Protecting your investment: Backing up your data...
Written by Dale Allen, 2005
To fund a disaster recovery plan, you need to justify the cost. To do that, you
must drill down to the nitty-gritty of what customer dissatisfaction and loss of
customer service means in real figures....
Cost estimating a potential disaster; Finding the project costs associated with
disaster recovery and high availability solutions isn't a terribly difficult
task, but justifying these costs can be an absolute nightmare. For example, how
does a service organization quantify the cost of downtime for its service
center?
Many organizations, such as restaurants, hotels, and businesses that use
telephone sales people such as call centers, can't easily determine how much
money they lose during an outage. However, the numbers can be found. The first
thing to consider is that most employees are paid by the hour and use company
resources while on the clock. These resources become vitally important when you
can't point directly to lost revenue streams. You can add up the numbers for how
much electricity, office space, and other fixed costs will be utilized during an
outage.
You can also determine how much you pay employees during this time. Since both
the resources and salaries have to be paid, but no work is performed, you
immediately have a number you can begin to use as a basis for cost
justification.
Beyond that, things become more difficult, but it's no less important in the
justification of your Disaster Recovery project budgets. Determining how much
money you lose due to client dissatisfaction during an outage takes a great deal
of study using consultants and statisticians who specialize in determining how
much this dissatisfaction affects future sales. For example, if your products
require support staff assistance and that support is not available, customers
may be less likely to purchase other products from your company in the future.
Your company may already have statistics on repeat purchasing based on client
satisfaction. If so, most of this battle is already won. If you don't have those
statistics, you'll either need to get this data or base your budget
justification on a fixed-cost analysis. Even though a fixed-cost analysis may
work, you'll end up with a number that's much lower than the total you'd get
using both analyses together.
Determining losses for a service organization is much easier. Generally
speaking, customer service is part of the cost of doing business and what your
clients pay for. Clients purchase particular services (by phone, e-mail, etc.)
and expect that the services will be available when needed. Downtime in this
type of call center results in a loss of continued revenue from clients for that
service.
If clients pay on a fee-per-call basis, you have an even easier time figuring
out how much the downtime costs you. Understanding how many calls you receive
during different periods of the day and how much revenue each call brings into
the organization allows you to determine exactly how much revenue is lost during
any significant outages.
Disaster Recovery projects are as important as any other project dealing with
business continuity planning. However, since Disaster Recovery often involves
additional costs, such as staffing, floor space, and phone systems,
justifications must be made before additional funds are allocated.Performing
due diligence and finding out how much an outage costs the company can greatly
shorten the justification process and get you the budget you need to do the job
right.
Contact me, Dale Allen today for your total backup
solution.
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