Microsoft’s Veeam partnership signals data resiliency market shift

Veeam recently announced a multi-faceted expansion of its partnership with Microsoft. The first facet is that Microsoft is making an equity investment in Veeam. Although no terms of the financial arrangement were given, this does follow a $2 billion round in late 2024 in which Veeam was valued at $15 billion. There have been rumors swirling regarding the Kirkland, Wash.-based company going public, but Veeam is nearing $2 billion in revenue and maintains healthy margins so there’s no urgency to join the capital markets.

Also, as part of the partnership, Veeam will integrate Microsoft AI services and machine learning (ML) capabilities into its data resilience platform, Veeam Data Cloud. The platform, hosted on Microsoft Azure, uses zero trust and isolated Azure Blob Storage to secure backups. It combines software, infrastructure, and storage into an all-in-one cloud service. This allows organizations to bring down costs and simplify data management.

Three Veeam Data Cloud offerings will benefit directly from the Microsoft integration: Data Cloud for Microsoft 365, a Microsoft 365 backup service with 23.5 million users; Data Cloud Vault, a cloud-based service that provides zero trust security and offsite backups in Azure; and the new Entra ID Solutions, designed for organizations operating in cloud environments to verify and protect user identities.

AI plays a key role in helping organizations detect suspicious activity early, preventing potential security breaches. It can identify weaknesses in backup systems, so organizations can address any vulnerabilities before they cause major problems. Also, AI automates manual work and speeds up the data recovery process, helping businesses restore lost or damaged data quickly.

This partnership signals a shift in data resiliency and its importance. Historically, a company like Microsoft would build software and customers would use a product like Veeam to protect it and provide backup services when required. However, that’s a very reactive approach to data resiliency and a lot of things must go right for the backup to be restored in a timely enough manner to not impact business operations. Also, many customers have assumed that with cloud services, the cloud providers take care of backing up data, but that’s not true. Every SaaS provider assumes a shared risk model where the customers must take steps to backup and protect their data.

With this partnership, Microsoft and Veeam are co-innovating to infuse AI into the Microsoft Cloud to protect against threats. Using AI, Veeam can predict where an attack might happen and protect against it before it occurs. This becomes increasingly important in the AI era as AI is fueled by data and if the data is not protected, the output from AI can be wrong and lead to bad decisions. This is a case of “fight fire with fire” in which companies need to use AI to protect the data that fuels AI.

In my conversations with IT and business leaders, I’ve seen a significant increase in interest in re-thinking data resilience. It’s always been important, but the Russia-Ukraine war put a magnifying glass on where data was stored and how fast it could be recovered. Since then, the growth of ransomware, the CrowdStrike breach, and other events have only added fuel the data resiliency fire. In fact, it was one of the top topics of discussion at RSA 2024, and I expect that to also be the case at the event later this year.

This has also been reflected in IT budget allocation. While most companies have kept IT budgets flat or seen a moderate increase, I consistently see more money allocated to security, ransomware recovery, and data resilience. Historically, these have fallen under the domain of an IT priority, those areas of spending are rapidly becoming a board-level issue.

I look at this partnership as a win-win-win. Microsoft gets a trusted partner with Veeam around which it can build a better data resiliency portfolio. For Veeam, protecting and recovering Microsoft workloads is what it does best. This partnership adds to the strong tailwinds the company currently has. Last year, it booted Dell as the top share player in backup and recovery, it has a great partnership with Salesforce, and now Microsoft sees it as such a strong partner, it invested in them.

The big winner, though, is customers. Microsoft software is used by almost every company, and being able to protect and recover data as needed brings a level of assurance to move forward with AI projects.