Fires, earthquakes, floods, power outages, and other types of disasters hit data centers all too frequently. IT managers cannot fail to recognize the need to prepare for disaster. Yet business continuity planning and disaster recovery capabilities can be a tough sell because they do not contribute to the bottom line. Compare them to an insurance policy: if a disaster occurs, the money has been well-spent. But if no disaster takes place, the investment has simply added to the organization’s cost. Furthermore, spending on business continuity preparedness can be an open-ended proposition–there is always more that could be done to better prepare the organization. Therefore, IT managers are wondering: how much spending is appropriate for the level of risk an organization is willing to accept?
This Research Byte is a summary of our full report, Business Continuity Spending: How Much Is Enough?
In our study, business continuity spending is defined as spending on offsite data storage, secondary data centers, backup and recovery facilities, testing, and related business continuance and disaster recovery services. For brevity’s sake, we refer to these capabilities simply as “business continuity.” In assessing these results, keep in mind that some companies may categorize some of these expenses as storage or server management rather than as spending on business continuity, specifically.
Although business continuity is essential to the survival of the organization, our study found that median spending on disaster recovery and business continuity actually fell from 2006 to 2007, when measured as a percentage of the total IT budget.
The full version of this report looks at average spending on business continuity as a percentage of the IT budget. Because business continuity risks and compliance issues can vary widely from sector to sector, we break down spending by industry to provide more targeted metrics. We also analyze spending by organizational size and look at the change in spending levels from 2006 to 2007. Finally, we investigate how organizations rank disaster recovery improvements as a budgetary priority.
Considering that so many budget items are given higher priorities than business continuity (see full report), it is not surprising that so many organizations are reducing spending. For companies that have integrated business continuity planning into their operations, maintaining spending at median levels should be appropriate. Companies that consider business continuity a low priority because they have more pressing concerns, however, should rethink the issue. History shows that companies that suffer major losses and outages in a disaster often fail to recover without adequate preparation.
Spending on disaster preparedness is sometimes difficult to justify in view of many other demands. After all, managers hope that payback from money invested in business continuity will never be needed. But having a plan can determine which companies will survive over the long term.
This Research Byte is a brief overview of our report on this subject, Business Continuity Spending: How Much Is Enough? The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website at https://avasant.com/report/business-continuity-spending-how-much-is-enough-2008/ (click for pricing).