The Consequences of Neglecting Data Backup

Left to their own devices, a lot of users play fast in loose with data backup. They’ll back up when they remember or ignore backups altogether because they haven’t quite processed the consequences of data loss. But taking this approach to business data can have devastating consequences, and MSPs should make sure their customers are aware of the very real costs of data loss, be it as a result of a security incident, natural disaster or some other reason.

A 2014 study by Vanson Bourne for EMC estimated the worldwide total of data loss at $1.7 trillion – not too far from the gross national product of Canada, currently estimated at $1.83 trillion.

It’s such a massive number that your customers may look at it as more of an abstraction than something they can truly grasp. So let them try these costs on for size instead: The average cost of a lost or stolen record increased12 percent in 2015 to $154 from the previous year, according to a study conducted by Ponemon Institute for IBM. The average per-incident cost rose 23 percent to $3.8 million.

A small business that experiences a significant data loss may never recover, and indeed the U.S. Small Business Administration (SBA) estimates that 25 percent of businesses survive a major disaster.

Going out of business is the ultimate price for data loss, but even businesses that survive suffer serious consequences, especially if the loss occurs as a result of a security incident such as recent the high-profile cases involving Target, Sony, Anthem and Home Depot.

Beyond Dollars and Cents

Monetary costs from remediation, lost profits and productivity aren’t the only consequences of data loss. A serious security incident delivers a reputational black eye that can erode the trust of customers who may take their business to a competitor.

Legal consequences are also likely in many cases. There’s always the chance of lawsuits by customers, partners and other interested parties if the loss or theft of data affects them in some way.

Beyond that, a company that loses private customer or employee data and can’t recover it from a backup may be violating some sort of regulation. Regulations at the state and federal level address the need for replicating and safely storing certain types of data such as medical records, financial data, human resources files and payment card information.  

Violating data privacy laws can carry heavy penalties. For instance, HIPAA (Health Information Portability and Portability Act) violations can result in civil and criminal penalties. Civil penalties range from $100 per violation to a total of $1.5 million, depending on the severity and a determination of negligence. In criminal cases, jail time is a real possibility.

So, however you slice it for your customers, the fact is failure to have a data backup and recovery strategy in place can cost them dearly. If they haven’t grasped this reality yet, keep trying to explain it to them. Remind them the cost of paying for a data backup service is lower than going out of business as a result of data loss.

Marvin Blough is StorageCraft’s Vice President of Worldwide Sales where his focus is on expanding the company’s global reach by establishing channel partnerships that enhance the profitability for the channel partner.