The Cost of Data Loss

When it comes to disaster recovery, prevention is the best medicine. Although this principle is not new to our culture, many companies learn this truth the hard way.

According to Graziadio Business Review, Pepperdine University’s peer-reviewed online business journal, in a given year, there are an estimated 4.6 million episodes of data loss. The estimated average cost of each data loss episode is $3,957, with $340 spent on technical services such as disaster recovery, $217 spent on lost productivity and $3,400 the approximate value of the lost data itself. Given these costs, Pepperdine’s journal then estimates the total annual expense of United States’ data loss to be somewhere in the vicinity of $18.2 billion.

But the cost to some businesses far exceeds the $4K average per data loss episode. In August of 2010, BBC Mobile reported that a European insurance company was fined £2.3m (3.8 million U.S. dollars) due to the loss of data containing the personal details of 46,000 customers.

So what causes data loss? Well, according to the report, hardware failure represents 40 percent of data loss, followed by human error accounting for a whopping 29 percent. Software corruption and viruses come next, at 13 and 6 percent respectively, followed by theft at 9 percent and finally, hardware destruction at 3 percent.

While the data recovery process can be expensive and even sometimes tragic, data center services such as co-location are simple and relatively inexpensive. Co-location services make it possible for companies to secure their files and data in ways that they might not be able to do in-house, significantly increasing the overall security of their company data.

Not only are co-location services customizable to the individual company, but the basic packages offered by a data center also often offer far more than a company would be able to provide themselves without spending a higher percentage of its budget. As a result, co-location offers a realistic and financially-wise alterative to the traditional risk of an in-house server.