Business Continuity: Balancing Risk, Costs and Price

What are the essential components of a top business continuity managed services practice? MSPmentor recently directed that question to BlackPoint IT Services CEO James Watson (pictured), who agreed to provide some insight into the secrets behind his successful BC practice. Here's a look at what he said about BC in this MSPmentor exclusive.

Watson cited three factors as essential in a BDR and BC practice. Through these factors, MSPs can do an effective job of calculating a business continuity plan and how to price it. Take a look.

What is the probability of being down?

Watson said MSPs need to consider various disaster scenarios, including hardware malfunctions, natural disasters, and even employee sabotage, for their customers. Complete a clear risk assessment for each customer to help them  to understand the chances of systems going down. “A lot of the time business owners misjudge the probability of an occurrence blowing off the probability as close to zero when in fact accidents, disasters, and hacking incidents happen every day,” he said.

What is the cost of downtime?

Calculate the true costs of downtime for your customer, Watson said.

“If your people can continue working for days without systems your cost of downtime is relatively low,” he said. “If your business is tied to your systems or work cannot be processed your downtime cost may be high. We have had both sets of clients, a small architecture firm accounting system went down and they were comfortable with it being down for a few days.”

However another customer, a lumber mill, shut down after someone tripped over a power cord. A server failed, and more than 200 workers were paid for doing nothing. That human error cost the company $10,000.

So calculate the cost of downtime in terms of labor paid, productivity lost, and all the other factors. Presenting such a number to your customer in terms of costs per hour or day can make a compelling argument for a solid business continuity plan.

What is the cost of recovery?

Watson explained that cost must not outweigh the risks. If a customer's cost of downtime is high, and the probability of disaster is high, customers may be expected to pay more.

“Prices in the BC space have been dropping dramatically with new technologies, and plans can be put together that fit most budgets,” he said. “We can minimize the probability of going down through redundancy and virtualization and well as improve the time it takes to recover systems. It all depends what is right for the client.”