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A RESOURCE FROM ATLAS OIL
THE COST OF DOWNTIME
The Cost of Downtime
Tips for understanding, planning for, and minimizing the consequences of outages and business
interru...
changes need to be made to the existing plan as technical advances and operational changes
make certain elements of the or...
remote systems and specialists comes network fragility and increased dependence on factors
that are sometimes outside of y...
and downtime. The way that those measurables are calculated, however, can be a little slipper,
and businesses need to be a...
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The Cost of Downtime - Tips for understanding, planning for, and minimizing the consequences of outages and business interruptions

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Consider this astounding fact: 90 percent of companies that experience a computer disaster and don’t have a survival plan go out of business within 18 months.

Downtime affects businesses of all sizes from small boutiques to fortune 500 companies. You can’t foresee future disasters or business interruption, but you can plan for how you will response and recover when one does hit.

Power outages cost the U.S. economy between $80 and $188 billion per year. When power is disrupted to IT systems, 33 percent of impacted companies lose between $20,000 and $500,000; 20 percent lose $500,000 to $2 million; and 15 percent face catastrophic losses, facing more than $2 million in damages.

The losses from a power failure can be extensive and of great consequence. For a business, the recovery time is significant. The costs are high. According to Price Waterhouse research, after a power outage disrupts IT systems:
- 33 percent of companies take ore than a day to recover
- 10 percent of companies take more than a week
- It can take up to 48 hours to reconfigure a network
- It can take days or weeks to re-enter lost data

Tips:
- Have a plan in place
- Role play
- Bridge the IT gap
- Estimate the cost in advance
- Consider your supplier network
- Have the right equipment
- Secure partners for onsite support
- Consider your technologies
- Know your Achilles Heel

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The Cost of Downtime - Tips for understanding, planning for, and minimizing the consequences of outages and business interruptions

  1. 1. A RESOURCE FROM ATLAS OIL THE COST OF DOWNTIME
  2. 2. The Cost of Downtime Tips for understanding, planning for, and minimizing the consequences of outages and business interruptions The numbers are dramatic: power outages cost the U.S. economy between $80 and $188 billion per year. When power is disrupted to IT systems, 33% of impacted companies lose between $20,000 and $500,000; 20% lose $500,000 to $2 million; and 15% face catastrophic losses, facing more than $2 million in damages. If you are a business owner or stakeholder, those figures are more than just dramatic—they are truly alarming. Large outages (those affecting 50,000+ individuals) are trending up since 1991. While the high profile events like Superstorm Sandy make literal and figurative waves and provide fodder for dramatic headlines and intensive media coverage, the reality is that many of the most costly events for people, properties and businesses are localized in nature. Large-scale power interruptions are really only the tip of the outage iceberg: while Sandy left around 8.5 million people without power, more than 40 million people were affected by outages in 2012. For businesses everywhere, a comparatively modest amount of education, preparation and investment in business continuity and emergency readiness can yield an enormous ROI. This is the kind of basic preparation that can not only minimize headaches and inconvenience in the event of an emergency, it can help avoid the kind of catastrophic losses that can damage or even destroy a business. What follows are tips and considerations for business owners and decision-makers when designing, deploying, and maintaining their business continuity plans and disaster preparedness protocols. Have a plan in place Having a plan in place and making sure that everyone is in the loop is critically important. Your employees need to understand not only how the emergency plan affects them, but also what their specific roles and responsibilities within that plan will be. Even the most strategic, thoughtful, and well-designed plan will be of limited value if your entire team does not understand how to implement it. While many companies rely on outside experts or consultants to provide logistical support and planning expertise, failing to disseminate and integrate that plan into the ranks of personnel is an all-too-common mistake. While essential employees like IT staff and managerial team members will necessarily have more on their plate, every employee needs to understand what to do (and what not to do) in the event of an outage or other emergency interruption. Role play Planning alone is not enough. It is important to talk through and walk through your business continuity preparations and disaster preparedness regularly. The old sports adage explaining that you “play like you practice” holds true in business, as well. Comprehensive training should be an essential part of every business continuity plan deployment, and that training should not be a one-time event. Regular, rigorous, and repetitive emergency training and drills should be part of standard operating procedure for every company. One of the advantages of “role playing” and emergency walk-throughs is that they so often identify gaps and vulnerabilities that were not evident on paper. Regular training and walk-through sessions can also highlight where
  3. 3. changes need to be made to the existing plan as technical advances and operational changes make certain elements of the original plan less redundant, less efficient, or obsolete. Bridge the IT gap One of the most underappreciated aspects of safeguarding your business against the damage and disruption of unanticipated outages involves understanding—and resolving—the growing internal disconnect between IT staff and the executive leadership team. Addressing that disconnect has become increasingly important as IT systems have evolved and businesses of all sizes rely on high-speed data centers. IT has evolved from what was once largely a supporting role (primarily involved in internal company functions) to a key player in customer service, revenue generation and business growth. The problem, however, is that as technological complexities have grown, and as businesses have become more reliant on technical infrastructure, the ability of decision-makers without a specialized IT background to make strategic decisions about how to protect that infrastructure has been significantly diminished. A recent survey cited in “Understanding the Cost of Data Center Downtime” from Emerson Network Power found that while the majority of senior-level staff fully support efforts to prepare for, prevent and manage unplanned outages, less than one third of IT respondents believed that their company was utilizing resources correctly and efficiently to provide maximum protection to the most critical IT components. While executive staff may have a better appreciation for the costs and consequences of downtime, IT staff have a deep and technical understanding of where your systemic vulnerabilities are located and what essential systems and components should be prioritized in the event of an emergency. Clear and direct communication between IT and senior management is vital if you wish to develop a truly effective business continuity plan. Estimate the cost in advance Before you can adequately prepare for a disaster, it is important to understand what is at risk, and to appreciate that losses from a power failure can be extensive. For a business, the recovery time can be significant, and the financial impact can be damaging. If nothing else, knowing the real numbers might scare you enough to take planning seriously. According to Price Waterhouse research, after a power outage disrupts IT systems, 33% of companies take more than a day to recover and 10% of companies take more than a week. It can take up to 48 hours to reconfigure a network, and it can take days or weeks to re-enter lost data. Aside from the costs of repair and recovery from damaged equipment and lost or corrupted data, the financial losses from the downtime alone can be extraordinarily costly. A recent paper from Business Computing World entitled “Assessing the financial impact of downtime” puts some of that into perspective: “According to Dunn & Bradstreet, 59% of Fortune 500 companies experience a minimum of 1.6 hours of downtime per week.” The author goes on to contextualize that in dollar amounts, and concludes that the labor costs alone nearly exceed $900,000 every week, and would reach $46 million by the end of the year. Other calculations put the cumulative annual costs of IT downtime north of $26 billion. And all of that grim calculus takes place before you consider the long-term damage to your brand and/or customer base from an interruption in service, a reduction in productivity, or a loss of sensitive data. Losses of goodwill or diminished professional reputation are not abstract concerns: they carry a weighty and worrisome price tag. Consider your supplier network Much is made of the advantages of an increasingly connected world. While the ability to transmit massive amounts of data and information has facilitated extraordinary new efficiencies and business opportunities, there is a downside to the technical miracles that drive so much innovation: unfortunately, however, with connection comes vulnerability. With specialization and
  4. 4. remote systems and specialists comes network fragility and increased dependence on factors that are sometimes outside of your direct control. As a result, it is essential to consider how business interruptions and unanticipated disruptions outside of your own firm can impact your operations. Whether it is a power outage at another link in the supply chain, a disruption in an essential communication network, or a data center struggling to come back online after an interruption in power, geographical location has less to do with your vulnerability than your virtual location on the network (and your location relative to other essential players on that network). The lights in your corporate headquarters may be on, but if the data center powering your website goes down, you are in trouble. Have the right equipment Having the right equipment in place for immediate response can make the difference between a damaging outage and a minor inconvenience. The difference between winners and losers in a post-interruption environment is often defined by minutes, if not seconds, and delays can be costly. While backup generators are often the most visible piece of your emergency backup infrastructure, they do not exist in a vacuum. Generators require fuel, and some generators require some time to get fully powered up. The need to bridge the outage gap and get to the generator without losing data requires many companies to invest in an uninterrupted power supply (UPS)—an electrical apparatus that provides emergency power instantaneously. The technical and operational architecture for various UPS solutions varies (as does the cost), and it is important to be thoughtful and strategic about selecting UPS equipment and a UPS vendor that meets the needs of your business or property. Secure partners for onsite support For many businesses (particularly those with large networks of generators or facilities that require elaborate or extensive support) an extended outage requires an enhanced level of onsite support. An emergency fueling plan/solution should be an integral part of the business continuity and disaster response planning for these firms. When selecting an emergency fueling vendor, prioritize candidates with the infrastructure advantage of a national storage, supply and distribution network: true nationwide coverage translates to the fastest possible response times in an emergency. Ideally, that network should be supported by a dedicated fleet of vehicles and personnel capable of rapid deployment. Vendors with those resources, as well as resource staging expertise and sophisticated post-event management and fleet dispatch control—which can be enhanced by mobile fueling stations and geographically diverse supply points—may be able to offer a guaranteed emergency fueling response time. Consider your technologies Think critically about the specific technologies your business relies on—and which of those technologies is essential if you are going to stay connected and operational in the event of an emergency or power disruption. Many companies, particularly smaller firms, fail to fully appreciate the technical complexities involved and do not entirely understand the ways in which their operational viability is reliant on their IT infrastructure. Understanding the technical details of exactly where and how you are vulnerable will enable you to determine whether the business continuity solution you require will be a technical or operational in nature. In many cases, the best and most cost effective solution is to include some degree of data and IT diversification into your planning. By not putting all of your tech eggs in one basket, you reduce the chances that a disruption can derail your entire operation. Know your Achilles Heel Many service-level agreements (SLA) can seem highly specific with regard to the service assurances they provide, as well as the standards that will be used to measure performance
  5. 5. and downtime. The way that those measurables are calculated, however, can be a little slipper, and businesses need to be alert to a lack of transparency and clarity within their cloud provider’s SLA. This lack of transparency can be your Achilles Heel when it comes to designing your own supplemental backup plan: without specific operational details and a more nuanced and sophisticated understanding of how your provider’s systems work (and how their own redundancies function), it will be virtually impossible to optimize your own systems for effective business continuity and disaster recovery. It makes sense to work with a provider who is willing to give you the level of detail and specificity you need to adequately prepare and protect your assets in the event of an outage.

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