By the Numbers: The Cost of Data Loss on a Smaller Scale

When discussing backup and disaster recovery strategies, companies like to throw around statistics about the risk of data loss. According to Seagate, 20% of companies storing 2-7TB of data have experienced data loss. More than half have had 2-3 data loss events in one year.

If these numbers don’t scare you enough, they pull out another familiar figure: the dollar sign. These companies like to estimate the cost of data loss for a company. In 2012, Seagate estimated that $40 million is lost annually on data loss events. According to an Aberdeen research study, the average company loses $163,674 in unused labor and lost revenue for each hour of downtime due to data loss.

But most of the time, these daunting percentages and huge numbers seem like empty threats. Data loss can’t possibly be that common, right? And even if it were, it certainly couldn’t cost that much, right?

Consider the following: Your company experiences a data loss event, due to fire, flood, hardware failure, human error, what have you. A damaged flash drive may even display a USB device not recognized error. Instead of considering the cost of data loss for your entire company, think about what it costs to lose just one white paper.

For those unfamiliar, a white paper is a long form informational report created for educational purposes. (Gillware even has a few white papers for you to read here.) Since they are typically very in-depth pieces, there is a lot of work that goes in to creating a white paper. Let’s break down the cost of developing one white paper from start to finish:

• Research – The marketing director chooses a topic and begins the necessary research to generate content for the white paper. Research includes working with the engineering team to fill in pertinent technical details. Total time – 8 hours (marketing director) + 4 hours (engineer)
• Outlining – The marketing director then begins to put the details in order and organize the content into a logical format. Total time – 2 hours
• Drafting – A copy writer takes the marketing director’s research notes and outline and begins to flesh out the full white paper. Total time – 8 hours
• Editing – The copy writer and marketing director then proofread, copy edit and review their work to ensure everything is in order. Total time – 2 hours (each)
• Imagery – The graphic designer takes data represented in the white paper and creates charts and graphs, along with other visual representations. Total time – 4 hours
• Layout – The graphic designer then takes all the copy and graphics and puts them in a readable format, creating the final product. Total time – 4 hours

In total, this white paper took 34 hours to create. Considering the salaries of each of the three employees (marketing director at $95K/year, engineer at $80K/year, copy writer at $40K/year and graphic designer at $65K/year) and the amount of time each spent working on the project (marketing director 12 hours, engineer 4 hours, copy writer 10 hours and graphic designer 8 hours), the white paper cost $1144 to create in total.

But the cost of losing this file doesn’t end there. The white paper will need to be recreated, which is difficult when starting from scratch. Maybe you have a few handwritten notes to go on, or you remember some of what you wrote, but even then it only shaves a couple hours of the total time to recreate the white paper. It might cost you $800 to recreate.

The other option is data recovery, which can cost tens of thousands of dollars for severely damaged servers and RAID arrays. All in all, losing one white paper costs approximately $2000. A single white paper! Imagine the aggregate of all the materials your company has created, every project, all accounting data, customer data, invoicing data, etc. gone due to a data loss event. The cost begins to add up.

Take our company for example. Gillware’s company file share holds over 100,000 files. Losing all that data due to a fire, flood or hardware failure represents a devastating loss. If even half of those files required the same amount of time investment as our hypothetical white paper, we would be looking at well over $1 million in lost data.

Furthermore, the cost is not all financial. The loss of trust of your customers when you lose data that may contain sensitive or vital information can cost you future business for years to come.

Compare the cost of data loss in dollars (and headache) to the cost of a backup solution. A backup solution costs just a fraction of what losing data, even a single file, costs to a business, making it a necessary investment.

So the next time you see staggering figures about the cost of data loss, you know they’re not exaggerated. Even the cost of losing a single file makes the cost of backup seem like a no brainer.