The Harsh Reality of Data Loss

By Don Lewis

August 28, 2006

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Loss is an unpleasant fact of modern life. 99.9 percent of all businesses have experienced at least one costly incident of data loss; causes include operating system crashes, failed software installations or updates, user error, power outages, and hard-drive failure. These incidents can have such a damaging effect that they are sometimes called "digital disasters."

According to a report by Deloitte Touche Tohmatsu, more than 50 percent of businesses have suffered non-recoverable data loss at one time or another. Just how serious is the problem? The report goes on to say that one-third of all digital disasters will result in financial setback.

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• 46% said each hour of downtime would cost their companies up to $50k
• It takes 19 days and costs $17,000 to retype 20 megabytes of sales data
• The same volume of accounting data takes 21 days and costs $19,000
• Recreating data from scratch is estimated to cost between $2000 and $8000/MB

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So what's a business to do?

Back It Up (It's the Law)!

Of course, businesses have a financial incentive to safeguard their electronic data. But now there's an even more compelling reason to do so--it's the law! Sarbanes Oxley Act (SOX) of 2002 requires business to retain certain kinds of information for specific durations. Lost data could put a business out of compliance with SOX and invite in possible legal action.

The most common types of business data that need to be protected include: financial information, business plans, employee data, classified or technical information under a non-disclosure agreement (NDA), product or service data and working documents, and communication documents (e-mails). Regardless of the type of data, the new rule of thumb is that documents need to be kept in a tamper-proof format for at least five years.

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