Business and infrastructure connection
The digitization index of small and medium-sized businesses in Russia averaged about 45 p.p. out of 100 possible in 2019. According to a joint study by Otkritie, Google, Mail.Ru Group, Moscow School of Management Skolkovo, RAEC and NAFI, about 46% of respondents use cloud technologies, that is, almost every second business depends in one way or another on IT infrastructure.
For a large business that processes tens of thousands of orders a day, it is critically important to monitor infrastructure downtime. If we compare the level of risk and technical support, we can say that such companies are especially interested in increasing resiliency. Several million a month for optimization is not a problem for large companies, because the same amount can be lost in idle time.
For example, a large courier service can make several thousand deliveries a day. In the event of a failure of the system, through which the couriers find out the delivery address and the customer’s phone number, the couriers will not reach the addressees and will not even be able to contact them. Without a well-thought-out plan of action in such situations, recovery can take hours or even days. At this time, the company will not have new orders, the downtime of couriers will need to be compensated, and customers will remain dissatisfied with the quality of services. Direct losses, reputational losses and lost profits – this is what can happen even with a small business if the system fails.
Business dependency level
There is no one-size-fits-all solution to assess the level of business dependence on infrastructure. For a rough estimate, you need to focus on the organization of processes, their dependence on each other and their own tasks. Let’s say the owner of an online store has a PBX integrated into a CRM system: this lowers the threshold of requirements for hired employees and helps to process orders faster. The operator may not fully understand how the store works, or have information about customers – prompts simply appear on the screen.
This allows you to easily personalize the dialogue: you immediately know the name of the client and his previous purchases. In this case, you save on staff training: even an intern can handle the script and integration. Compare this situation with the classic call center scenario, when an agent has to look up customer information in a table. An untrained employee is unlikely to be able to cope with such a task quickly and efficiently, but this way the processes are less dependent on the work of the infrastructure part.
Dependence of revenue on IT systems
In some cases, business monetization directly depends on IT systems. For some, their collapse could lead to a complete halt: fintech, telecom and e-commerce. But if a conservative business (for example, a sawmill) is faced with a shutdown of IT systems for a couple of days, this is unlikely to lead to collapse. Some of the data can be saved and restored manually later, and the business can continue to operate and generate profit.
An intermediate situation can occur at call centers and those companies that accept orders online, but also have offline stores. If online is not available, interaction will occur through another channel: for example, by calling a store. If the online business does not have a large budget, the logical solution would be cloud storage of backups of all data that can be restored within a few hours or replicated directly in the cloud.
The larger your business, the more important it is to conduct an in-depth analysis of possible risks. If a business sells only a small part of the goods over the Internet, and the rest is through offline traffic and in the format of courier delivery via a call, then the business depends on IT for this small part. If your call center has telephony, but the IT system does not work, then the operator will be able to receive the call, but will not recognize a regular customer.
Imagine a situation when a company has been supplying products to a catering service for a long time, the orders of which amount to hundreds of thousands of rubles. In the event of a failure of the IT system, instead of a couple of clicks in CRM, the employee will have to collect the order from scratch – and this is the company’s reputation costs. If the store receives not 30 orders per hour, but 300, then such a flow is even more difficult to process.
In such cases, the cost of an employee’s work is one of the important factors. There is no equally correct business model. The value lies in finding a balance between the qualifications of employees and the level of IT systems. In one case, where CRM is integrated into the PBX, a system crash will lead to complete downtime, but the business saves on employee fees. In the case when the integration is not so serious, and the labor of employees is more expensive, the business will continue to lose money, but in the long term.
How to count losses
If there is a downtime in the company, for example, the system fails, then you continue to pay employees for this time. And this is not only wages, but also taxes, deductions, rent of premises, electricity costs. Ultimately, hourly downtime is calculated as a weighted average of revenue over a period of time.
For example, if an online store earns 300 million rubles a month, and a working day lasts 10 hours, then in case of downtime, the business directly loses one million rubles per hour, and taking into account indirect losses, this figure still increases, sometimes quite significantly. We wrote about a cyberattack on Garmin systems , during which the company’s cloud system was completely inaccessible. In this case, the company did not incur significant losses in revenue directly, but at the same time, customers could not change the dial on the watch, and amateur pilots could not update flight maps, as required by regulators. This could further affect Garmin’s sales.
There are different methods of risk accounting. It can be pledged commercially: the company assumes in advance that a certain amount of time per year its systems become unavailable to customers. Based on the weighted average revenue, the risk is embedded in the financial model. On the contrary, you can invest in backup infrastructure, backup systems and cloud data replication, reducing potential downtime. But the higher the fault tolerance of the business, the higher the cost of such systems, and vice versa. With the right understanding of the cost of downtime, you can choose the right solution to mitigate the risks of each business. Only the business owner can find this balance.
If your revenue is small and your IT dependency is not very high, look for backup or pay-as-you-go services, where you don’t pay for resources until you need them.
If the dependence is average, then pay attention to the organization of replication of information systems to the cloud – the creation of additional backup data centers based on cloud providers and the drafting of a DRP (Disaster Recovery Plan) with the involvement of a professional team.
If your business is directly dependent on IT, ensure that there are more than two geographically dispersed platforms operating in mirror mode.
If you have a completely offline business, take care of the backup creation and retention policy to ensure the safety of your data. Pay special attention to the storage of personal data, if they are hosted with you. Read our material on how personal data is regulated in terms of legislation. In future articles, we’ll show you how to prepare your infrastructure for storing such data.
Small companies, depending on an hour of downtime, have enough backup, while large businesses can use large storage and additional security services. The cheaper the downtime hour, the more downtime hours a business can afford. If several hours of downtime are calculated in millions of losses, it is imperative to prepare a complete Disaster Recovery system, which will restore the business to normal operation in a few minutes.