How CFOs Can Learn to Love Disaster Recovery
I admit it: I’ve always hated the term business continuity/disaster recovery (BC/DR). It just sounds so broad and like spending money in case something bad happens. And it always comes wrapped with technical terms like “recovery point objectives,” “failover SLA’s,” and “OS compatibility.” Frankly, all those technical terms just don’t resonate with me.
What does get my attention are terms like “lost revenue”, “worker productivity,” “customer satisfaction,” and “damage to my company’s brand.” That’s what keeps me up at night and motivates me to invest precious funds. Like most CFO’s, I prefer to invest in things I believe will earn financial returns. So while I can’t say I love BC/DR spending, I do like strategic BC/DR initiatives that directly support business issues I’m paid to worry about.
Top of mind
Technology is so deeply rooted into every organization’s DNA that any disruption can have massive consequences. It’s sobering to think that:
- Absent an effective recovery plan, 90 percent of companies that experience a serious disaster close within five years;
- For every day of down time, you can lose a full point of market share which takes three years to win back; and
- Half of companies that lose their critical systems for over 10 days never fully recover. ·
As a result, taking action to preserve business continuity should be top of mind for all C-level executives. But pitch this in the name of “BC/DR” and you may still see executive eyes glaze over.
A core problem with undertaking BC/DR is that it’s still too often branded an IT department issue. Some of that, frankly, comes from IT department tendencies to be possessive of corporate technology tools. That sort of attitude, unfortunately, creates disadvantage when funding is sought for a particular BC/DR effort.
The more progressive IT departments I’ve seen combat this by really integrating themselves into operations. They proactively seek healthy doses of user input and treat their work as a competitive service for everyone in the organization, including the CFO. In one of my earlier columns, How to Align IT with Income I said how doing this can help directly align IT staff efforts with business profits.
CIOs and IT directors who rebrand their teams as creators of income, as opposed to a cost center, describe new technology projects in terms of improved sales and enhanced cash flow. When they talk to CFOs about BC/DR, they don’t lull them to sleep with technical terms and obscure risks. Instead, they command attention with clearly illustrated examples of how they will protect hard-won revenue streams, preserve the company’s brand and support the critical business processes an organization depends on. They clearly articulate how an effective business continuity plan can be accomplished in incremental steps versus one big bang. And they craft realistic recovery objectives for specific applications like ERP, CRM and email by consulting with respected system users.
Virtualization options have been a big shot in the arm for BC/DR projects of late. Most CFOs can now appreciate savings realized from the virtualization of server and storage environments. As they learn these same virtualization techniques make things like replication and automatic failover more cost effective, BC/DR investments become that much easier for CFOs to like. This is especially true when it, at least in part, rationalizes IT investments a company has already made.
Ironically, many CFOs and CEOs are becoming far more enthusiastic about enterprise cloud computing options than their fellow IT leaders. The fact is, most IT directors still have mixed feelings about trusting critical systems and applications to a third party. While it’s true many cloud service providers simply can’t back up their marketing claims, there are established providers with enterprise class infrastructure-as-a-service (IaaS) built to standards exceeding what a typical data center can match.
An appropriate amount of due diligence by the IT department can distinguish these enterprise class cloud providers from the pack. As the cloud services market continues to mature, CFOs will expect more and more analysis on outsourcing any new IT investments, especially BC/DR.
The savings, predictable expense and scalability many organizations have realized from established managed services providers also keeps raising the comfort level for outsourcing IT.
CFOs I’ve spoken with recently view the economics of hardware based cloud services as a logical extension of the pooled labor a managed services contract offers. This clearly holds true for storage backup and other BC/DR objectives. So when further internal virtualization isn’t an option, tapping the cloud for BC/DR needs can leverage very similar economies of scale. In fact when presented in a smart fashion, you may even get your CFO to think it was his or her idea to fund BC/DR needs that way in the first place.
The truth is that the key objectives of BC/DR efforts, including risk management and business continuity, are embedded in executive job descriptions. This means discussing it with your CFO and CEO should be an outstanding opportunity to showcase the essential role IT plays in the company’s success.
Business continuity planning never was all about technology. The exercise of developing and implementing a BC/DR plan can foster healthy conversations that contribute to a sense of teamwork and trust. The end game is shared confidence in your processes and tools, and the ability of your people, to work together to face whatever challenges lay ahead.
That way everyone can sleep better at night. I like that.
Greg Baker is the chief financial officer for Logicalis, an international provider of integrated information and communications technology solutions and services, where he oversees finance, accounting, treasury and strategic planning. Prior to joining Logicalis, Mr. Baker held key finance positions with Thomson Reuters, a Tier-1 automotive supplier, private equity firm Talon LLC, and PricewaterhouseCoopers.