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How Much Does a Data Loss Disaster Cost?

Aug 17, 2007
Data emergency recovery is troubling enough to have to deal with the financial realities as well. Losing huge portions of important information can cause anyone to lose a few nights sleep and a lot of precious time. When it hits a large company, the expenses can skyrocket, because data is a key requirement for just keeping things operational. Phones need to be answered, goods need to be shipped, payments have to be processed, and bills need to be paid.

But what happens if the data that those key activities require suddenly disappears? Yes, it can be expensive, especially for the 1 in 500 company data centers that deal with data loss each year. Unfortunately, over 70% of these companies are ultimately forced to close within three years as a direct result. That's tough business.

So how much does a data emergency recovery loss cost? If you are trying to ascertain just the actual dollars of loss, and not the emotional and other intangible costs, it's fairly easy. Multiply the total down-time by hourly rates, determine much was paid for late payment interest, and calculate how many sales were lost. Hopefully, for your individual situation, this number is low.

For those who have a short interruption, anything less than 3 days, this cost will be minimal. (for most companies) However, if it goes on for a week or longer, there may be a need for a more in depth analysis. It also may spell disaster of the worst kind. Consider this: a company that has a computer outage of longer than 10 days, has a 50% chance of going out of business within five years. That's a sad reality. It also reiterates the need for total prevention and security when it comes to company data.

Businesses in the U.S. lose close to $12 billion per year due to data loss issues. 78% of these failures result from hardware or system problems, 11% are due to human error. Sometimes, it's the software corruption that becomes the issue, but this only accounts for 7% of all cases.

Other key statistics:

* On average, 46% of U.S. businesses indicate each hour of downtime cost them up to $50k, 28% say each hour cost between $51K and $250K, 18% say each hour would cost between $251K and $1 million, 8% indicate the cost to their company is more than $1million per hour.

* The average company spends between $100,000 and $1,000,000 per year for data disasters.

* Computer viruses are happening more frequently, are more expensive, and are doing more damage overall than in the past.

Most people who are faced with a data emergency recovery loss situation feel the pressure. They understand that if they can't get the data back, they may be out of a job. This is when it gets to be an emotional situation. The internal drama of a data loss can affect everyone throughout the company. Employees may feel hostility towards their IT department and IT may put in place new rules and regulations that are hard to deal with.

Those that are relying in information from those departments that lost it can become frustrated. Overall morale can deteriorate. Access to credit or capital may be cut off by financial organizations because they may feel that the business is failing to protect its data.

The bottom line? Data recovery cost a lot, and it's more important than ever to try and prevent it as much as possible.
About the Author
ITS - Data Recovery has been providing professional data recovery, data repair, computer forensics and evidence recovery services and software since 1980. Located in Los Angeles and serving clients around the world. For inquiries, contact http://www.datarecoveryspecialist.com/ or (818) 727-1500
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