Regardless of the reason for an outage, downtime impacts the ability of a financial institution to deliver on its service promise. Customers are literally cut off from accessing the institution's brand. Studies show that a financial services firm might lose millions of dollars for every hour of downtime. While a small community bank might incur a much smaller downtime cost per hour, proportionally it can have the same effect on the institution's bottom line. Many financial institutions cannot function without computer support for even a few minutes, and a catastrophic data loss would severely cripple its long-term survival. An information availability solution—software that ensures optimum availability and access to your data, applications, and networks—can mitigate and even eliminate these risks entirely and deliver other benefits as well:
- Lower the cost of doing business by eliminating downtime for planned IT maintenance.
- Protect business relationships with customers, partners, and suppliers.
- Meet service-level agreements (SLAs).
- Ensure compliance with government and financial regulations.
Consequences of Downtime: Count the Ways
Any planned or unexpected downtime in the bank's IT environment has the potential to cause both short- and long-term costs with far-reaching consequences. So how much does downtime cost your business? The answer may not be as obvious as you think. IT outages can unleash a procession of consequences that are both direct and indirect, tangible and intangible, short-term and long-term, immediate and far reaching. These costs include the following:
IT Outage Costs
Lost transaction revenue
Lost business opportunities
Loss of employees and/or employee morale
Decrease in stock value
Remedial labor costs
Loss of customer/partner goodwill
Financial penalties and fees
Driving business to competitor
Downtime also negatively impacts customer satisfaction levels, internal productivity of employees and decision-makers, and the organization's ability to comply with government regulations such as Sarbanes-Oxley, USA Patriot Act, Gramm-Leach-Bliley, Basel II, and a host of other governmental regulatory requirements.
To determine how much an hour of unplanned downtime will cost your institution, you need to ask a series of questions regarding the real-world impact it will have on your customers, your partners, your employees, and your ability to process transactions:
- How many transactions can you afford to lose without significantly impacting your company? For a bank, this is very often zero.
- Do you depend upon one or more mission-critical applications, such as F/X, ATM, or CRM software?
- How much revenue will you lose for every hour your critical applications are unavailable?
- What will the internal productivity costs be for the loss of available IT systems and applications?
- How will collaborative business processes with large business customers, securities firms, financial partners, and others be affected by an unexpected IT outage?
It's All About Recovery
For each application or combination of applications that comprise a critical business process, you should determine both a recovery point objective and a recovery time objective:
- Recovery point objective (RPO)—At what point in the data stream do you need to recover information, or more simply put, how much data can you afford to lose? Often this depends on the application; for example, a customer-facing application such as a demand transaction system will have a much higher RPO than a back-office application.
- Recovery time objective (RTO)—How long can your systems be down? How long should it take you to recover your applications and data? Again, this is often application-specific. A financial organization should have a priority list of critical applications and a corresponding RTO for each.
To measure the true cost of downtime and determine your recovery objectives, consider the totality of the all the people, processes, and business implications that will be affected by an IT outage. In addition, you'll want to identify how delays and latency in information delivery and accessibility can impact your bank's strategies and business functions:
- Risk and compliance—Ensuring regulatory compliance, enabling effective training, identifying and reducing risks to business processes, enabling banking industry initiatives
- Lending—Empowering a mobile workforce (in office and field), displaying new product offerings, providing real-time access to credit and rate information, supporting producers with on-demand accurate information, eliminating silos of lending information through consolidation, etc.
- Marketing and branch management—Generating revenue, developing products/services, managing the go-to-market process, targeting growth segments, improving customer satisfaction, enabling business intelligence, etc.
- Operations—Multi-channel management, refresh and transformation, core banking
- Productivity and process improvement—Web services, BPM and business process transformation, Check 21, revenue opportunities, electronic payment, payment hubs, etc.
Information Availability: Your Choice Depends on Your Objectives
Financial institutions of all sizes—from global powerhouses to small community banks—have cost-effectively protected themselves from the loss of time and money due to downtime with an information availability solution. Depending upon their capabilities, IT infrastructure demands, and RPO/RTOs, financial institutions can implement information availability in several different ways, including replicating data to a secondary server to maintain continuous application availability or frequently backing up data to a server at a remote location for disaster recovery in the event of a total facility loss at the production site.
Information availability should provide the optimum uptime that's right for the business, which could include one or more of the following options:
- Practical Availability—Provides readily available access to and protection of transaction and business data with RTOs and RPOs in the range of hours. By performing frequent data backups to a secondary server, this type of software solution provides smaller banks with the ability to significantly reduce any planned downtime and efficiently recover from an unexpected outage without the loss of large amounts of data or days or weeks of labor restoring the production environment. When the backup server is placed in a remote location, it also serves as a cost-effective disaster recovery solution.
- High Availability—Delivers continuous uptime with zero data loss so your applications and business data are always available when you need them, whether that's a 24x7 workweek or a 12x5 or 23x6 business environment. A backup server with a current replica of your application environment is always available to failover or switchover—on demand or automatically—to replace your production server with an RTO of seconds to minutes and an RPO of zero. High availability dramatically reduces the risks and costs of business interruptions and can also act as a disaster recovery strategy when the backup server is placed in a remote location.
- Multi-Platform Protection – Because separate business-critical applications may be running simultaneously (and interdependently) on different operating systems, some organizations require a multi-platform information availability solution. For instance, today's banks rely on Windows applications as well as applications running on everything from a System I server to a Linux server. All need protection at varying levels from unplanned outages to keep the business functioning and reduce the risk of lost revenue and productivity. Some information availability solutions vendors today can provide specific solutions to either run on those separate platforms or use the powerful capabilities of one server type (such as the System i) to protect all of these multiple OS applications running on the same servers.
For Financial Services, Uptime Is Money in the Bank
Let's look at one real-life example. For one leading provider of financial services for brokerages and auditing firms, high availability is the foundation of its business. This organization manages transactions to national exchanges for major brokerage firms and provides hosting services for major auditors by running critical applications that ensure compliance with the SEC. Any downtime resulting in unavailable applications or data could trigger a major crisis for both stockbrokers and the auditors who monitor them.
The company guarantees its clients continuous availability to their applications—and faces costly penalties and the loss of customer confidence when it cannot deliver. The solution this firm deployed uses the capabilities of a leading-edge high availability software solution to ensure applications and data are available to clients 24x7. By switching from production to a remotely configured backup server on demand or automatically during an emergency, the firm is able to meet its stringent SLAs and have confidence it will continue to meet them every trading day.
Utilizing real-time replication of data, applications, and system objects—even for its custom applications—the high availability solution constantly monitors system functions and even automatically switches users to a backup in case of sudden production system failure. If unplanned downtime occurs, a backup environment is ready on a moment's notice to assume the full business volume required by customers.
Is It Time to Invest in Availability?
An information availability solution provides significant benefits to small and mid-sized businesses by minimizing the risks and consequences posed by unexpected IT outages:
- Lowers the risk of significant costs to business such as lost revenue, lost productivity, legal penalties, and brand damage caused by unplanned downtime
- Protects business relationships with customers, partners, and suppliers by ensuring that applications and data will be available to satisfy their needs and unique schedules
- Enforces SLAs by maintaining predictable RTOs and RPOs in the event of an IT outage
- Enhances ROI on existing resources by assuring they will be available to generate revenue and support business processes
- Ensures compliance with government and trade regulations by securing email and record retention requirements and protecting the availability of business data and reporting processes