penalties such as fines up to €10 million or 2% of global turnover.

For more information on backup compliance and the upcoming NIS2 Directive, catch up on our recent webinar featuring Michael Hopewell, Director of Minerva Secure, for an overview of how developing a long-term backup and recovery plan, can help you meet the demands, not only of NIS2, but other standards and certifications, such as ISO 27001, GDPR and HIPAA.

 

 

What Compliance Factors Should OEMs Pay Attention to in a Backup Software Supplier?

As a result of these regulations, OEMs should carefully evaluate their choice of backup software partner. The right backup solution can help OEMs and their customers meet compliance requirements more easily and effectively.

Here are key compliance considerations for OEMs when evaluating a backup software partner:

  • Company origin and jurisdiction: Consider the legal framework under which the provider operates. Recent regulations, like the upcoming NIS2, are placing greater emphasis on suppliers to avoid potential "aggressive actors." This includes countries where geopolitical issues and conflicting data protection policies may threaten the supply chain, such as Russia and China. Providers operating under robust data protection laws, like those in the UK or EU, may offer advantages for regulatory compliance.
  • Encryption capabilities: Ensure the solution offers strong encryption for data at rest and in transit, meeting standards required by regulations like GDPR and HIPAA.
  • Audit trails and reporting: Consider if the solution has logs and reporting capabilities to help demonstrate compliance during audits.
  • Data retention and deletion capabilities: Ensure the solution allows for flexible data retention policies and secure data deletion to comply with regulations like GDPR's "right to be forgotten."
  • Backup frequency and recovery speed: Consider solutions that offer frequent backup options and rapid recovery capabilities to meet NIS2's emphasis on business continuity.

By carefully considering these factors, OEMs can select a backup software partner that not only meets their technical needs but also helps them navigate the complex landscape of data protection regulations.

 

Support in OEM Partnerships

When assessing the right backup supplier, OEMs should consider not just the product itself, but also the company behind it. The reputations of both the OEM and the backup solution provider become intertwined, calling for a close working relationship. Here are some key areas OEMs should consider when evaluating potential suppliers:

  • Tailored support for OEM needs: OEMs often require a level of support that goes beyond standard customer service. Look for a vendor that understands the unique challenges OEMs face and is willing to provide customized support.
  • Flexibility in product development: OEMs may need specific features or modifications to the backup solution to meet their product requirements. A flexible vendor will be open to collaboration on product development.
  • Roadmap alignment: The OEM and the backup solution provider should have aligned long-term visions to ensure ongoing compatibility and mutual benefit.
  • Reputation and track record: As mentioned, the backup vendor's reputation in the industry is crucial. Look for providers with a history of positive reviews, satisfied customers, and a strong market presence.

By carefully evaluating potential partners against these criteria, OEMs can select a backup solution provider that not only meets their current needs but also supports their long-term success. The right partner will help you enhance your product offerings, streamline your operations, and build trust with your customers through robust data protection.

 

Making the Right Decision for Your Business

Remember, the choice of a backup solution provider is not just a technical decision – it's a strategic one that can significantly impact your competitive position in the market. The demand for backup software is on the rise, with reports indicating 48% of businesses plan to increase their spending on backup and disaster recovery solutions in 2024. This presents a key opportunity for forward-thinking OEMs to integrate robust backup solutions and gain a competitive edge.

To find out more about how Macrium can support your OEM's backup strategy, speak to one of our experts. Our team has 17 years of experience in backup solutions, with a strong emphasis on security, compliance, and seamless integration. We're ready to discuss your specific needs and demonstrate how our solutions can add value to your products and enhance your customers' experience.

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