Downtime is real and it’s costly. How costly exactly? Depending on the size of the organization, the cost per hour of downtime is anywhere from $9,000-$700,000. On average, a business will lose around $164,000 per hour of downtime. The numbers speak for themselves.
What causes downtime? Network outages and human error account for 50% and 45% of downtime, respectively. Meanwhile, natural disasters account for just 10 percent of downtime.
When you look at the cause of downtime by data volume, the #1 culprit is, once again, human error, at 58%. As it turns out, businesses should be warier of their own employees and less of natural disasters. Obviously, hurricanes, catastrophic fires and earthquakes get most of the attention, but be warned: the bigger threat to your data is inside of your company, not the great outdoors.
So, what’s at stake for your business?
Well here is some food for thought…
5 quintillion bytes of data are generated daily.
- 90% of the total data in existence was created within the past few years, a significant portion of which has been generated by small businesses.
So, when you consider all the servers, desktops, and laptops that the typical small business manages, it adds up to a lot of data to protect.
Yet nearly 75% of SMBs operate without a disaster recovery plan and only 25% are “extremely confident” that they can restore data if it was compromised. What’s more, only 50% of SMBs back up less than 60% of their data.
The remaining 40%? No protection for it whatsoever.
How much does this cost? Over the past few years, 35% of SMBs lost as much as $500K due to downtime. An unlucky 3% lost over $1 million. Whenever systems go down, businesses must scramble to retrieve important data. According to IDG, it takes around 7 hours to resume normal operations after a data loss incident, with 18% of IT managers saying that it takes 11 to 24 hours, or even longer.
The Aberdeen Group found comparable numbers when comparing best-in-class companies with “average” and “laggards” in the matter of downtime and recovery. Multiply even the average amount of time it takes to recover from a downtime event (5.18 hours) by the average cost of downtime, and you’ve got a large bill to pay by any standard.
Small wonder that 40% of all businesses close their doors permanently after a disaster, according to the Federal Emergency Management Agency (FEMA). Similar statistics from the U.S. Small Business Administration (SBA) indicate that more than 90% of businesses fail within two years after being struck by a disaster.
So what are SMBs doing to protect themselves? Over 60% of them still ship tapes to a storage facility or another office, a surprising number, considering the technology is over four decades old and the storage and retrieval processes are extremely cumbersome. Meanwhile, nearly 20% are already using some sort of cloud-based data backup.
LOCAL OR CLOUD BACKUP? THE ANSWER LIES IN BETWEEN
Using local backup for business continuity works well for quick restores. Because the data is right there, it’s fast and easy to restore back to its original location and keep the business humming. But what happens if the power goes out? If the device fails? Or if it is stolen or destroyed in a natural or man-made disaster? You might think the cloud looks more attractive for all these reasons. But cloud-only backup is risky because you can’t control the bandwidth. Restores tend to be difficult and time-consuming. After all, the cloud can fail, too.
How does a hybrid-cloud solution work? Your data is first copied and stored on a local device. That way, if something happens, you can do a fast and easy restore from that device. But then your data is also replicated in the cloud. So, if anything happens to that device, you’ve got off-site cloud copies of your data—without having to worry about moving copies of your data off-site physically.
DATA BACKUP VS BUSINESS CONTINUITY: WHAT’S THE DIFFERENCE?
Data backup answers the questions: is my data safe? Can I get it back in case of a failure?
Business continuity, on the other hand, involves thinking about the business at a higher-level and asks: how quickly can I get my business operating again in case of system failure?
Thinking about data backup is a good first step. Business continuity is equally important to consider as it ensures your organization is able to get back up and running in a timely matter if disaster strikes. For example, if your server dies, you wouldn’t be able to quickly get back to work if you only had file-level backup. Your server would need to be replaced, software and data re-installed, and the whole system would need to be configured with your settings and preferences. This process could take days. Can your business afford to lose that time?
How Much Downtime Can You Tolerate?
Downtime comes in all shapes and sizes. Whether it’s from a catastrophic storm or fire, a data center outage, ransomware, DDoS attack, internet outage or even a careless mistake. No one is totally safe, and it isn’t a question of if, but instead when it will strike.
The Ponemon Institute surveyed over 700 IT professionals regarding costs due to network downtime. According to their research they found business lose $22,000 on average for every minute their network is down. This is not even included any server failures, simply people cannot do work. The top three most severe consequences as a result of a network outage are productivity loss, reputation loss and then lost revenue.
When talking about business continuity, we think in terms of Recovery Time Objective (RTO), and Recovery Point Objective (RPO).
RTO: The Recovery Time Objective is the duration of time within which a business must be restored after a disruption to avoid unacceptable consequences.
RPO: The Recovery Point Objective is the maximum tolerable period of time in which data might be lost due to a disaster.
By calculating your desired RTO, you have determined the maximum time that you can be without your data before your business is at risk. Alternatively, by specifying the RPO, you know how often you need to perform backups. You may have an RTO of a day, and an RPO of an hour depending on what your business requires. But calculating these numbers will help you understand what type of data backup solution you need.
Once you determine your RPO and RTO, it’s time to calculate how much downtime and lost data will actually cost you. Simply add up the average per-hour wage, the per-hour overhead, and the per-hour revenue numbers and you have how much a data loss will cost you.
We’ve put together a simple worksheet to get started on these calculations. This is just a beginning, so be sure to work with your IT provider to get a clear handle on the specific numbers for your business.
Given that budget constraints can be a challenge for many businesses, obtaining these costs provides a financial validation to justify the purchase and maintenance of a business continuity solution.
When downtime occurs, an organization can lose a lot in terms of sales and customers, not to mention the costs involved in fixing the machines. A good Business Continuity plan is the first defense against a data loss disaster threatening your business.
To learn more, Download our latest eBook 4 Business Continuity Essentials.
About the author Ilan Sredni
Ilan Sredni, President of Palindrome Consulting, a well-respected business leader, author and Co-Host of the Brilliant Business Radio Show specializes in technology for high caliber businesses, law firms and medical practices.
Recent Insights From The Palindrome Blog
