The Business Case for Preparedness

Minimizing Impact on Revenue of IT Outages

May 23, 2008 11:46 PM

Source: "Business Continuity: New risks, new imperatives and a new approach", IBM Global Services, IBM, 1999

Key Points:

* "Many senior executives and business managers consider business continuity the responsibility of the IT department. However, it is no longer sufficient or practical to vest the responsibility exclusively in one group. Web-based and distributed computing have made business processes too complex and decentralized. What's more, a company's reputation, customer base and, of course, revenue and profits are at stake. All executives, managers and employees must therefore participate in the development, implementation and ongoing support of continuity assessment and planning."
* "According to a report published by Strategic Research Corporation, a Santa Barbara, California, market research and consulting firm, the financial impact of a major system outage can be enormous: US$6.5 million per hour in the case of a brokerage operation; US$2.6 million per hour for a credit-card sales authorization system; or a mere US$14,500 per hour in automated teller machine (ATM) fees if an ATM system is offline."
* "In this climate, executives responsible for company performance now find their personal reputations at risk. Routinely, companies that suffer online business disruptions for any reason make headlines the next day, with individuals singled out by the press. Moreover, corporate directors and officers can be liable for the consequences of business interruption or loss of business-critical information."
* "For example, the New York-based research firm FIND/SVP calculates the average financial loss per hour of disk array downtime at US$29,301 in the securities industry, US$26,761 for manufacturing, US$17,093 for banking and US$9,435 for transportation. More difficult to calculate are the intangible damages a company can suffer: lower morale and productivity, increased employee stress, delays in key project timelines, diverted resources, regulatory scrutiny and a tainted public image."

Link: http://www.moregroupinc.com/IBM%20BC%20White%20Paper.pdf