Yes, there is.

Before we get into the math, let’s answer the question, “why are we asking?”

Many companies treat backup as a best practice – they just do it, they don’t calculate the Return on Investment (ROI). They do it because they know that losing one critical piece of data could put them out of business. They do it because if the CEO comes in one morning and finds that her entire inbox is missing for some reason there’s going to be a lot of running around. They do it because we all know the person who mistakenly deleted critical data at the worst time (like right before the big meeting). And some do it because they read James Fallows’s article about how his wife’s gmail was hacked and she lost everything.

But, despite all this, sometimes we get asked, “What’s the ROI?”

By our estimate, the ROI on Google Apps backup for a company is between 250 percent and 350 percent, which means that for every dollar you spend on backup you save at least $2.50.  We calculated this ROI by comparing the cost of Google Apps backup (i.e. Backupify) to the cost of lost data. We looked at how often companies restore items from backup and multiplied that by the rough cost of manually recreating an item.

For example, we estimated it costs a company about $2 to create an email, so if the company restores 2 emails it just saved $4. It’s a very conservative view of cost since it assumes that all data is replaceable. This clearly isn’t true. For example, one of our customers had a dispute with one of their clients. Our customer needed to produce the original agreement but found it had been deleted. Our customer restored the lost document using Backupify and the client agreed to pay the thousands of dollars at stake. Obviously that document was worth more than $217 – the average value of a document using replacement cost – but $217 is a reasonably conservative place to start.

When you multiply the value of the items backed up by the probability they will be restored, you find that the average user saves more than $90 per year. Since the cost of Backupify is $36 per user per year, we’d consider that a good value. In addition, we did a second analysis based on the risk of having to restore whole accounts and found an ROI of roughly 350 percent. In both cases it clearly makes sense to backup.

Does this number seem right to you? To high or too low? We at Backupify obviously have a bias so I’d love your feedback on whether this sort of analysis seems on track to you. If you’re interested in the math you can download the whitepaper that outlines our return on investment model, How to Calculate the ROI of Google Apps Backup. Give it a read and let us know what you think.

Tagged as: Backup, Restore, ROI