Disaster Recovery Cost Comparison: Managed DR vs. In-house

Introduction

“Our CIO wants a Disaster Recovery cost breakdown comparing in-house versus outsourced options by next week.”

If this sounds familiar, you’re among the 73% of IT leaders currently reassessing their disaster recovery (DR) strategies. With disaster recovery costs typically consuming 15-25% of IT budgets, choosing between building your own DR infrastructure or opting for a Disaster Recovery as a Service (DRaaS) Provider aka outsourcing disaster recovery has significant financial implications.

In-house disaster recovery involves building and maintaining a secondary data center or offsite location to store duplicates of critical systems and data. DRaaS, on the other hand, leverages the power of the cloud, offering businesses a cost-effective and flexible solution where a third-party provider hosts the recovery environment.

Both options have their merits, but the real question is: which is more cost-effective and better suited to your organization’s needs?

In this blog, we’ll dive into a cost comparison of in-house disaster recovery versus DRaaS, considering not just the dollars but the operational impacts and long-term benefits. Whether you’re navigating budget constraints, evaluating scalability, or aiming to reduce complexity, this analysis will provide the insights you need to make an informed decision.

Disaster Recovery Cost Comparison: In-house vs. Managed (DRaaS)

When evaluating disaster recovery solutions, it’s crucial to consider various factors that can influence the overall cost. These factors include:

1. Size of the organization
2. Complexity of the IT infrastructure
3. Recovery time objective (RTO)
4. Recovery point objective (RPO)
5. The level of security required.

To provide a general idea of the disaster recovery cost range, small to medium-sized businesses might spend between $10,000 to $50,000 annually on disaster recovery, while larger enterprises with more complex needs could see costs ranging from $100,000 to several million dollars per year. These estimates include both direct and indirect expenses.

Breaking down In-house Disaster Recovery Costs

Building an in-house disaster recovery solution is like creating a complete backup of your IT infrastructure. Think of it as building a second data center that can take over when your primary system faces issues. The investment required varies significantly based on your organization’s size and how quickly you need to recover your systems. Let’s break this down by organization size to help you understand what this investment might look like for your business.

Small Enterprise (100-500 employees): Small enterprises typically invest between $75,000-$190,000 annually specifically for disaster recovery capabilities. This represents additional infrastructure and services dedicated to DR purposes, separate from primary production infrastructure. Here’s what this DR-specific investment covers:

• Hardware ($20,000-50,000): Secondary/redundant server infrastructure and storage systems dedicated to DR. This includes backup servers, additional storage devices, and networking equipment specifically for the DR environment.
• Software ($5,000-15,000): DR-specific tools and licenses for backup, replication, and recovery management.
• Personnel ($25,000-45,000): IT staff time dedicated specifically to DR management and testing (typically partial FTE allocation).
• Facilities ($15,000-40,000): Secondary site costs solely for housing DR infrastructure.
• Connectivity ($10,000-40,000): Additional network connections specifically for DR purposes, enabling replication between primary and backup sites.

Mid-size Enterprise (500-2000 employees) As organizations grow, so do their disaster recovery needs. Mid-size enterprises typically invest $215,000-575,000 annually to ensure business continuity:

• Hardware ($50,000-150,000): Secondary/redundant enterprise systems dedicated to DR, including backup servers, storage arrays, and networking equipment specifically configured for failover operations.
• Software ($25,000-75,000): Specialized DR orchestration tools, replication licenses, and recovery management platforms separate from primary production software.
• Personnel ($60,000-150,000): Dedicated DR team members or allocated time from IT staff focused solely on DR planning, testing, and maintenance.
• Facilities ($50,000-120,000): Secondary site costs exclusively for DR infrastructure, including redundant power and cooling systems.
• Connectivity ($30,000-80,000): Additional high-bandwidth connections dedicated to DR replication and failover operations.

Large Enterprise (2000+ employees) Large enterprises often invest $675,000-1,750,000+ annually in comprehensive DR infrastructure and capabilities, separate from their primary production environment. This DR-specific investment includes:

• Hardware ($200,000-500,000): Multiple redundant enterprise-grade systems configured specifically for DR, including high-performance backup servers, dedicated storage arrays, and sophisticated failover networking equipment.
• Software ($100,000-250,000): Enterprise DR platforms, orchestration tools, and specialized recovery solutions separate from primary production licenses.
• Personnel ($150,000-400,000): Dedicated DR teams focused exclusively on disaster recovery planning, implementation, and testing.
• Facilities ($150,000-400,000): Multiple DR sites with enterprise-grade infrastructure, providing geographic redundancy for critical systems.
• Connectivity ($75,000-200,000): Dedicated high-speed, redundant network connections specifically for DR replication and failover operations.

How Recovery Requirements Affect Disaster Recovery Costs

Your specific recovery needs can significantly impact these base costs. Here’s how:

• Near-Zero Recovery Time (RTO): If your business needs to be back online within minutes of an outage, expect to add 40-60% to your costs. This requires maintaining fully operational backup systems that can take over instantly.
• Minimal Data Loss (RPO): If you can’t afford to lose more than a few minutes of data, plan for an additional 30-50% in costs. This requires sophisticated real-time data replication systems.
• High Availability: For businesses that need 99.99% uptime or higher, add 25-40% to account for redundant systems and advanced monitoring tools.

Understanding these costs helps organizations make informed decisions about their disaster recovery strategy. While building an in-house solution offers complete control, it requires significant upfront investment and ongoing commitment. This is why many organizations are now considering Disaster Recovery as a Service (DRaaS) as an alternative, which we’ll explore in the next section.

Understanding Managed Disaster Recovery Costs

Unlike building an in-house solution, DRaaS offers a more predictable, subscription-based cost model with significantly lower upfront investment. The costs scale with your organization’s size and recovery requirements, making it easier to match spending with actual needs. Let’s explore what DRaaS investment looks like across different organization sizes.

Small Enterprise (100-500 employees) Small enterprises typically invest between $30,000-75,000 annually for DRaaS services:

• Subscription Fees ($2,000-4,000/month): Covers basic DR infrastructure and management for 20-50 virtual machines.
• Storage Costs ($500-1,000/month): Production-grade storage for critical data and system backups.
• Compute Resources ($300-600/month): On-demand computing power for recovery and testing.
• Bandwidth ($200-400/month): Data transfer between your site and the DRaaS provider.
• Software Licensing ($200-300/month): Required software licenses for recovery environment.

Mid-size Enterprise (500-2000 employees) Mid-size organizations typically invest $75,000-150,000 annually for comprehensive DRaaS coverage:

• Subscription Fees ($4,000-8,000/month): Supports 50-200 virtual machines with enhanced recovery capabilities.
• Storage Costs ($1,000-2,500/month): Higher capacity storage with better performance characteristics.
• Compute Resources ($600-1,500/month): Additional computing power for more complex environments.
• Bandwidth ($400-1,000/month): Higher bandwidth allocation for larger data volumes.
• Software Licensing ($300-800/month): Extended licensing for broader application coverage.

Large Enterprise (2000+ employees) Large enterprises typically invest $150,000-300,000+ annually for enterprise-grade DRaaS solutions:

• Subscription Fees ($8,000-15,000/month): Covers 200+ virtual machines with advanced recovery features.
• Storage Costs ($2,500-5,000/month): Enterprise-grade storage with highest performance tiers.
• Compute Resources ($1,500-3,000/month): Substantial computing resources for complex environments.
• Bandwidth ($1,000-2,000/month): Dedicated high-speed connections for real-time replication.
• Software Licensing ($800-1,500/month): Comprehensive licensing for enterprise applications.

How Recovery Requirements Affect DRaaS Costs

Your specific recovery needs influence the final cost:

• Near-Zero RTO: Add 20-30% for instant failover capabilities and continuous data protection.
• Minimal RPO: Add 15-25% for real-time replication and advanced data synchronization.
• High Availability: Add 10-20% for additional redundancy and monitoring.

Cost Optimization with DRaaS

Unlike in-house solutions, DRaaS offers several cost advantages:

• Pay-as-you-go model means you only pay for resources you actually use
• No large upfront capital investment required
• Built-in scalability allows easy adjustment as needs change
• Reduced personnel costs as provider handles maintenance and updates
• Predictable monthly expenses for better budgeting

It’s important to understand these core pricing factors before vetting DRaaS vendors. Some providers, like Zmanda, offer a flat-fee DRaaS solution with no extra hidden costs. The monthly fee covers everything from computing power to security and disaster recovery.

This disaster recovery cost structure highlights why many organizations are moving toward DRaaS solutions – they offer enterprise-grade disaster recovery capabilities with lower upfront costs and more predictable ongoing expenses compared to in-house solutions.

Cost Summary: Managed DR vs. In-house (3-year estimate)

Small Enterprise (100-500 employees)

Cost Category	In-house DR	DRaaS
Hardware	$60,000-150,000	Included in subscription
Software	$15,000-45,000	Included in subscription
Personnel	$75,000-135,000	Included in subscription
Facilities	$45,000-120,000	Included in subscription
Maintenance & Monitoring	$54,000-129,000	Included in subscription
Subscription Fees	Not applicable	$157,500-393,750
Total Cost Range	$249,000-579,000	$157,500-393,750

Mid-size Enterprise (500-2000 employees)

Cost Category	In-house DR	DRaaS
Hardware	$150,000-450,000	Included in subscription
Software	$75,000-225,000	Included in subscription
Personnel	$180,000-450,000	Included in subscription
Facilities	$150,000-360,000	Included in subscription
Maintenance & Monitoring	$135,000-240,000	Included in subscription
Subscription Fees	Not applicable	$393,750-787,500
Total Cost Range	$690,000-1,725,000	$393,750-787,500

Large Enterprise (2000+ employees)

Cost Category	In-house DR	DRaaS
Hardware	$600,000-1,500,000	Included in subscription
Software	$300,000-750,000	Included in subscription
Personnel	$450,000-1,200,000	Included in subscription
Facilities	$450,000-1,200,000	Included in subscription
Maintenance & Monitoring	$225,000-600,000	Included in subscription
Subscription Fees	Not applicable	$787,500-1,575,000
Total Cost Range	$2,025,000-5,250,000	$787,500-1,575,000

While the initial cost of procuring disaster recovery hardware might appear lower compared to the multi-year subscription fees of DRaaS, a comprehensive cost comparison necessitates factoring in the total operational expenses associated with both solutions. This includes ongoing costs such as maintenance, personnel, and facilities, which can significantly contribute to the overall expense of in-house disaster recovery. DRaaS, with its predictable subscription-based model and lower upfront investment, often emerges as the more financially prudent choice in the long run.

Moreover, DRaaS offers a lower initial investment and a more predictable cost model compared to traditional DR. It’s important to note that in-house disaster recovery programs often incur significant recurring costs for maintenance and IT support, whereas DRaaS eliminates these recurring expenses.

Hidden Disaster Recovery Costs

In addition to the direct costs outlined above, there are potential hidden costs associated with both in-house disaster recovery and DRaaS.

Hidden Costs of In-house Disaster Recovery

• Downtime Costs: In the event of a disaster, businesses may experience downtime while their systems are being recovered. This downtime can result in lost revenue, productivity losses, and damage to reputation.
• Data Loss Costs: If data is lost due to a disaster, businesses may incur costs associated with data recovery, data recreation, and regulatory fines. Businesses without a predefined disaster recovery plan frequently find themselves scrambling to resolve issues. Failing to protect sensitive customer data can also lead to hefty fines from regulators.
• Opportunity Costs: Maintaining an in-house disaster recovery solution can divert resources and attention away from other strategic IT initiatives.
• Challenges in the Claim Recovery Process: Recovering from a disaster can be a complex and challenging process, with potential delays in insurance claims, issues with underinsurance, and difficulties in finding reliable contractors.
• Single Point of Failure: In-house disaster recovery can be susceptible to a single point of failure due to factors such as improper management of backups, lack of offsite backups, and disasters affecting a wide geographical area.

Hidden Costs of DRaaS

• Unexpected Usage Fees: Some DRaaS providers may charge additional fees for unexpected usage, such as exceeding bandwidth limits or storage quotas.
• Vendor Lock-in: Businesses may become dependent on their DRaaS provider, making it difficult to switch providers in the future.
• Performance Limitations: DRaaS solutions may have performance limitations compared to in-house disaster recovery, especially for applications with high I/O requirements.
• Service Level Agreement (SLA) Issues: DRaaS providers may have limitations in their SLAs, particularly in the event of large-scale regional disasters, which could affect recovery times and prioritization of customer support.
• Cloud-related Challenges: Utilizing the cloud for DR/BC planning can present challenges such as security concerns, compliance requirements, and potential issues with data sovereignty and jurisdiction.

Benefits of In-house Disaster Recovery and DRaaS

Benefits of In-house Disaster Recovery

• Control: Businesses have complete control over their disaster recovery infrastructure and processes. This includes physical control over backups and the ability to keep critical data in-house, preventing third-party access to sensitive information.
• Customization: Businesses can customize their disaster recovery solution to meet their specific needs and requirements. This includes building custom infrastructure and ensuring compatibility with niche or highly custom-built applications.
• Security: Businesses can maintain a higher level of security by keeping their data within their own infrastructure.
• No Reliance on Internet Connection: In-house disaster recovery eliminates the need to rely on an internet connection for access to data, which can be crucial in disaster situations where internet connectivity might be disrupted.
• Potential Disaster Recovery Cost-effectiveness for Smaller Companies: In-house disaster recovery can be more cost-effective for small to mid-sized companies with limited IT infrastructure and data storage needs.

Benefits of DRaaS

• Cost-effectiveness: DRaaS can be more cost-effective than in-house disaster recovery, especially for small and medium-sized businesses. This is because DRaaS eliminates the need for significant upfront investment in hardware, software, and facilities.
• Scalability: DRaaS solutions are easily scalable to meet changing business needs. This allows businesses to adjust their disaster recovery resources as their IT infrastructure grows or changes.
• Flexibility: DRaaS provides greater flexibility and agility in responding to disasters. This is because DRaaS solutions can be quickly deployed and configured to meet the specific needs of a disaster scenario.
• Reduced Management Overhead: DRaaS providers handle the management and maintenance of the disaster recovery infrastructure. This frees up internal IT staff to focus on other strategic initiatives.
• Faster Recovery Times: DRaaS solutions can provide faster recovery times compared to in-house disaster recovery. This is because DRaaS providers have dedicated infrastructure and expertise in disaster recovery.
• Minimized Downtime and Data Loss: DRaaS solutions are designed to minimize downtime and data loss in the event of a disaster. This is achieved through features such as automated failover processes and continuous data replication.
• Meeting Service-Level Agreements (SLAs): DRaaS can make it easier for businesses to meet their SLAs for disaster recovery. This is because DRaaS providers offer guaranteed recovery times and performance levels.
• Simplified Operations: DRaaS simplifies disaster recovery operations by providing a managed service that handles all aspects of disaster recovery planning and execution.
• Improved Time to Value: DRaaS can improve time to value by providing a faster and more efficient way to implement and manage disaster recovery.
• Access to Expertise: DRaaS providers offer access to specialized talent and industry-leading expertise in disaster recovery. This can be particularly beneficial for businesses that lack in-house expertise in this area.
• Dedicated Focus on Disaster Recovery: DRaaS providers can focus solely on disaster recovery, unlike in-house IT teams who have to handle various other tasks. This dedicated focus can lead to improved disaster recovery planning and execution.
• Automation and Reduced Manpower Requirements: Most DRaaS solutions offer automated backup, failover, and system recovery features. This automation streamlines the disaster recovery process and reduces the need for manual intervention.

DRaaS Provider Landscape

The DRaaS market is comprised of various providers, each offering different features, capabilities, and pricing models. Some of the significant DRaaS market vendors include AWS, Microsoft, IBM, VMware, 11:11 Systems, Recovery Point Systems, InterVision Systems, TierPoint, Infrascale, and Zerto. These providers offer a range of DRaaS solutions to meet the needs of different businesses, from small and medium-sized enterprises to large corporations.

When selecting a DRaaS provider, it’s essential to consider factors such as the provider’s experience, expertise, service level agreements (SLAs), security measures, and pricing structure. It’s also important to evaluate the provider’s ability to support the specific applications and systems that need to be protected.

Conclusion

Choosing between in-house disaster recovery and DRaaS is a complex decision that depends on various factors, including budget, technical expertise, security requirements, and recovery time objectives (RTOs). While in-house disaster recovery offers greater control and customization, it comes with significant upfront investment and ongoing operational costs. DRaaS, on the other hand, provides a more cost-effective and scalable disaster recovery solution with faster recovery times and reduced management overhead.

However, the final decision should be based on a thorough assessment of the organization’s specific needs and circumstances. For businesses with limited IT resources, budget constraints, or the need for rapid recovery times, DRaaS is often the more viable option. DRaaS offers numerous benefits, including cost-effectiveness, scalability, flexibility, reduced management overhead, faster recovery times, minimized downtime and data loss, and access to specialized expertise.

In conclusion, while in-house disaster recovery might be suitable for organizations with specific security or compliance requirements that necessitate complete control over their data and infrastructure, DRaaS offers a compelling alternative for most businesses seeking a cost-effective, efficient, and reliable disaster recovery solution.

Choose Zmanda as Your DRaaS Provider

Zmanda, in partnership with BETSOL Global IT Services, delivers a comprehensive DRaaS solution that helps organizations protect their critical infrastructure while eliminating the complexity of managing disaster recovery in-house.

• Fast RTO and RPO: When every minute of downtime counts, our solution ensures rapid recovery, keeping your business running smoothly.
• Cloud-Powered Scalability: Our hybrid cloud architecture offers the flexibility to grow with your business. Whether managing data from on-premise systems, cloud environments, or hybrid setups, Zmanda scales seamlessly with a pay-as-you-go model.
• Automated Failover and Failback: Don’t let disasters disrupt your business. Our automated systems ensure a smooth transition to backup systems and graceful recovery.
• Continuous Data Protection: Real-time protection ensures your critical data is always safe and ready for recovery.
• Compliance-Ready: Meet your regulatory requirements with our compliance-ready infrastructure.

How Zmanda DRaaS Works

1. Initial Assessment & Customization: Tailored assessment of your infrastructure to set clear recovery objectives.
2. Continuous Backup & Replication: Real-time backups and secure data replication ensure your data is protected offsite.
3. Proactive Monitoring & Alerts: 24/7 monitoring provides instant alerts for disruptions.
4. Regular Testing & Recovery Drills: Routine recovery drills ensure your disaster recovery plan stays optimized.

Unsure about your DR needs? Schedule a consultation with our DR experts to learn how Zmanda DRaaS can protect your critical business operations book a meeting today!