40% of all SMBs will go out of business if they cannot get to their data in the first 24 hours after a crisis.” – Gartner
You would be surprised at how many small and medium businesses do not take Disaster Recovery and Business Continuity seriously. While taking a backup of some description is a good start, there is much more to it than that.
Disaster Recovery Statistics
43% will never re-open Source: Aveco
80% fail within 13 months Source: Aveco
53% of claimants never recoup the losses incurred by a disaster Source: Aveco
Less than 50% of all organisations have a business continuity plan Source London School of economics
43% of companies that do have a business continuity plan do not test it annually Source London School of economics
80% of companies have not developed any crisis management to provide IT coverage sufficient to keep the business functionally effectively Source London School of economics
40% of companies that do have crisis management plans do not have a team dedicated to disaster recovery Source London School of economics
Firstly, there’s the cost of people failure. As you can roughly add 50% to someone’s wage in associated costs of employing them, the following would be the cost to your business of lost staff time: Hourly wage x 1.5 x number of people x length of downtime = cost of downtime So for example: Wage of £10 ph x 1.5 x 5 employees x 4 hrs downtime = £300
Catch up costs
You might then have to play catch up and pay overtime to get onto missed workload, so doubling that cost. And if it’s an extended outage, you might find yourself forever playing catch up.
If work can only be done in real time, there’s an immediate loss of income as well. For example, if you’re an insurance business and your computers being down prevents you being able to access data to give an answer to the customer on the phone, your competitor is only a phone call (or click!) away.
Next there’s the cost of loss of customer confidence. If an IT outage prevents you delivering on your promises, will they order from you the next time?
If an IT outage causes loss of data, then there are the costs of potential customer information loss or the time costs involved in recreation of data. If you’ve ever tried recreating accounts data . . . it is a painful business! Plus you may fall foul of data protection regulation in the process.
Cash flow problems
Not only is no work being completed and going out the door to keep customers happy, but neither are invoices – creating a double whammy in potential cash-flow problems further down the line.
Cost of repair
On top of all of this, if you don’t have an IT support contract or expertise in house, then not only will you have to find a trustworthy IT technician, but you will be at the back of their queue behind customers with Service Level Agreements and you may well also be paying a higher hourly rate and may have to wait for new equipment to be delivered. A new server can take 3-5 days to build – could your business survive that long?