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Business Costs of The Day of Lost Data


Have you ever stopped to consider the costs your company would suffer from just a single day of lost data? If your company is not prepared with an adequate backup and recovery plan, the financial results could be devastating if an unexpected event causes you to lose access to critical data.



The Day of Lost Data

While a sound data backup and recovery plan can restore your data in sometimes just hours, the lack of a plan can cost you greatly and possibly result in permanent data loss. The costs detailed below are examples of what your company could experience from a day of lost data. 

Lost Employee Productivity

Without access to data and programs that employees use on a daily basis, your vital staff will be unable to do their jobs. When employee productivity ends, you lose money immediately in two ways: 1) you lose the hourly cost of paying each employee and 2) you lose the money their revenue-generating activities make for you. These costs of employees not being able to perform their duties for one day, and possibly more, can be staggering.  

Lost Operating Costs and Impact on Cashflow

While lost productivity costs will make up a large portion of your loss, your costs will include more than payroll.  You'll lose operating costs while your systems are down as well. How? The business processes and contracts you've set up won't stop just because your data is unavailable. Here are some of the specific costs that continue while you're systems are down:

Inventory carrying costs. Inventory on hand will be stagnant if you can't access the records and data needed to fulfill orders.  

WIP costs. Projects in process, including partly finished installations or projects, will halt, leaving materials and working capital tied up. Projects won't progress, resulting in dissatisfied customers and unfinished business.  

Purchasing Costs. Prior purchase orders that have been approved will still process, so purchasing costs are still incurred while your data is down.

Accounts Payable and Accounts Receivable Costs. Without access to the data needed to pay bills and get paid, your income will be affected. If you can't send bills to get paid for your work, you'll be under financial pressure when paying your own bills, and also risk missing due dates. 

Capital equipment costs. You continue to pay for equipment leases, auto leases/payments and machine maintenance.

Supply chain costs. Purchasing and manufacturing slows, but planned costs continue to be incurred. Deadlines may be missed, with extra fees incurred. If any of your business functions are outsourced, you will lose communication and information transfer with vendors, halting business from moving forward.

Cashflow. All of these costs will have an impact on company cashflow if you lose data for just one day.

Lost Revenue

When you are unable to carry out the basic functions of your business due to lost access to your data, you'll begin to lose revenue right away. Revenue from potential customers considering doing business with you will be lost as they are forced to choose a competitor who can meet their needs today. In an online or e-commerce environment, this can mean a day of lost orders, because you can't process or fulfill the orders. This lost revenue can add up to thousands, even millions, of dollars for some large companies.

Think your loyal, current customers will stick by you? Think again. No matter how loyal your current customers are to your business, they will only have so much patience as you sort things out with your data recovery. If your slowdown begins to affect them, you can't blame them for losing confidence and eventually walking away.  

Compounding Business Costs

If  you think these costs could wreak havoc on your business in just one day, you could expect these expenses to be just the tip of the iceburg, if you truly have no backup system in place. In this case, your data could be inaccessible for a much longer period of time and could possibly be permanently lost.  In most cases, data can eventually be restored, but the process can be a long and costly one if you have no plan in place prior to the data loss. The costs described above will compound for each day your company attempts to operate without access to critical data.

We urge all companies to consider their company data as a critical asset and to take comprehensive action to protect it. We welcome the opportunity to speak with you and provide a systems evaluation to identify a sound plan for your data backup and recovery plan.

Image credit: lost data 

How to Prepare for Disaster  

Topics: Backup & Recovery

blog author

Todd Tramba

Todd is a veteran in the IT industry with 35 years of experience with companies like JD Edwards, Ariba, Iron Mountain and Oracle. He currently serves as TCC's Vice President of Business Development and Marketing. Todd is active in several Cleveland-area Chambers of Commerce and other business networking groups.