Kim Brand, inventor of Server Partner's FileSafe small business server, thinks the new sales model for the company's SMB server may be a more important innovation than the product he invented.
"By doing some scrambling and thinking about what customers really wanted, we came up with what we call the cell phone model," Brand told Small Business Computing. "We sell technology but nobody really wants that. This new cell phone model is really the invention. In this economy people don't want to pay very much, they don't want to be obligated and they want maximum flexibility."
The "cell phone model" allows Server Partners to sell its small business server, valued at $4,000, for only $995 (plus tax), bundled with a two-year service agreement (starting at $199) --though the company does not penalize customers for early cancellation the way many wireless companies do. The company sells FileSafe both directly and through value-added resellers (VARs).
Server Partners' FileSafe small business server (formerly called FileEngine) was a bit of a sensation when it first debuted. The SMB server provides file sharing for businesses with five or more PCs that want to centralize the storage of Word, Excel and PowerPoint documents, AutoCAD files, QuickBooks and other accounting databases, etc. It's a domain controller that allows businesses to control who has access to which files in that centralized storage.
It was rated CRN's networking hardware product of the year in 2006. But in 2008, as the recession hit, Server Partners' small business server hit a snag. At the time, the company offered the product as a three-year lease that came to about $8 per day.
"The challenge began when the economy turned south and what were formerly good customers with pretty good credit weren't getting approved," Brand said.
With creditors unwilling to extend credit, many companies were unable to lease Server Partners' SMB server and business dried up.
From Small Business Technology to Small Business IT Services
That's when Brand hit on the idea of the cell phone model, under which the customer gets a steep discount on the small business computing hardware on the front end with a two-year service agreement. Essentially, instead of selling a small business server, Server Partners would sell small business IT services for file sharing.
The service agreement part of the deal is a bit of a tricky wicket, Brand acknowledged, as many businesses are allergic to long-term contracts these days. That's especially true of Server Partners' SMB customers, many of whom simply expect technology to work, Brand said. Many customers, who tend to have between five and 25 PCs, are transitioning to a centralized file server from non-networked PCs, and their file storage system consists of saving documents locally on the PC or on a thumb drive.
"In our end of the market, they resist [service contracts] with their soul," Brand said. "They think it's supposed to work. Servers are so different because they break, and when they break it's a real bad day."
Brand added that the rules completely change when you work with really small businesses. "They don't have an IT guy. They don't want to pay for administration, monitoring, updates or any of that stuff because they think it should just work. But they really need it," he said.
Brand noted that a credit union -- to which Server Partners just sold a FileSafe -- had been using a thumb drive to back up its files. But the drive had long since reached maximum capacity and was no longer actually storing the backups.
"They hadn't had a back up since May 2009," he said. "They just thought it was working."
To combat reticence, Server Partners' cell phone model allows customers to cancel the service agreement at any time. They simply have to return the hardware. "Customers are very interested in having the ability to get out of a contract more than they ever were before," Brand said.
As part of the service agreement, the FileSafe small business server ships with customer-specific features --including user accounts, group memberships and shared folders -- preconfigured based on details provided when it's ordered. The agreement includes warranty, support, unlimited users, on-site and offsite backup, next business day disaster recovery, monitoring, administration, updates and more.
"When a customer has a really bad day with a server, we just deliver them a new box with their stuff on it already," Brand said.
Brand explained that customers understand how cell phone sales work, and that makes the pitch much easier. "It's turned an hour and a half sales interview into 35 minutes, 40 minutes," he said. "Now, I can go into a deal and say, "do you have a cell phone?" It's really an amazing transformation because the sales process is just so familiar and so simple. There's no more credit approval."
Small Business Server Features
Locally, the FileSafe small business server features hot-swappable drives in a RAID configuration, daily backups to DVD (so long as the customer places a blank disc in the drive), two-week's worth of snapshots for recovering files that have been corrupted or overwritten, and a server-based Recycle Bin that allows for the recovery of deleted files for up to 30 days.
The box runs on Novell's SUSE Linux Enterprise Server and is compatible with both Windows and Mac clients. And using the Linux Logical Volume Manager, Server Partners can double a customer's storage at the flip of a switch for an additional $50 a month.
"They don't have to buy in advance what they don't need at the time. If they need it, they just pay $50 more per month," said Brand. "Small businesses need this and we're trying to innovate a way for them to buy it."
Thor Olavsrud is a contributor to SmallBusinessComputing.com and a former senior editor at InternetNews.com. He covers operating systems, standards and security, among other technologies.
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