What is the true cost of your backup strategy?

One thing that I have found during my time in the IT industry is that the tendency for a lot of customers is to look at the cost of the backup strategy on face value and make a decision based on the initial investment when evaluating data backup solutions or implementing a business continuity plan.

What many do not take into consideration are the implications and total cost to the business should something go wrong….

What is your pain threshold?

A robust data backup strategy should be built around the following guidelines:

  1. Physical Redundancy
    • Backup data should not be on the same physical hardware as your live data
  2. Geographic Redundancy
    • You should always have a copy of backup data in a separate location to where your live data is
  3.  Time Protection
    • How often is your backup data updated to minimise data loss? Hourly, daily or weekly?
    • If you have to recover, your data is only as current as your most recent functional backup

Taking this into account, when we design a backup solution we generally look at two aspects:

  • Recovery Point Objective (RPO) where we look at how much data loss can be tolerated by the business – largely driven by the rate of change in the business data.
  • Recovery Time Objective (RTO) where we look at how long the business can be offline while systems restored – largely driven by operations and the potential loss in business productivity.

These tend to be a sliding scale between time and cost (less time to recover = more cost, and vice versa).  Where a business’ particular backup strategy falls depends on their tolerance for both.

Where are the hidden costs?

As a business owner, when evaluating which backup solution is right for you, do not just take into account the cost of the overall solution but also take into consideration the potential impact to your business.

Let me run through an example…

Company X is a 40 user manufacturing business that turns over $15 million in revenue per year.   They have a server in their office where they store their customer files as well as accessing their Enterprise Resource Planning (ERP) software which is used to manage and automate the information flow from sales through to fulfilment. 

Only a few years ago they were a 15-20 user organisation and their data requirements were small so they couldn’t justify the expense of an “enterprise” solution but they invested in one “good” server that could accommodate growth as well as their ERP software.   Since the business relies on these systems to operate, they ensured that the server had some level of fault tolerance in the hardware as well as an improved warranty service to ensure a 4 hour response to any critical issues.

They have a backup strategy in place where they have a separate data storage appliance to their server, and their backup solution captures changes every 15 minutes and then uploads a daily backup to another location overnight so that it doesn’t disrupt the Internet connection during the day.  The backup solution was reasonably priced at around $4,000.

One night a storm comes through town and there is a power surge to the building which causes components in the server to fail and corrupts the data on multiple hard drives – the backup device is ok.

Here is an overview of the timeline and process for recovery:

  1. Company X calls their support provider to inform them of a critical issue.
  2. Support provider does some initial checks and logs a support call with the server manufacturer for warranty hardware replacement.
  3. Manufacturer responds within the 4 hour warranty (most warranties are an SLA for “response”, not “fix”) and gets the support provider to do some troubleshooting steps so that they can determine the likely cause of the fault before approving the hardware replacement.
  4. Manufacturer agrees to the hardware replacement and dispatches the replacement parts via courier from a local depot
  5. Parts and technician arrive to site approx 5-6 hours after the initial call to install the new hardware and begin to restore from backups. This will take approximately 4 more hours resulting in a 10 hour total recovery time.

From a technology perspective, the cost to recover was nil other than the investment in the backup solution since the hardware was covered under warranty and the labour was covered by their support agreement.

However, the cost to the business operationally was significant as follows:

  • Number of employees affected = 40
  • % that the outage affected their productivity = 50%
    • lets assume that half of the team could do limited tasks offline so 75% and the other half could do most tasks offline at 25%
  • Average hourly cost per employee = $30
  • Number of hours outage = 8
    • total hours was 10 but let’s just work on a single business day

Total Labour Cost for the day’s outage = $4,800

In addition to the labour cost, the outage caused significant lost revenue

  • Gross annual revenue = $15,000,000
  • Work hours per week = 40
  • Work weeks per year = 51
  • Yearly business hours = 2040
  • Hours of outage = 8
  • Percentage impact to operations = 50%

Total lost revenue because of the outage = $29,411.76

Total cost of downtime = $35,571.76 (or $4,446.47 per hour)

If this was your business, would you have preferred to invest more upfront to reduce the potential risk later?

Perhaps considering cloud solutions so that you can avoid these types of outage all together?

Reducing your downtime

If you are concerned that your backup and business continuity strategy (or lack of) may leave you exposed to unacceptable downtime or data loss, our team at Resolution Technology are skilled in building the right solution for your needs.

Contact Us to make sure that your business is protected.