The ROI of Cloud-based Disaster Recovery

By Nick Morse, Acronis.

The average cost of an infrastructure failure is $100,000 (?68,000) per hour, with critical application failures coming in at between $500,000 (?340,000) and $1 million (?680,000) hourly, according to a report from market research company IDC.

IDC also said that the average total cost of unplanned application downtime per year for the Fortune 1000 companies is $1.25 billion (?850 million) to $2.5 billion ($1.7 billion).

The truth is, data and related IT systems are becoming ever more important to every business. IT infrastructure is becoming more complex, yet at the same time spending on IT resources is static. Vital data is spread around more locations within a company while regulatory and legal demands around data protection and storage are multiplying.

At the same time, companies are expected to be able to process data and protect data all the time. Customers (whether consumers or business users) are quick to vent their anger on social media when websites are offline or e-tailers suffer data breaches.

Disaster Recovery and business continuity planning is not a ‘nice-to-have’ – it is a business imperative.

It’s not just a matter of a company losing money during any unplanned downtime; there is also the fact that you may be sued by customers for any losses your failure may have caused, plus the potential reputational damage amongst end users of your products.

Downtime can be the result of a whole range of factors, both internal and external, including someone spilling a cup of coffee over a server, a hacker attacking a company’s website, a datacentre suffering a power failure – all the way up to earthquakes, floods and hurricanes.

At the top end of the scale, you’ll find natural disasters like Hurricane Irene, a tropical cyclone which hit the Caribbean and the East Coast of the United States towards the end of August 2011,caused $15.6 billion (?10.6 billion) of damage across the US and another $1 billion (?680 million) in the Caribbean. Irene was the seventh-costliest hurricane in US history.

One Acronis customers got hit by Irene, and lost power at its main data centre for three days – but its computer systems and data storage seamlessly switched over to our services and the company’s servers were back up and running in less than two hours.

If the company had had to shut down for three days, it would have lost $900,000 (?612,500) in revenue – instead, for an investment of $50,000 (?34,000) a year, it protected that $900,000 in revenue, for a Return On Investment (ROI) of 1,700%.

Granted, a Hurricane Irene doesn’t come along every year; but even if the same customer had had our Acronis Disaster Recovery solution in place for 10 years before the hurricane hit, the ROI would still be 80%, equal to an annual rate of return of 10.46%.

This may look like an obvious argument, but it’s remarkable how difficult it can be to convince executives that investing in cloud-based Disaster Recovery services for your systems and data makes absolute financial sense.

The problem is, they look at it as a cost, not an investment. It’s very difficult for them to see the value of something not happening.

It works better if you present it as an insurance policy, which is, to be honest, what it is. After all, like insurance, it’s there to protect your business – you hope you’ll never have to use it, but you have to be protected against disasters that can happen at any moment.

As with any insurance policy, there are costs involved, like premiums, and it is important to make a strong business case for an investment. Does it make sense for you to get a disaster recovery solution? What is the best deployment option? How does the cloud impact today’s DR solutions? How do you get your executive team to accept that insuring corporate data with a DR solution is necessary?

The best way is to demonstrate that disaster recovery is not a cost, but an investment with a positive ROI.

IT departments seldom justify their purchases using ROI – often using operational needs, costs savings or productivity enhancements as the key arguments. However, for a cloud DR solution, an ROI analysis provides the most effective and objective argument for investment.

Remind your executive team of the worst-case scenario – without a DR solution in place, the company is at risk, especially in geographies prone to tornadoes, earthquakes, fires or floods.

And remind them that the downside is not just the purely financial impact, but also the potential damage to customer happiness and brand image, not to mention the possibility of law suits and financial sanctions imposed by regulators for breaching compliance rules.

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