Four tips for turning cost into a non-issue

Getting funds earmarked for insurance-type business continuity services needn't be as difficult as it often is.

At far too many companies, business-continuity planning gets sidetracked the minute cost comes into the discussion. But users and industry experts say budgeting for business continuity doesn't have to be so painful. Turning the cost of business continuity into a non-issue could be as simple as following these four suggestions.

1. Do the math.The best way to justify business-continuity spending is by figuring out exactly how much money the business loses during a typical outage or disaster and comparing that with the relatively inexpensive cost of preventing those losses.

Jason Buffington, director of business continuity at NSI Software, a continuity-software vendor, offers an easy formula. First, figure out the average amount of time a typical outage lasts. He uses tape backup as an example, where a half day is the credible amount of time from when the outage occurs until data is restored to the most recent backup, he says. Multiply that downtime by the costs incurred per hour by the business. The costs should include not only salaries for people left idle, but also lost revenue and regulatory penalties that would result from the outage. Do the math and you get a realistic amount to bring to upper management.

That's what Draft Worldwide, a New York advertising agency, does. "I think if more companies took a good look at the cost of downtime, they would realize the importance of having a sound recovery plan," says Julian Morris, IT director at Draft. "We looked at just the cost of lost productivity, not taking into account any revenue [that would have been] generated, and for us, it's typically about $14,000 per hour for our major offices."

In the blackout in August, Draft's New York office was down 10 hours, which cost the company about $140,000 in lost productivity.

"After the event, I said to upper management, 'Remember the plan I wanted to do with the standby server and the cost was such that you kind of wanted to put it off? What we lost now would have paid for it,' " he says. "It's a no-brainer."

2. Do a reality check.Working through the above math exercise will help the business side of the house take a realistic view toward continuity planning, too. "A lot of times, you ask the business unit what it wants, and it comes back with the Cadillac plan - we need all of our servers back instantaneously, with no downtime," says Dieter Marlovics, CIO at Gelber Group, a financial services firm in Chicago. "So you say, 'OK, here's what that will cost you.' It takes a look at that number, compares it to the cost of downtime, and realizes, 'Well, hey, maybe we can be back in three hours and maybe we just need these three servers.' " With a little back and forth, you can find the sweet spot where the business unit is comfortable with the service level and the price, he says.

You also need to explain the options. At Evergreen Investments, Mitch Hodus, vice president of technology operations, sold upper management on an expensive replication system by outlining the savings in administration and staff costs. "Once we looked at the alternatives, we saw that over time, we were actually saving money on staffing," he says.

And don't try forcing upper management into covering everything at once, says Suzie Ray, director of Ernst & Young's Business Continuity and Availability Practice. "Most executives can tell you that out of 20 business processes, five are most critical," she says. In that event, you prepare those five and put off the rest until next year. "You make the decision to accept the risk on those."

3. Take the little things into account.Even after factoring in the true cost of downtime and comparing it with the cost of investing in continuity planning, some companies still have trouble justifying the cost. "For some, profit margins are so razor thin, that just adding continuity costs to the equation could put them out of business," Hodus says. "Still, there are things you can do that really cost very little and can protect you. Maybe you can't afford to relocate to a disaster-recovery site, but you can at least call your customers and give them the phone number of a different business site to call for service."

At the very minimum, experts say firms need to do crisis management. "They need to make sure everyone understands their roles and responsibilities, and that you have people lined up who can make key decisions," Ray says. "You have to communicate to your employees your evacuation plan, your emergency response and so on. You have to make sure you can take care of your people. That's important, and it's not expensive."

Other low-cost strategies include training your business staff on pre-Internet technologies. Morris recounts the time Draft lost Internet and e-mail access for a day. "People were stymied. They didn't know how to use the fax machine or that they could print a document and have a courier deliver it," he says. "Training for those kinds of things doesn't cost much but it can save you at times like that."

4. Play up the plus side.Sometimes the positive approach works best. Rather than focusing on costs, focus on the plus side of being up during an outage or disaster. "People who are better equipped will take advantage of the opportunities the less well-equipped ones are missing during a disaster," says John Robinson, director of JR Consulting Partners, a disaster-recovery firm in London. "So spending on business continuity, depending on your business, can be a competitive advantage. If you're out on the trading floor and your competitors aren't, whatever the business is, you've got an advantage."

Also, you won't be negatively affecting corporate value. "If by being down during a disaster, you damage your reputation and the share price of your company takes a dive, you've lost far more than the actual revenue amount," Robinson says. "You have to think of it as actually rescuing marketplace confidence."

Cummings is a freelance writer in North Andover, Mass. She can be reached at

Copyright © 2003 IDG Communications, Inc.

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