The Costs Of A Data Loss Disaster

Computer data is the life's blood of the modern organization. Losing a little means discomfort and weakness. Losing too much is death. 

When a catastrophic failure hits a company's data, the costs begin mounting immediately. Employees who should be busy are idle while the work piles up. Products aren't shipped, payments aren't processed and salespeople dealing with customers are suddenly tongue-tied and stuck for answers. 

Those costs are relatively easy to quantify, once the company is back in business and managers are being called to account for their actions - just multiply down-time by hourly rates, and tally up how much money was paid out in interest on late payments, and calculate how many sales were lost. The real costs of data loss are sobering. When a company suffers a computer outage longer than 10 days, there is a fifty-per cent chance it will no longer exist in five years. Most that do survive never fully recover. 

Disaster strikes two out of 1,000 company data centers each year, according to one accounting firm with 43 per cent of those companies closing immediately, and another 29 per cent gone within two years. 

Like hack attacks and employee sabotage, reliable information about data disasters can be hard to collect. It is probably impossible to quantify the exact dollar costs of data loss. But the personal reality of data loss is much worse than many management personnel can imagine. We are no longer surprised to have clients tell us, "It doesn't matter what it costs, just get my data back." We hear it once a week. 

It gets worse. We have received media for recovery from an IT administrator one day only to learn the next day that the person had been terminated and someone else appointed in their place. The day after, when we called the company, we learned that the new person had been fired and replaced. 

While it is unusual for companies to tear themselves apart during a data loss crisis, an episode can erode an organization's self-confidence. The internal damage caused by even a minor data loss can reverberate throughout the company. Line departments, feeling betrayed by IT may never again rely on company-wide systems, even if they are an appropriate response to the disaster. The IT department may well insist on strategies that centralize information resources under its control, at the expense of innovation. 

Meanwhile, even the tightest security may not be able to prevent news of a data disaster spreading outside the organization. Customers, accustomed to just-in-time service and instant access to information, may find other vendors whom they perceive as more reliable. Financial organizations will look twice at any business that fails to protect its data so access to credit or capital may be cut off. 

Successful data recovery companies can literally bring their clients back to life, by stopping the bleeding, restoring order from chaos and getting people back to work. Most data can be recovered quickly, most of the time. But almost all data loss incidents can be prevented, through simple, manageable, measurable policies and procedures.