Disaster Recovery: How to calculate the costs of a failure
Every business needs a good backup and a disaster recovery plan . There's always a possibility your business could experience a temporary disruption, so you need to be as prepared as possible. With this in mind, we want to show you the costs associated with a disaster and the consequences of not having a Disaster Recovery (DR) strategy.
We recommend you download our free ebook: Using AWS for Disaster Recovery.
Types of costs in the event of a disaster
It's time to show you what the main costs of a disaster are and how you can learn to calculate them.
Fixed costs
When your company's business operations come to a halt, costs such as the salaries of employees involved in the disaster-affected activities are impacted. Additionally, you will have to cover the costs associated with the interruption of IT services .
To calculate this cost, multiply the number of hours the service has been interrupted by the cost of labor per hour and the cost of supplies per hour.
Loss of expected income
It's not just the cost of an outage that needs to be considered, but also the lost revenue. Without access to files, data, or entire systems, your business won't be able to operate normally.
To calculate the revenue you are not billing for, simply multiply the number of hours in which the service has been interrupted by the average revenue your organization earns in an hour.
Lost potential customers
This cost is difficult to calculate precisely and depends heavily on the sector you operate in and the focus of your business. What is clear, however, is that you will lose business opportunities.
To calculate them, multiply your annual revenue by your business growth estimates. Then, divide the total by the number of business hours per year. Once you have that value, you can calculate the loss of opportunities due to lost leads. Multiply the number of service interruption hours by the value obtained.
Restore service
It is also important to consider the costs associated with detecting the fault, as well as those associated with containment and protection . Then come the costs associated with restoring the system, which includes replacing or repairing the infrastructure.
Finally, we must consider the damage caused to both image value and recognition, which are difficult to quantify.
The costs arising from the lack of DR
As you have already seen, a failure in your systems will have, in addition to the possible loss of data and files, disastrous consequences for the productivity and revenue generation of your company.
One of the keys to reducing these costs is to improve the RTO and RPO of your Disaster Recovery plan , that is, the response and recovery times.
In short, a DR plan serves to prevent data loss and optimize operational recovery , so it is important to create a disaster recovery plan tailored to your needs to avoid major negative consequences in the event of a system failure.
Do you have a disaster recovery plan? If you have any questions about this or would like us to help you prepare your Disaster Recovery Plan, please contact us . We'd be happy to advise you!
