KingsBridge Blog

The current weather that has gripped Washington and most of the North East is a perfect example of what we try to impart to our clients.  It doesn’t take a major event such as hurricane, flood, earthquake, etc. to cause a significant impact to your bottom line.  Let’s take a quick look.

We are constantly asked about the Return on Investment (ROI) of Business Continuity (BC) and Disaster Recovery (DR).  Unfortunately, it is very much like insurance (car, life, house, etc.) it doesn’t do you any good until you need it!  For the most part BC/DR are money losers, in other words you aren’t making money from doing Recovery Planning.  But, those days when you need some guidance or what to do in the event of “Snowmageddon” (for example), it will save you tons of money.

So if BC/DR planning doesn’t save me money until an incident occurs, how do I get budget for the planning before an incident occurs?

This question goes back to our previous post “I cant get budget for my planning…” and in there we recommended the use of our ROI tool.  If you haven’t used the tool, I would really recommend giving it a try.  It takes seconds to scare years off your life!

Let’s take a look at what I mean:

Very simple process, take the annual gross income for your company, divide it by the work hours in a year (we’ll use 1717 as per Wikipedia) This calculation will give you a cost of dollars revenue lost per hour of downtime. For example:  A company with a gross income of $20 million dollars value works out to:

Lost Revenue = $20,000,000 / 1717 hours = $11,648.22 per hour.

So that means for every hour Snowmageddon slows your ability to get to work, you are looking at loosing almost $12,000 an hour!  Obviously, this is a very simple calculation, but it gets the idea across.

If this number doesn’t get you some budget, add in the cost of the not working employees!  Say the same company has 75 employees with an average annual income of $80,000 each.  What is their cost per hour?

We know the lost revenue is $11,648.22 per hour

Their cost per hour is the number of employees multiplied by their average income divided by the number of work hours.  So…

Employee Cost = (75 employees x $80,000) / 1717 hours = $3,494.47 per hour.

Getting back to Snowmageddon, each hour your company is delayed due to snow, power failure, delayed transit…  what is the cost of not being open?  Add the Employee Cost (because you don’t stop paying them due to snow) and the Lost Revenue, your small $20 million company is now losing $15,142.69 per hour!!

If you company matches these stats bang on, well you don’t have to get to the ROI tool, but if your company is larger (or smaller), run your numbers through the tool and find out how much each hour is costing you!

If these numbers don’t get you budget to do your planning, you might want to polish your resume.  Not because you are leaving right now, but when the next incident occurs and there is no plan, you will need you resume!!

KingsBridge is a Disaster Recovery and Business Continuity company specializing in Software, Seminars and Consulting.  If you are looking for a Microsoft Office integrated recovery planning tool, Phoenix is not only an excellent tool, but the only completely integrated planning tool.  Our seminars (online and in-house) are some of the longest running seminars in the recovery business.  KingsBridge uses turn-key consulting for those who need the plan done, right the first time.  For more information about KingsBridge, checkout www.disasterrecovery.com