HOW MUCH DOES IT COST NOT TO

HAVE A DISASTER RECOVERY

PLAN?
WHITE PAPER
 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

CONTENTS Overview
To answer that we really need to understand the cost of downtime. The industry
average cost of IT downtime depends on a several factors. The monetary losses vary when
you consider your revenue, industry, the actual duration of the outage, the number of
Overview people impacted, the time of day, etc. For example, losses are significantly higher per
The cost of a DIY Disaster Recovery for a medium sized company Vs DRaaS
hour for businesses who are based on high-level data transactions, like online retail
The cost of a DIY Disaster Recovery for a largesales, manufacturing,
sized company Vs DRaaSbanking etc. If you experience an unplanned outage during peak
traffic time, obviously the damage will be more significant.
In summary
According to Gartner, the average cost of IT downtime is 20,000 AED per minute.
Because there are so many differences in how businesses operate, downtime, at the low
end, can be as much as 1.1m AED per hour on average, and as much as 2m AED per
hour at the higher end.

98% of organizations say a single hour of downtime costs over 368,000 AED. Ouch.

How did Gartner arrive at these numbers?

Downtime costs involve far more than simply the costs of idle infrastructure. Those costs also include operational and
personnel factors, including:

• Your staff costs for an hour

• How much your company bills in an hour as a function of revenue and profit
• Lost revenue from delayed billing, and additional penalties due to late payments
• Cost of rescheduling appointments and lost opportunities
• Cost of unproductive staff while infrastructure is being restored

These calculations do not include the cost of reputational damage. If you are a Software-as-a-Service provider downtime usually
equates to customer losses.

But how often does and for how long does downtime actually happen?
To try and answer this question we look to a report from Aberdeen Group. They took a sample of 500 companies split into
three groups and over a period of a year monitored how many times and for how long they experienced a severe outage.

• Small less than 100 employees

• Medium 100-999 Employees
• Large 1000+ Employees

And over a period of a year monitored a sample of 500 companies to see how many times they had downtime and for how
long that downtime lasted. All companies in the sample were running their IT infrastructure on premise.
Below shows the results they had.

Small Companies Mid-sized Companies Large Companies

Occurrences/Year 1.7 3.5 3

Average Length/Occurrences (hours) 2.2 3.8 0.8

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 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

Putting it all together and crunching the numbers?

To do this let’s take Gartner’s average cost of downtime as $100,000 as a medium company and make a small size company
to be five times smaller and a large company to be 5 times larger and apply this to the findings from Aberdeen group.

Cost per hour in AED Small

73,600Companies Mid-sized
368,000 Companies Large Companies
1,840,000

Occurrences/Year 1.7 3.5 3

Average Length/Occurrences (hours) 2.2 3.8 0.8

Total Cost 275,264 4,894,400 4,416,000

From the above we can see that the cost of not having DR is is biggest for medium companies. This is because they have on
average more downtimes and for longer periods than other sized companies do. It is likely that their size means that while they
have a requirement for advanced technologies and applications they are not quite big enough to pay for high levels of infrastructure
redundancy, enough staff training and enough staff to create an IT environment as robust as say large companies. Smaller
companies suffer less, most likely because they have a much smaller IT environment that is also less complex.

From the above it is obvious that companies of all sizes must actively engage in developing, implementing and regularly testing
disaster recovery (DR) plans for their business-critical information. Those that don’t are literally putting their company’s future on
the line. Companies may choose to implement a Disaster Recovery plan on their own or take Disaster Recovery as a Service. The
question then is which?

The cost of Do It Yourself (DIY) Disaster Recovery versus Disaster Recovery as a Service?

In order to answer this question we have decided to focus on a medium and large company only. We assume it will be too
costly for small companies to invest in Disaster Recovery and they will instead focus on Backup and Restore solutions.

For this financial analysis it is assumed:

• A medium company will have 20 critical workloads to protect (conservative estimate)

• A large company will have 50 critical workloads to protect (conservative estimate)

What follows is a detailed ROI for building the solution and operating the solution in house. It considers the cost of
datacenter space, bandwidth, equipment, licensing and the labor cost of keeping it operational as well as taking the
depreciation of the hardware in to account. The estimate uses real numbers and is designed to be as realistic as possible.

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 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

The cost of a DIY Disaster Recovery for a medium sized company Vs DRaaS

Operating Costs 2019 2020 2021 2022 2023 TOTAL

DR Datacenter Co-location (1 Full AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 780,000.00
Rack - 5Kva)
Replication Connectivity ADSL AED 36,000.00 AED 36,000.00 AED 36,000.00 AED 36,000.00 AED 36,000.00 AED 180,000.00
(100Mbps)
Product Vendor Annual AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 311,000.00
Maintenance (20% of
infrastructure cost annually)
3rd Party Support Contract / AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 300,000.00
Personel Time Savings
Business Failover Testing AED 40,000.00 AED 40,000.00 AED 40,000.00 AED 40,000.00 AED 40,000.00 AED 200,000.00
Infrastructure Depreciation (311K AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 62,200.00 AED 311,000.00
over 5 years)

Total Operating Costs AED 416,400.00 AED 416,400.00 AED 416,400.00 AED 416,400.00 AED 416,400.00 AED 2,082,000.00

Capital Costs 2019 2020 2021 2022 2023 TOTAL

Server Hardware (512GB AED 70,000.00 AED 70,000.00

RAM HA Hosts)
Switching and Routing AED 60,000.00 AED 60,000.00
SAN Storage AED 36,000.00 AED 36,000.00
VMware License AED 15,000.00 AED 15,000.00
Replication Software Licence AED 80,000.00 AED 80,000.00
Security Appliances AED 40,000.00 AED 40,000.00
Anti-Virus/Malware Licenses AED 10,000.00 AED 10,000.00

Total Capital Costs AED 311,000.00 AED 311,000.00

Total Current Costs AED 727,400.00 AED 416,400.00 AED 416,400.00 AED 416,400.00 AED 416,400.00 AED2,393,000.00

As you can see the five year cost of building and maintaining a Disaster Recovery service in house for a medium sized company is
2.4m AED compared the cost of not having Disaster Recovery which is closer to 20m.

Now let’s compare that to Disaster Recovery taken as a Service:

Capital Costs 2019 2020 2021 2022 2023 TOTAL

Implementation AED 30,000.00 AED 30,000.00

Total Operating Costs AED 30,000.00 AED 30,000.00

CloudHPT Costs 2019 2020 2021 2022 2023 TOTAL

IaaS AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 950,600.00

Total Capital Costs AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 950,600.00

Total Proposed Costs AED 220,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 190,120.00 AED 980,600.00

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 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

As you can see the cost of DRaaS is much cheaper. 60% cheaper as demonstrated by the below graph which shows a saving
of 1.4m.

DIY vs DRaaS and savings in green The cost of building a working and effective DR
solution in house may be higher if the company does
AED 3,000,000.00
not already have:
AED 2,500,000.00
• A dedicated, distributed, 24 x 7 IT team
AED 2,000,000.00 • VMware environment
• SAN storage
AED 1,500,000.00 • A fault-tolerant, N+1 environment
• An up-to-date, regularly tested recovery plan
2,393,000.0

1,412,400.0
AED 1,000,000.00
980,600.
AED

AED

AED
AED500,000.00 AED -

The cost of a DIY Disaster Recovery for a large sized company Vs DRaaS
Operating Costs 2019 2020 2021 2022 2023 TOTAL

DR Datacenter Co-location (1 Full AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 156,000.00 AED 780,000.00
Rack - 5Kva)
Replication Connectivity ADSL AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 60,000.00 AED 300,000.00
(200Mbps)
Product Vendor Annual AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 515,000.00
Maintenance (20% of
infrastructure cost annually)
3rd Party Support Contract / AED 125,000.00 AED 125,000.00 AED 125,000.00 AED 125,000.00 AED 125,000.00 AED 625,000.00
Personel Time Savings
Business Failover Testing AED 80,000.00 AED 80,000.00 AED 80,000.00 AED 80,000.00 AED 80,000.00 AED 400,000.00
Infrastructure Depreciation
(311K over 5 years) AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 103,000.00 AED 515,000.00

Total Operating Costs AED 627,000.00 AED 627,000.00 AED 627,000.00 AED 627,000.00 AED 627,000.00 AED 3,135,000.00

Capital Costs 2019 2020 2021 2022 2023 TOTAL

Server Hardware (1024GB AED 140,000.00 AED 140,000.00

RAM HA Hosts)
Switching and Routing AED 80,000.00 AED 80,000.00
SAN Storage AED 60,000.00 AED 60,000.00
VMware License AED 25,000.00 AED 25,000.00
Replication Software Licence AED 120,000.00 AED 120,000.00
Security Appliances AED 70,000.00 AED 70,000.00
Anti-Virus/Malware Licenses AED 20,000.00 AED 20,000.00

Total Capital Costs AED 515,000.00 AED 515,000.00

Total Current Costs AED 1,142,400.00 AED 627,000.00 AED 627,000.00 AED 627,000.00 AED 627,000.00 AED3,650,000.00

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 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

In the above the costs for a largest company is 3.65m AED constitute a significant saving when compared to the costs of not
having Disaster Recovery over 5 years which is approximately 20m AED.

Now let’s compare that to Disaster Recovery taken as a Service:

DRaaS

Operating Cost AED 50,000.00 AED - AED - AED - AED -

Capital Cost AED 358,000.00 AED 358,000.00 AED 358,000.00 AED 358,000.00 AED 358,000.00
Total AED 408,000.00 AED 358,000.00 AED 358,000.00 AED 358,000.00 AED 358,000.00

Which we can see translates to a significant saving as compared to Doing It Yourself

DIY vs DRaaS and savings in green

AED 4,000,000.00

AED 3,500,000.00

AED 3,000,000.00

AED 2,500,000.00

AED 2,000,000.00

AED 1,500,000.00
3,650,000.0

1,840,000.0

1,810,000.0

AED 1,000,000.00
AED

AED

AED

AED 500,000.00

AED -

In summary
As you can see not having a Disaster Recovery plan for Medium and Large companies is financially painful and also it is much more
cost effective to use Disaster Recovery as a Service (DRaaS) as opposed to building Disaster Recovery in house. This may be part of
the reason why Gartner estimates that 40 percent of mid-sized firms will use cloud-based (DRaaS) to support their IT operations
by 2019, up from 20 percent in 2014.

DRaaS has other advantages over DIY DR. Namely:

• It is elastic and can be scaled up and down

• It comes with SLA’s for RTO (Recovery Time Objectives)
• It comes with SLA’s for RPO (Recovery Point Objectives)
• It requires no Capex
• Is built to scale with large team behind it
• In the event of a disaster the in-house team may not be able to scale to operate the DR platform and resotre
production
• In house teams rarely operate 24x7

Office 1603, Emaar Boulevard Plaza Tower 1, Downtown, Dubai, UAE Connect with us
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 HOW MUCH DOES IT COST NOT TO HAVE A DISASTER RECOVERY PLAN?

About BIOS Middle East

BIOS Middle East, established in 2002, is a Managed Service & Cloud Provider that
is headquartered in Dubai, UAE. We aim to give our 300 plus customers the
capabilities they need to become cloud enabled and successful with their digital
transformations. To do this we provide managed services and cloud solutions with
24x7x365 support backed by a measurable SLA.

Our solutions include: Managed Services, Security-as-a-Service,

Infrastructure-as-a-Service, Disaster Recovery-as-a-service, Managed
Multi-cloud across our cloud, CloudHPT, AWS and Azure and most recently
Blockchain-as-a-Service.

Office 1603, Emaar Boulevard Plaza Tower 1, Downtown, Dubai, UAE Connect with us
Toll Free On: 800 BIOSME (246763)

www.biosme.co © 2016 BIOS Middle East Group. All Rights Reserved