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How will Veeam customers be affected by vendor's sale?

As Veeam takes aim at the U.S. market and the world of hybrid cloud, users could see enhanced products and technology now that it's under the ownership of Insight Partners.

Raj Perumal, CIO at conservation nonprofit Ducks Unlimited Canada, has high hopes for Veeam customers -- including his company -- following the data protection vendor's sale to a private equity firm.

"This acquisition is really only going to take us to the next level," Perumal said.

Insight Partners agreed to acquire Veeam at a valuation of $5 billion this month. Veeam will become a U.S. company, moving its headquarters from Switzerland. With the sale, executives are aiming to add Veeam customers in the U.S. and continue the company's progression in the hybrid cloud market.

Hope of more product growth for Veeam customers

Perumal looked at the acquisition as both good for Veeam customers and the company itself. Veeam is constantly rolling out new features, he said, but the infusion of capital should further bolster their product set and support.

Ducks Unlimited has used Veeam for about two years, and Perumal worked with the vendor previously as well.

"I've seen them grow over the years," Perumal said.

Ducks Unlimited uses multiple Veeam products, including its flagship Availability Suite and its newer Backup for Office 365. Veeam protects more than 2 PB for the nonprofit and Perumal expects that amount to grow exponentially. The nonprofit can't delete its science-based data -- for example, in monitoring climate change, it's looking at data sets over 30 years.

"We have to keep it, manage it," Perumal said. "And as it grows, we have to continue to back up and replicate it."

As Veeam has grown, it has remained user-friendly, Perumal said. With so many cloud-based products in the market, Perumal is hoping that the acquisition will lead to support for other major ones, such as an integration with Salesforce. He said Veeam should be able to hit more markets, partners and operating systems.

Perumal noted that Insight has partnered with lots of top tier technology companies, such as Shopify, so it has a good history. He's hoping that Insight applies its skills and experience to Veeam as well.

Veeam seeking U.S. customers with move

Perumal said he doesn't have concerns with the new management. Veeam founders Ratmir Timashev and Andrei Baronov will step down from the company, which is considering Columbus, Ohio, or Atlanta for its new headquarters.

William Largent, formerly an executive vice president at Veeam, returned to the position of CEO, replacing Baronov. Timashev, a former Veeam CEO, will leave his executive vice president role. Both founders will step down from the board of directors at the close of the sale, which is expected by the end of March.

Headshot of Steven Hill of 451 ResearchSteven Hill

"It's unlikely that the exit of founders Andrei Baronov and Ratmir Timashev will result in a significant shift in their model," said Steven Hill, senior analyst at 451 Research.

Christophe Bertrand, senior analyst at Enterprise Strategy Group, said he doesn't expect any major shakeups internally at Veeam just because the leaders have stepped down.

Headshot of ESG's Christophe BertrandChristophe Bertrand

Even though there are new people in the leadership roles, "it's not necessarily new leadership," Bertrand said. "The talent has always been there."

David Friend, a founder and CEO of cloud storage provider Wasabi, a Veeam partner, said he doesn't expect a lot to change with the founders out of the mix. Veeam's model is easy to understand and it's successful in the backup and recovery market, he said.

"They still have lots of room to run on that strategy," such as in the U.S., where Veeam could take business away from some of the legacy players, Friend said. "I don't see anything broken that needs fixing."

Sometimes when private equity firms buy software companies, there's cutting to maximize cash flow. Customers then worry about investment dropping and employees exiting after an acquisition. However, Friend said he doesn't think that's the motivation here.

Customers will benefit from this in the long run, so long as the new owners continue to invest in the product.
David FriendCo-founder and CEO, Wasabi

"It's really more a matter of creating new opportunity for Veeam to get better traction in the U.S. market," Friend said. "I think customers will benefit from this in the long run, so long as the new owners continue to invest in the product."

Friend doesn't envision much concern from Veeam customers outside of the U.S. following the headquarters relocation. Most major SaaS products are American, so the world is used to buying from U.S. companies, he noted.

"As companies are moving from on-prem to the cloud, they have an opportunity to pick up customers who are rethinking their whole infrastructure strategy," said Friend, who was also a founder of cloud backup pioneer Carbonite.

Veeam customers part of hot market

Bertrand predicted there will be at least one major change in Veeam's strategy. He expects Veeam to make more acquisitions, both to expand global presence and to tap into adjacent markets. These adjacent markets are anything that improves data reuse for business value: compliance, analytics and test/dev, to name a few.

"Veeam has not traditionally been focused on acquisitions. Now, with a private equity firm whose job is exactly that, I expect to see more non-organic growth," Bertrand said. "I think we're going to see an evolution of the business with this new financial sponsor in place."

The past two years have shown a lot of investor interest in backup vendors, including substantial funding rounds for Rubrik, Actifio, Cohesity and Veeam. But Bertrand said it's not the backup technology investors are interested in -- it's what the industry will evolve into. He said investors are seeing that backup will shift into what he calls "intelligent data management," which is the reuse of data assets for business outcomes beyond data protection, and a Veeam target. Backup is the logical jumping point for this because it is a process that touches all of the data in an organization.

"Data has become centric to business and to digital transformation," Bertrand said. "It's a big market that keeps on growing, because data is at the heart of everything."

Bertrand also said that ransomware is keeping the topics of data protection, business continuity (BC) and disaster recovery (DR) on people's minds. This also feeds customer demand, and therefore, investor interest.

Hill said he doesn't expect the backup market to change much as a result of the acquisition. Before the Insight buyout, Veeam had a strong position in the backup market, and he said there's no reason that should change now that Veeam is better funded than before. He expects more growth from Veeam, in the form of expanded services, geographical expansion and acquisitions that strengthen its technology portfolio.

"Veeam has been a juggernaut in the BC/DR industry for the last few years," Hill said. "And it's likely that Insight Partners will be expecting continued growth along those lines."

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