Understanding the cost of your data protection service is not a trivial matter. In fact, most B&R managers don't really know the total cost of protecting the business data in their environment. Typically, a manager may know how many headcount work in that area, or some amount of the B&R maintenance and licensing costs, but very few have the data, or the wherewithall to put it together into a cohesive cost model.

You may ask youself, "Why do I need to know how much my backup service costs anyway?." First and foremost, you need to be able to articulate to your Sr. Management the total costs to defend yourself against any outsourcing claims that they can do it better and cheaper. Secondly, you must understand your cost per GB per month to know now close your all-in costs are as compared to AWS or another cloud provider.  Finally, how can you adequately manage what you don't understand?  The financial data is key to properly managing your service.

Personally, I can implicitly tell you that there is not an IT service that I cannot run cheaper and better than any IT outsourcer with the exception of data centers. How can I make that assertion? I can make it because I created cost models for every IT service tower I ever managed, and the data very clearly shows this. One other thing to understand, is that since insourced IT does not need to generate a profit, you already have a 30% advantage over any outsourcer right out of the gate.

To begin developing your cost model, you will need to create a spreadsheet to begin documenting your category costs as you collect them during your journey. Bit by bit, you will see your service cost appear before your eyes, and you will be able to authoritatively speak to it to all your peers - as well as Sr. Management.

The first, and probably the easiest cost to acquire is the cost of your headcount. Depending on your organization, you most likely have regular full-time staff working on your backup team, and you may even have some consultants since most organizations use a mix of both.

In the first column of your spreadsheet, list each backup resource by name, and in the cell directly adjacent to their name, enter their annual burden cost rate. Remember, it is not their annual salary you need to capture, but their fully burdened rate - which is their salary plus their benefits. Your company probably has this data as it relates to each salary grade across the entire organization. Next, you need to capture the annual salary of any consultants that you have working on your backup team. List each in the first column, and then directly adjacent to the right, enter their annual salary. So far, your spreadsheet should look something like this:

Now you have the "simple" version of the resourcing cost model for your tower. As we continue, you will see that not all your data protection costs are contained in the typical backup and recovery tower. In most environments, data protection is a hybrid service made up of B&R costs PLUS storage-related costs. Most companies are leveraging D2D data protection technologies such as snapshots and storage replication in addition to traditional backups. 

For now though, we are going to keep things simple and continue capturing traditional B&R costs. Next, I typically capture my annual maintenance costs, broken down by item model or software / license name. The list needs to include every single hardware, software or license that you pay annual maintenance for, including reporting tools. The model should look something like this:

Remember that industry best practices dictate that you have the primary backup copy onsite, and a secondary copy of the backup data offsite.  Now we have to determibne the cost of keeping portable storage media (e.g. tapes) offsite if your organization uses backup tapes for your offsite copy of the backups.  If you are not in the financial approval chain that would allow you access to the monthly offsite storage bills, you may be required to reach out to the person in the organization that manages that aspect for your service.  You can categorize them by site, by region, or by whatever approach makes sense for your organization.

The next item I typically capture is my equipment costs.  In organizations that purchase equipment using CapEx, the depreciation is usually piped back into the functional IS area in the form of monthly depreciation chargebacks.  If your organization leases, then the annual lease costs is charged back in monthly increments.  Either way, it is important to capture what your backup equipment's annual depreciation or lease cost is and add that into your budget.

You can start to see how all this adds up, but you now have captured almost all of the "usual" costs associated with your backup service.  You probably need to capture any supplies that you normally purchase during the year like backup tapes and add that into your financial model.

The complication comes in adding fractionalized costs that represent the portion of your data protection service that is associated with your storage environment.

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