Any organization that has to face unexpected data loss risks falling behind. It can happen to all types of businesses at any time and create a domino effect that has long-term consequences for the company and its financial health.
Data loss can be triggered by both internal users (accidentally deleting data and damage to on-premise servers) and external forces (viruses, ransomware attacks, and natural disasters). As organizations become more dependent on quick and reliable access to digitally-stored information, a data loss incident can disrupt day-to-day functions and even bring the organization to a complete standstill until the matter is resolved.
Leaving data unprotected is a costly endeavor. A 2014 study found that 1 in 5 companies that experienced data loss said the incident cost them between $50,000 and $5 million. Small businesses are at a greater risk of data loss because they often don’t have adequate security to prevent data loss and don’t have a disaster management plan to deal with a crisis situation.
Apart from the financial consequences, there are several other costs that many firms tend to overlook. Here we’ll take a closer look at these additional consequences of data loss:
1. Productivity Losses
Whether an organization gets hit by malicious cyberattacks that hold information for ransom or damage to the hardware, the company experiences a sharp decline in employee productivity for several days. Without adequate backup, employees don’t have access to critical business information needed to carry out work.
Sales also decline as the company scrambles to recover information about inventory levels, customer details, and product information. This, in turn, has a direct impact on the finances of your company. The Strategic Resource Institute reports that organizations that are unable to resume operations within ten days of losing access to their data run a high risk of going under.
2. Damage to Reputation
In this day and age, news travels fast. Customers expect that companies will have reasonable security measures in place that prevent permanent loss of data. If your company is unable to protect information and provide seamless services, it will negatively damage your reputation. Not only do you risk turning away existing customers, but you also lose ground with potential customers. Many large organizations spend hundreds of thousands of dollars after such incidents to restore brand faith and repair customer trust. Unfortunately, smaller businesses don’t have the means to carry out massive campaigns making preventative measures all the more essential.
3. Loss of Confidential Information
Data loss caused by negligence or deliberate theft can leave confidential business information and customer data exposed. If employee records or customer data are compromised, the state can levy fines against the company directly. This is because companies are expected to have adequate security measures in place that protect against such data loss. Affected individuals can even take legal action against your company, which can further rack up the damages.
4. Permanent Business Failure
The non-financial and economic impact of data loss can leave companies reeling from the incident. Unfortunately, sometimes businesses are unable to recover from the loss leading to permanent business failure—even large businesses aren’t immune to the consequences.
The direct and hidden costs of a major data loss event are particularly devastating for small and mid-sized enterprises. Studies show that 60% of SMEs that experience a data breach close down within six months of the attacks.
How to Manage Data Loss?
The good news is that there are techniques that can help you prevent the risks associated with data loss. Moving your information to the cloud is the best way to prevent data loss caused by malfunctioning hardware and natural disasters. Cloud storage allows companies to safeguard critical business information and prevent malicious actors from accessing confidential data.
Work with the Leading Commercial Hosting Provider
If your small business is currently using QuickBooks or Sage ERP and storing information in on-premise servers, it’s essential to re-evaluate your data security mechanisms. As a leading application hosting provider, gotomyerp offers secure and hassle-free cloud hosting services to clients in the United States and Canada.
We provide secure Sage and QuickBooks cloud services at competitive rates and strongly believe in designing tailored solutions that meet all your data security and functionality requirements closely. Apart from securing all your business information and tools, our experts can guide you regarding data security best practices and help you implement a robust disaster recovery plan.
To get started, call us at (877) 888-5525 or try a live demo today!
