TeamLogicIT of Mountain View: How Much Should You Pay For A Business Continuity Plan?

Several recent studies suggest that between 75% and 80% of businesses that experience a major fire or other significant disaster will never re-open or end up shutting down within 18 months. That staggering statistic is much easier to comprehend considering that a mere 35 percent of small to mid-size businesses have comprehensive disaster recovery plans in place, according to Gartner Research. While “a lack of awareness” and “cost” are listed as key reasons why organizations don’t implement safeguards on their critical business information and systems, these programs are the best investment a company can make.

So, what should a good business continuity/disaster recovery solution cost? While the true answer should be “as much as it takes,” almost every organization must work within its budget constraints. That means finding the most cost-effective solution available—minimizing company exposure without subtracting significantly from its bottom line. Since the most pressing concern for most business owners is how much revenue could be lost if their critical systems go down, the evaluation process should start there.

How much does an hour of downtime cost your company? The precise investment to make in a business continuity solution can be hard to justify unless you’ve experienced a severe outage in the past, but it’s fairly easy to assess the potential dollar liability of various disruptions using the following example scenario.

Let’s assume your monthly business expenses for wages, rent, utilities, and other expenses total $55,000. Divide this by the monthly hours of operation (200), which equals $275.00 per hour. Now assume your business is offline for an entire week due to a disaster. Based on a 40-hour workweek, your expenses would be approximately $11,000 for that week. But you’ll also have lost revenue while your business is shut down. Using your annual revenue divided by the number of hours your business is open, let’s assume that amounts to $1,000 per hour. Again, for the same 40-hour workweek, that would be $40,000 in lost revenue. The grand total for a weeklong business shutdown would approach $51,000!

Business continuity plans and the related systems are bonafide insurance policies, designed to protect an organization’s key information, applications and related files. While some can be quite comprehensive, depending on the company’s size and footprint, each should include these basic elements:

Business continuity plan: include a complete list of precautions to minimize the effects of a disaster on the organization. This should be reviewed and revised at least on an annual basis.
Onsite backup: combines and stores copies of each essential file and all company information.
Remote site backup: ensures that a business can be restored if their facilities are destroyed. The Federal Reserve suggests highly critical data be kept at least 200-300 miles away!

The disaster recovery plan is just as important as the organization’s business plan, which explains why many companies consult with experienced IT solution providers to help develop and implement the program. With so many variables and scenarios to consider, as well as the complexity of some of the available solutions, an experienced disaster recovery specialist can streamline the process and offer the best options.

After calculating the potential financial damage if a major outage or catastrophe were to occur and spending some time with a qualified specialist, it should be much easier to gauge the required investment. Of course, that’s also when many company owners and executives realize that the most costly disaster recovery/business continuity option is not having one.

About TeamLogic IT

At TeamLogic IT, we help out customers plan their technology investments so they can run their business efficiently and affectively. And we help them plan for the unexpected. Not only can we provide a foundation for their business continuity planning but we help them with implementation of that plan and maintaining it over time. A disaster can strike at any time. Is your business prepared to deal with the unforeseeable consequences? Call us at TeamLogic IT and we will provide a free consultation on the business continuity planning and alternatives.

Taking the worry out of your technology.