Do backup vendor guarantees pay off?

The “£1m Data Restoration Guarantee”

In the world of data protection, trust is everything. When faced with a disaster, ensuring your business continuity depends on a vendor's ability to restore your data. This is the basis of data restoration guarantees, which promise financial compensation as a coverage if there is a failure in recovering your lost data.

But are these guarantees simply a sales tactic, or are they actually a viable insurance policy?

Back in 2005, we introduced our £1 million guarantee for data restoration. This was a big deal at the time, providing much needed reassurance to early adopters of cloud backup solutions (or online backup, as we called it then). The guarantee was backed by our insurer – demonstrating their trust and confidence in our recovery capabilities.

The recent surge in ransomware attacks has brought data restoration guarantees back into the spotlight. Backup software vendors are now offering multi-million dollar guarantees, hoping to win over customers worried about their data's vulnerability. However, the viability and limitations of these guarantees need to be considered.

Are they a good idea for vendors?

We ultimately decided to phase out our guarantee. While the financial safety and risk mitigation it offered attracted new customers, these benefits were less relevant for larger businesses. For large companies with turnovers in the hundreds of millions or billions, £1 million (or $10 million) simply isn’t enough compensation to offset the potential data loss.

But are guarantees still a good offering? In our experience they are a good initial hook, but they aren’t a major factor in the decision-making process. Customers were (and still are) focused on factors like reliability and recovery speed, beyond the attention-grabbing headline ‘guarantee’.

Are guarantees beneficial for customers?

Large payouts might sound appealing, but the conditions for claiming them can be strict. Often, these guarantees only apply to premium support tiers and specific configurations, leaving many users out in the cold. Additionally, the significance of recovering the data itself is often far more valuable than the promised financial payout.

Guarantees vs. insurance?

Data restoration guarantees are not a replacement for business interruption or other insurance policies. Guarantees offer limited compensation under specific circumstances, while insurance provides broader coverage for various data loss and continuity scenarios.

Are the terms of the guarantee reasonable? Is the figure worthwhile? These are the key questions to ask when considering claiming on a guarantee rather than insurance.

Making an informed decision

Data restoration guarantees seem like a resounding statement of confidence that a solution will never fail. However, in practice these guarantees have limitations in their effectiveness and the ability to claim against them. As a result, we recommend that businesses rely on insurance and not guarantees.

Outside of an initial hook, these guarantees are not the most important consideration. Instead, focus on researching the specifics of a vendor’s backup solution – track record, recovery speed, security measures and customer support.

The best backup guarantee is a vendor with a proven ability to protect and restore your data when disaster hits.