How data loss and backup method impact your business

December 9, 2020

Data is the lifeblood of modern organisations. The data each organisation creates is unique and needs to be stored safely and securely.

To ensure the safety of your data, backups of this data must be done regularly to lessen the risk of your information being lost when your primary storage platform is damaged or destroyed.

Just about everyone has experienced data loss at one time or another, whether it was due to a natural disaster, hardware failure, cyberattack or human error.

What happens after a data loss incident?

The impacts of losing your business data can include anything from spending hours recreating lost work product to losing your entire business due to severe data loss.

According to Gartner, for any business, the average cost could go up to US$5,600 (RM23,256) per minute, let alone for hours of outages.

For Malaysian companies, this number of immediate revenue loss is enormous.

Beyond the monetary costs, IT downtime can wear on your business’s productivity levels. Every time you get interrupted, it takes on average 23 minutes to get refocused on your primary task.

So how do you calculate the downtime cost of your business?

IT Downtime Formula

Cost of Downtime (per hour) = Lost Revenue + Lost Productivity + Recovery Costs + Intangible Costs

Lost Revenue = Revenue/hr x downtime(hrs) x uptime(%)

You need to calculate the amount of revenue generated per hour by your business; this would be the revenue per week/40 hrs.

An important component to figure out your lost revenue is your business’s revenue dependence on uptime.

Uptime is time/percentage your site is up and operational online. For example, if you are an e-commerce store and solely sell online, you are 100% dependent on the internet for your business’s revenue.

You will need to estimate the percentage amount of your income that is dependent on uptime.

Example: If your revenue is RM3500/hr and your network was down for 3 hours, and your uptime percentage is 30%, your lost revenue would equal: RM3,150/hr

Lost Productivity = Employee Salary/hr x Utilization % x Number of employees (with same Utilization %)

Due to down servers, employees are unable to perform their jobs. But their salaries are a fixed cost and do not change even during the downtime.

To calculate the productivity lost, you must first calculate each employee’s salary/hr. Then, estimate the percentage of productivity that is dependent on uptime, and this could be different across employees.

(Uptime, remember, is simply the time or percentage your site is up and operational.)

This percentage is known as the Utilisation Percentage.

Recovery Costs = sum of costs accrued while fixing the issue

They can include but are not limited to:

  • Repair services
  • Replacement parts
  • Lost data recovery
  • Other costs due to loss of data

Intangible Costs = costs that can sting the most for the long-term

These occur when downtime damages your reputation or your brand.

Including intangible costs into the IT Downtime Formula gives a better understanding of the long-term consequences that can occur due to downtime.

Final Cost

Once you have calculated each separate cost, you can now finally plug them into the main formula and tally up your total downtime cost.

Having the right backup solution is one of the keys to minimising IT downtime

Backup has been an essential part to minimise IT downtime. But the right backup solution is much more critical to balance your cost and complexity of managing it.

A look back at traditional backup solutions

Traditional backup solutions enable you to make a copy of your data to a secondary backup device.

Compliance and common sense require you to ensure the secondary backup device is not stored near your primary data storage location.

This requirement exists to mitigate the risk of losing both your primary and backup storage if something terrible happened and end up destroying the entire site where your data is stored.

What are the advantages of cloud backup solutions?

The internet, along with all its other benefits, has created the ability for individuals and business to safely and securely back up their data to cloud platforms.

This automatic offsite capability has eased the operational burden of needing to ensure backups are taken offsite.

Cloud backup solutions have further benefits over traditional backup solutions in addition to the automatic offsite capability.

5 key advantages of backing your data up in the cloud instead of traditional backup

1. Cloud backups deliver scalable capacity

Traditional backup solutions are limited to the capacity of the storage media being used to store the backed-up data; this is not the case with cloud backups which are scalable, growing capacity effortlessly as your data increases.

Not only do cloud backups scale as you grow, the need to plan capacity, as is the case with traditional backup solutions, is negated.

For example, if you need to back up 20GB of data today with a cloud backup solution, you start paying for the 20GB you use.

With a traditional backup solution, you would need to estimate your data growth for the next 2 to 3 years and then invest in storage capacity that would meet that future requirement.

So, you may need 20GB today but may end up procuring storage capacity for 200GB, which is both costly and conflicting with your current need.

2. The costs work out in your favour

Cloud backups work on a pay-per-use subscription model.

There is a very low barrier to entry as you can subscribe and utilise an enterprise backup platform at a fraction of the cost.

Also, there is no capital expenditure in the form of hardware needed to store the data as well as software necessary to automate and manage the backup process for you.

Furthermore, the additional hardware that needs to be procured for a traditional backup solution must have the capacity to sustain your backup requirements for 2 to 3 years which forces you to pay for hardware capacity you will not use in the short term.

3. Cloud backups deliver simplicity

When compared to traditional backup solutions, cloud backup solutions are simple to deploy. There is generally minimal configuration, and you can be up and running in minutes on a fully redundant, enterprise-class backup platform.

Traditional backup solutions require the installation and configuration of hardware and software which takes time, effort and specialist skill.

4. Freedom from lock-in contracts or investments

The best cloud backup providers don’t lock you into contracts or investments in hardware and software.

Cloud backup solutions can be terminated with a short notice period, whereas traditional backup solutions generally involve purchasing perpetual licenses with annual maintenance upfront.

This substantial upfront investment in traditional backup solutions creates a situation which makes it financially challenging to disengage from the solution down the line.

5. Reduced management time

Cloud backup solutions also require less management and maintenance overhead than traditional backup solutions.

Backup solution companies are investing heavily in research and development on their cloud platforms as they see the traditional backup solution market shrinking.

This increased investment has led to simple, easy-to-use interfaces which anyone can manage with little to no training required.

Besides, cloud backup solutions are also soft-touch in that there is minimal impact on operations when backups are tested due to the availability of offsite testing environments.

Cloud Backup much more superior

Based on these fundamental differences between cloud backup and traditional backup solutions, one can see that cloud backup is far superior.

One cannot argue with the automatic offsite capability, better capacity management, improved cost efficiency, increased simplicity, superior freedom and enhanced management experience which cloud backup solutions have to offer.


Data loss impact can be extremely devastating to all business and organisations across the globe. We believe that an excellent modern cloud backup solution is the first step you need to look into when it comes to IT downtime.

AXO Technologies Sdn Bhd (1276407-U) is an innovative and thoughtful IT consulting firm based in Selangor, Malaysia. We help organizations solve their IT challenges by leveraging technology in their business process.

With our certified professional team, we strive to provide a better understanding and relationship with our customers.
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