Are IT DR Budget Comparisons Always Indicative of a Good Spend?

We are often asked by our clients to compare their Disaster Recovery spend and staffing to like organizations and industries as part of our Disaster Recovery Assessment engagements.  This spend comparison typically includes number of staff by Disaster Recovery budget spend, overall Disaster Recovery spend, per server Disaster Recovery spend and per user Disaster Recovery spend.  This comparison is performed to give management peace of mind that they are spending the right amount of dollars on the recovery environment(s).   In many cases, its pure disinformation.

Here is why.  Comparing what you spend against other organizations is not indicative that the dollars being spent are prudent, appropriate and  supporting a recovery environment that will meet the needs of your organization and customers:

  • Example 1:  Large multi-billion organization is spending 2% more than their industry annually on multiple backup sites, offsite storage, network, hardware maintenance, staff, etc.  Looks good, right?  The in-depth assessment reveals the budget simply maintains multiple backup sites and strategies that can simply provide for standalone application recovery and not recover the  business.  The spend comparison, even though looking like they spent more than their peers, actually showed dollars were being poorly spent on strategies and technologies that had returned little to no value.
  • Example 2:  Large regional hospital wants to compare themselves against the healthcare industry.  In our experience, hospitals have experienced severe budget constraints over many years and often do not spend the appropriate dollars needed to protect their highly complex computing environments.  So, a comparison against other hospitals may not always be a good guideline.  Lastly, we view hospitals as important as the financial industry.   Hospitals should compare themselves against the leaders in Disaster Recovery, the financial industry.  I always say their “human transactions” are more valuable than “money transactions”.
  • Example 3: Private college in the northeast wants to develop a working recovery environment based on what the industry is spending.  Well, for one, colleges like hospitals, have not been big spenders and two, creating the initial environment will take significant investments over time before spending is somewhat stabilized.

In the many cases we see, the Disaster Recovery environment requires significant investments over time to even reach a stable point of operation before an annual budget stabilizes.  And even then, you could expect a 15% or more budget increase annually with maintenance, new hardware, faster network, storage, etc.  This happens in new and existing recovery programs.  Comparing yourself from a spend perspective can be helpful when you have a stable, working recovery environment that can recover your business.  This allows you to compare your spend more evenly.

Last, don’t always compare to your industry; compare yourself to those who do it best to give you a goal in mind.

Michael Herrera is the Chief Executive Officer (CEO) of MHA. In his role, Michael provides global leadership to the entire set of industry practices and horizontal capabilities within MHA. Under his leadership, MHA has become a leading provider of Business Continuity and Disaster Recovery services to organizations on a global level. He is also the founder of BCMMETRICS, a leading cloud based tool designed to assess business continuity compliance and residual risk. Michael is a well-known and sought after speaker on Business Continuity issues at local and national contingency planner chapter meetings and conferences. Prior to founding MHA, he was a Regional VP for Bank of America, where he was responsible for Business Continuity across the southwest region.


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