Many organizations feel that it is too expensive for their cash flow to implement a thorough and professional backup and recovery system for their business data. Business data includes valuable company information that you have collected and stored throughout the years such as customer history, financial information and reports, and past emails, as well as computer software programs and the information in them: CRM (customer service, sales, and vendors), ERP (accounting, financial, reporting), email, website, inventory and quoting systems.

Can your business survive easily if you lost access to this data?

How much would it cost to recreate it if you had to, and how much money would you lose during the downtime?

When companies cannot access their data, they cannot perform normal business functions – something that they take for granted everyday. They may believe that just like getting hit with lightening, the chances of something happening to them are slim, and it would be a prudent financial decision to just cross that bridge when they get to it, and pay for “fixing” it when something does happen.

Evidence of this way of thinking comes from a study performed by the global market research firm IDC. For example, it finds that of the SMBs (small-to-medium sized business) it surveyed, 40% do not back up their data, and when they do, 40-50% of the backups are not fully recoverable. Even more alarming, 60% of business data in these companies is held on the individual hard drives of employee laptops and desktops, and does not commonly get backed up as part of the organization’s regular server data backup schedule (if they have one).

The fact is that companies across the country lose their data everyday due to employee error, hardware failures, viruses, vandalism and theft. And there is always the threat of fires, snow storms, water leaks and burst pipes that can cause a company to lose access to data and IT systems, and not perform normal daily businesses operations. They are not taking into account the total costs of downtime.

Since threats to company business operational data can come in many forms, and the actual likelihood of a company losing their data is greater than many organizations realize, it may help to quantify the costs associated with data loss and operational downtime.

The costs of downtime can be segmented into four major areas: Employee Productivity; Lost Sales; System Restoration; and Lost Customers.

Here is an example of the costs one company will incur during only one day of downtime:*

A professional services firm is hit be a computer virus and loses its business data and cannot perform normal business functions for one day.

Employee Productivity Cost:

  • Annual Company Revenue – $1,000,000
  • Number of Employees – 25
  • Average Revenue per Employee per Year ($1,000,000/25) – $40,000
  • Total Hours per Year/Employee (40 hours x 50 weeks) – 2,000
  • Average Revenue per Employee/hour – $20
  • Total Cost Due to Employee Productivity Loss for 1 Day = $4,000

Lost Sales Cost

  • Number of Sales per Year – 500
  • Average Revenue per Sales – $2,000
  • Estimated number of Sales Lost Due to Downtime – 10
  • Total Cost Due to Lost Sales Opportunities for 1 Day = $20,000

System Restore Cost

  • Cost per Hour of Technician Time to Restore Data – $160
  • Number of Hours of Technican Work – 8
  • Total Cost in 1 Day to Recover Data = $1,280

Lost Customer and Damaged Reputation Cost

  • Total Number of New Customers Last Year – 500
  • Average Revenue per Customer – $2,000
  • Number of Customers Lost Due to Downtime – 4
  • Total Cost Due to Lost Customers and Reputation Loss for 1 Day = $8,000

TOTAL COST OF DOWNTIME FOR ONE DAY = $33,380 (or $4,160 per hour)

Keep in mind that this is a hypothetical example and your organization’s information and situation will be different. Take a look at our…

Business Downtime calculator here:  

Imagine the costs if this company’s downtime was two days. A week. Several weeks.

Think about it – you protect your company through various insurance policies and physical security measures, why wouldn’t you also want to protect your company’s valuable business data as well?

If you need help implementing a data backup and recovery solution, contact the data backup and recovery experts at NexusTek at 303-773-6464, or use the short contact form.

*Example provided by StorageCraft, a leading provider of data backup and recovery solutions.

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