Lisa Pope, SVP Global Strategy & Sales, Infor Cloud Suite
This August marks ten years since Hurricane Katrina wreaked havoc on the Gulf Cost, leaving a path of destruction that is still evident in some areas, even today. According to the National Oceanic and Atmospheric Association (NOAA), last year alone, there were eight weather and climate disaster events with losses exceeding $1 billion each across the United States. As we approach this year's storm season, it's crucial for businesses to begin evaluating their IT infrastructure to safeguard assets and mitigate disruptions to mission-critical operations.
While on-premise servers and data centers provide large amounts of storage to run programs and applications that fuel day-to-day business operations, they also generate significant risk. In fact, a recent survey by Emerson Network Power and Ponemon Institute showed that the average cost of data center downtime is $5,617 per minute, or $690,204 per outage, with inclement weather accounting for one of the most common causes on average, a cost of $436,000 per outage.
A study from the Overview of Natural Disasters and their Impacts in Asia and the Pacific reported that between 1970 and 2013, the world reported over $2.8 trillion (in constant 2005 USD) in economic losses from natural disasters. Hurricane Sandy alone had an overall economic impact of approximately $72 billion. What do these numbers look like on a micro scale for an individual company? A recent Symantec survey of companies worldwide highlighted that each such incident costs an average of $287,000 per company.
“It's only a matter of time until all businesses, big and small, realize the importance of adopting a cloud-based ERP solution, as a cost-effective and efficient alternative for all IT infrastructure needs”
With potential for such drastic loss, it is vital that companies have procedures in place to return IT operations to acceptable performance levels as quickly as possible, without additional capital expenditures. Business owners and decision makers must adopt an enterprise resource planning (ERP) solution that is capable of handling the unexpected needs and immediate business challenges that result from a natural disaster. A cloud-based ERP system can provide the necessary flexibility for businesses to swiftly respond to whatever surprises come their way.
Spend less on maintenance and more on action
Moving to a cloud-based ERP system significantly reduces the costs associated with implementing your recovery strategies. A survey by Computer Economics shows that organizations that moved most or all of their systems to the cloud saw an average 15 percent reduction in IT spending. This reduction came from a reduction in data center spending, given that you wouldn’t have to manage multiple servers in an onsite data center, and you also wouldn’t need as many IT personnel to manage the system. Rather than investing money in maintaining the physical system, you could focus on your core mission of returning to business as usual.
Respond quickly and ensure long-term survival
One of the biggest challenges in a business’ disaster recovery lifecycle is issuing a rapid response to address the factors that have negatively impacted their IT assets. Loss of data, IT function or access to premises for an extended period can be detrimental for a smaller or midsize business. According to a recent survey, there’s a major variance in levels of disaster preparedness among small business owners. While one-third of owners said their companies could recover from a natural disaster within one week, some 16 percent said they would need two weeks, and 14 percent said they would need more than one month. Another source painted an even grimmer picture, citing long-term statistics of companies’ post-disaster performance. It said when companies endure a significant loss of business data, 43 percent never reopen and 51 percent close within two years. That means only 6 percent survive in the long term.
It is imperative that companies address the serious risk associated with a disaster recovery system that is hampered by maintenance expenses and physical challenges. It’s only a matter of time until all businesses, big and small, realize the importance of adopting a cloud-based ERP solution, as a cost-effective and efficient alternative for all IT infrastructure needs, especially in a state of emergency. The cloud gives employees access to all of the stored business data, anytime, anyplace. One county in Minnesota was able to improve its disaster recovery time from 48 hours to 12 hours, with just one hour of data loss by switching from a legacy, self-built ERP system, to the cloud. Once a disruption occurs, you need to restore operations as quickly as possible in order to stay ahead of your local competitors to ensure long-term survival. The cloud is critical in supporting your disaster recovery mission.
After the devastation of Hurricane Sandy and last year’s ruinous East Coast snowstorm, business owners should consider upgrading their legacy ERP systems to the cloud to ensure business continuity and minimize the potential impact of a disaster. Companies should evaluate their readiness to get their business back up and running in a time of emergency and analyze the true impact of downtime on business. There is an urgency to select the best business continuity solution to implement, and whether you’ve experienced this type of incident or not, you’re probably focused on your company’s bottom line. The cloud is a surefire, economical solution to manage all aspects of your business and prepare for whatever catastrophes Mother Nature throws your way.