Data Backup Intrigues
Venture Capitalists

When a network problem crippled the e-mail system at State Auto Financial Corp., last month, technicians spent much of the following day trying in vain to restore service.

"People were sitting around twiddling their thumbs all day," says Greg Wright, a software engineer at the Columbus, Ohio, insurer, which relies heavily on e-mail to communicate claims and policy changes. When the e-mail finally was up and running, State Auto wound up losing a day-and-a-half's worth of messages.

The experience was especially painful for Mr. Wright because he had been testing new software that lets companies progressively undo changes to files, enabling them to go back in time to moments before a crash. The new software, Data Rewinder, from Burlington, Mass., start-up XOsoft Inc., was only weeks away from installation and would have saved virtually all the e-mail, Mr. Wright says.

The mundane process of backing up data files to protect them against loss or corruption is one of high technology's least-glamorous tasks. But a new breed of backup tools -- such as Data Rewinder -- has been making waves and eliciting a rash of investment from venture capitalists looking for a tech hit.

The backup start-ups are playing in a tough field: Traditional backup software is dominated by such major players as Veritas Software Corp., Computer Associates International Inc. and International Business Machines Corp.

For decades, large companies have backed up their data pretty much the same way: At some prescribed time each day, usually in the middle of the night when few people are around, servers make copies of files and store them on magnetic tapes designed for mass data storage. This has the advantage of being inexpensive, as tapes are less costly than hard disks, and relatively secure, as tapes can be locked away in vaults for years.

But without sophisticated gear, such as a robot to load tapes into drives on command, recovery times can be long, some corporate customers complain. Furthermore, the data that are recovered are only as good as the last backup, which might have been hours ago.

Backup is "arguably the longest-standing problem in all of technology," says Steve Duplessie, an analyst at Enterprise Storage Group. "We still do things the way we did 35 years ago."

Like Data Rewinder, a number of the new products fall under the rubric of "continuous backup." The idea is that a piece of software takes note every time a computer server writes a piece of data to a hard disk. And since the software maintains a log of every change the server makes, it likewise can unravel those changes, much as the "undo" feature of Microsoft Word can rescue users from typing snafus. If a database gets corrupted, or if a user inadvertently deletes a critical file, an administrator can roll back the clock.

Keeping track of all those changes -- particularly in high-volume database processing, such as recording thousands of credit-card transactions a minute -- requires a lot of computing muscle and storage space, but both have been plummeting in price in recent years.

ExaGrid Systems Inc. of Westborough, Mass., is applying the in-vogue idea of grid computing. In a grid, several smaller computers each tackle pieces of a larger task that would otherwise require an extremely powerful computer to accomplish. The necessary algorithms require a fair amount of processing power, but all the hardware needed for an ExaGrid setup of several hundred gigabytes can be had for a few thousand dollars on Dell Inc.'s Web site.

Revivio Inc., a start-up in nearby Lexington, says its Continuous Protection System can return a user to any moment in time -- down to intervals of a second. Revivio logs all of the changes to files on a separate disk. Programs scan through the logs, compressing them and stripping out redundant information to keep the size manageable.

"The only reason it's possible is that there is an incredible amount of low-cost silicon out there," says Kirby Wadsworth, a Revivio vice president.

The data-storage industry long has looked for a way to change the backup process, to address customer complaints. But little progress was made in the past year or so because crimped tech budgets meant that customers were spending only on projects that could save money -- not merely make their lives easier. There are signs, though, that purse strings are being loosened. "People are definitely investing in simplifying backup," says John McArthur, an analyst at market-researcher International Data Corp.

Revivio has roped in nearly $31 million in venture funding; XOsoft, about $24 million. ESG's Mr. Duplessie estimates that investors have poured a total of about $150 million to $200 million into a dozen or so backup start-ups.

Bud Stoddard, chief executive of closely held Amerivault Corp., Waltham, Mass., which was founded in 1998 and sells a service that lets companies back up their data over the Internet, says he gets frequent calls from venture capitalists -- "some of the very same people who wouldn't take my calls or return my e-mail three years ago."

Veritas, which holds about half of the backup software market, has its eye on continuous backup, says Fred van den Bosch, the company's chief technology officer, but isn't sure how it will add it to its product line. Storage Technology Corp., the major vendor of magnetic-tape hardware, already has a continuous-backup product on the market.

Mr. van den Bosch says continuous-backup products haven't shown they work efficiently in very large data centers. "We think it's not quite ripe for mass deployment," he says.

And going back in time isn't as simple as it sounds. Returning to an arbitrary past moment might confuse the application that is working with the data. Indeed, Mr. Wadsworth concedes that Revivio's product doesn't work so well for that reason with Microsoft Exchange, the ubiquitous corporate e-mail system. Data Rewinder has a special module for working with Exchange that can go back in time to fixed "checkpoints" from which Exchange can resume, but those points are spaced apart, possibly meaning a few minutes or more worth of lost e-mail.

Still, Mr. Wadsworth says that customers will eventually realize that continuous backup makes it far easier to recover when glitches trip them up. "This is complicated and disruptive technology," he says.

Write to Charles Forelle at charles.forelle@wsj.com