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Eye on ROI:
Today, with enterprise operations so tightly bound to timely information and data flow, IT executives in most companies are aware of the need for high availability solutions. Yet according to research from Veritas Software some "43 percent of organizations worldwide remain largely unprepared to respond to a major disaster. [Only] 38 percent of respondents claimed to have comprehensive, integrated disaster recovery and business continuity plans in place, in spite of the fact that 92 percent acknowledged that serious consequences would result if they were faced with a major disruption to their IT infrastructure."1
A "disaster avoidance" rather than a disaster recovery mechanism, high availability solutions aim to proactively protect business continuity by monitoring the key business touchpoints of mission critical applications as determined by predefined business priorities. If something goes wrong with an IT component, it can be treated (often automatically) well before it impacts the business, at which time it is "fixed" or failover procedures can be initiated. Designing systems with the ability to stay operational in the event of a failure has an added benefit: improvement of IT efficiencies through continuous architecture. Additionally, such "preserve and protect" measures can do double duty as facilitators of planned downtime projects when "weak links" can be repaired and upgrades or patches are installed that help avoid the unwelcome surprise of an unplanned downtime.
So why is Eye on ROI focusing on high availability solutions this month?
These days the term for disaster avoidance is business contingency planning (BCP) or sometimes continuity of business planning (COB). As noted by Ken Miller in his October 2004 article in DM Direct (Don't Recover - Failover), the vast dependence of enterprise revenues on high availability systems have become "top of mind." As a result of the steep consequences of system failure (what ever the cause) that include not only the costs of recovery but the loss of revenue, productivity, profitability and customer relations, IT executives are correctly identifying high availability systems with continuous architectures as the optimal solution. By treating some of the causes of disasters rather than their costly effects, the economic return can be tangible and substantial. These solutions are not meant to replace disaster recovery systems but rather to supplement them. A business continuity-based architecture won't stop a fire from happening, but it will help fend off internally initiated disasters.
The ROI of investments in high availability systems is often tough to assess - and even tougher to quantify. By their nature, high availability solutions are - in part - a contingency. That is, their associated benefits only accrue when they are triggered by an event. So the "return" is only realized if there is a problem and is measured by the cost of the failure to the business if it had happened. The difficulty lies in calculating quantitative return from a benefit that has a probability associated with it. It's sort of like calculating the return on your car insurance premiums - the real benefit only derives if the event you are insuring against actually happens.
At face value, a high availability solution adds value in two ways: it decreases the probability of a disaster occurring and, if one does occur, the scope and impact may not be as great. This means that the disaster contingency reserve (dollars set aside in case of a disaster) can be reduced. As well, the probability of a disaster will also be reduced by the high availability solution's proactive mechanisms.
Disaster recovery and high availability contingency allocations are therefore "soft" ROI benefits because unless a failure occurs there is no actual cash benefit. However, companies that can now reduce the allocation of real dollars as a disaster reserve, have more free cash available. This money however is not a savings because even diverted to a reserve, the cash was not actually leaving the company.
Most companies doing any sort of continuity of business planning will likely be able to quantify the financial consequences on the basis of lost revenues/day plus the costs of recovery. Without a high availability solution, the probability of disaster is unchanged whether there is a disaster recovery system in place or not. The potential cost of a disaster is adjusted by the probability that such an event will occur. With a high availability solution the reduced probability can ratchet the adjusted cost even lower. Your net benefit is the difference between the recovery costs with and without the solution. But once again, this benefit has no direct cash impact if nothing happens.
While the costs of high availability and disaster recovery solutions are tangible it may seem that the benefits - though quantifiable - are not.
High availability systems based on continuous architecture have another, very important, side benefit. In addition to protecting systems operation, their very presence can vastly improve performance. "Capacity on demand, load balancing, offline maintenance capacity and zero-point backup windows are all examples of the added value a continuous architecture can produce."2
And where there is added value, there could be ROI. Again the quantification of this ROI is not straightforward. Increases in efficiency - unless they result in tangible savings like staff reductions or other avoided bottom line expenses - are often elusive to measurement. But they should nevertheless be examined for possible direct ROI contribution.
As if all these benefits of high availability systems weren't enough, there is yet another advantage. As the frequency of planned downtime is rapidly escalating due to the increased number of applications bring run and the corresponding increase in upgrades and patches, the need to compress the downtime as much as possible has become pressing. For some companies, downtimes or even slow downs of 5-10 minutes can have a substantial affect on revenues.3
Enter the high availability solution! The very same tools that are used for high availability such as clustering, volume management and load balancing, can automate key procedures that drive the length of the downtime window as well as the cost of downtime administration. Savings from these types of value-add are very real and can help reduce or eliminate costs associated with planned downtime. In addition, the outage window is compressed so that business functions can continue with little or no interruption.
Do high availability and disaster recovery solutions produce real, tangible ROI or not? Let's sum it up.
Purpose/Impact: To enable faster recovery of lost data and stalled business operations in the event of a disaster.
Cost: Tangible IT investment.
Benefits: Faster time to recovery, lower lost revenues/productivity, reduced recovery costs.
ROI: Soft since the benefits are only realized in the event of a disaster.
Purpose/Impact: To proactively avoid some types of disasters before they occur.
Cost: Tangible IT investment.
Benefits: Reduced probability of disaster occurrence, improved operational efficiencies, reduced planned downtime windows and costs.
1. DMReview.com, October 26, 2004 Issue of DM Direct.com
2. Ken Miller, October 2004, Don't Recover - Failover, DM Direct
3. See DM Direct, October 2004, Planned Downtime, Sheri Atwood, Veritas Software
Dawna Paton and Dale Troppito are managing partners of the Gantry Group. Paton has helped guide the Gantry Group's rigorous ROI best practice models based on a 25-year career as chief executive officer, CFO, sales and marketing executive, and venture capitalist in high technology companies. You can reach her at email@example.com. Dale Troppito, company cofounder, believes that the technology leaders of the future will be those that understand the crucial role that a market-validated, value delivery strategy and compelling ROI play in shaping corporate competitiveness and customer satisfaction. You can reach her at firstname.lastname@example.org.
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