CALCULATING THE R.O.I.

OF GOOGLE APPS BACKUP

JUNE 2012

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

INTRODUCTION
The market for Software as a Service (SaaS) is growing rapidly, meaning that more and more organizations are creating and storing critical data in online services. With this growth comes the question of backup how do you ensure that your SaaS data is protected? While SaaS providers are generally very good at protecting against hardware failure and other types of system risk, they generally cannot protect against user error, hacking and malicious deletion. As a result, many organizations that use SaaS also employ a backup provider to ensure they always have a secure second copy of their data. For some organizations, backup is simply a "best practice" they backup their onsite data, so of course they backup their SaaS data, as well. However, the idea of "cloud to cloud" backup is still relatively new, and a return on investment (ROI) analysis can provide justification for backing up your SaaS data. This paper is written to help organizations build an ROI model and determine whether SaaS backup is a good investment. We're going to use Google Apps as the example since it is one of the most widely used SaaS services.

SETTING UP THE R.O.I. MODEL

An ROI model compares the cost of an investment to the benefit the investment will create. In this analysis, a backup service is a bit like an insurance policy you will pay a small amount periodically to avoid a large cost in the future. To perform an ROI analysis we first must define Cost and Benefit. COST The cost of a SaaS backup is fairly simple it's the price you will pay each month or year for the service, along with any training, setup or recovery fees. In the case of Backupify there are no training costs, setup fees or other expenses so the cost is the total amount of the monthly fees. BENEFIT The benefit of backup has two components the value of the asset being protected and the risk of the asset being lost.
2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

Value of the Asset You buy a backup service so that if an item is lost you can restore it quickly. The benefit is that you get the item back. What is that worth? Here are two ways to look at it: 1. Opportunity cost - the harm you suffer because you lack the data 2. Replacement value - how long it would take to recreate the lost item Opportunity cost has a very wide range of potential outcomes. If you mistakenly delete a spam email, the cost may be zero (or in some sense negative you're better off without it!). If you delete the presentation you're going to give to a key prospect the day before the meeting, and lose the account as a result, the cost is enormous. In some cases you can imagine the loss of key data causing bankruptcy. While the fear of a worst-case opportunity cost is the reason many companies buy backup (or insurance) the chance of a major loss is very small, but if such a loss occurred you would be out of business it's difficult to calculate an average opportunity cost given the wide range of outcomes. As such, it's very hard to use opportunity cost in an ROI model. Replacement value is the cost it would take to re-create lost data, and it is the most conservative approach to calculating the value of your business information. If it took you three hours to create a presentation, presumably you could recreate it in another three hours. If you are paid $50 per hour, the replacement cost is $150. While the presentation almost certainly has a value higher than its replacement cost, the replacement cost is the minimum value you can place on any given piece of business information. Therefore this paper will use replacement value as a baseline figure to calculate the value of your SaaS data. As noted, replacement cost isn't an accurate reflection of the value of your business data; employees presumably create more value than what they are paid or the company wouldn't stay in business. We'll conservatively assume that the average employee creates value equal to twice their salary so if you

2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

are paid $50 per hour, you create $100 per hour in value. Thus, the aforementioned presentation that took $150 of employee time to create is conservatively worth $300. Risk of Loss Although SaaS providers can generally protect against the risk of equipment failure or facility damage, your data is still subject to several types of risk. Backupify did research in 2011 on the causes of data loss in Google Apps and found three causes were the most common: User error most common, cause of 63% of data loss in Google Apps Hacked account 8% of data loss in Google Apps External app errors 3% of data loss in Google Apps

In addition, "Other / Unresolved" accounted for 26% of data loss in Google Apps. Examples of Data Loss Data loss comes in many forms. We've included three examples below collected from Backupify customers. Company had an employee who was almost certain he was about to be terminated. Disgruntled, he deleted all of his documents and shared data before he was let go. The documents had several important presentations and accounting information that required days to recreate. Company discovered that they had lost a critical Google Doc. They logged an issue with Google, who eventually responded and told them that it would take approximately 5 days to retrieve it. They eventually recreated it themselves, rather than wait. Company was involved with a client renewal that was worth six figures. The client said that certain changes were not approved. Company couldn't find the email that had proof of the changes to hold the client accountable.

2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

Now let's apply this logic to Google Apps, using data drawn from Backupify's database and public sources. VALUE OF ASSETS Google Apps consists of five core applications Gmail, Drive (formerly Docs), Contacts, Calendar and Sites. We'll calculate how many of each type of item a user creates per month, how much time the user spends on the items, and finally what the value of that time is. Backupify has been backing up Google Apps users for almost two years so we have a idea for how many of each type of document the typical user creates per month.

Objects Mail Appointments Contacts Docs Sites

Objects per month/user 207.31 29.13 15.53 6.78 0.83

Next we need to calculate how much time it takes to create each type of object. Shown below are the assumptions we made for each type of item.

Item Mail Appointments Contacts Docs Sites

Time to create an item (min) 1.75 10 10 180 480

Source / Logic
2011 eMarketer and Nielson online activity data

Ten minutes to set up a meeting time Ten minutes to acquire and enter a contact Three hours to create a document A full day (8 hours) to create a site

2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

According to a Pepperdine University study, the average "knowledge worker" earns roughly $75,000 per year or $36.20 per hour. As discussed above, we're going to assume that they create $72.40 of value per hour, twice what they are paid. Multiplying the "time to create an item" by the "value per hour" gives us the replacement value per item.

Item Mail Appointments Contacts Docs Sites

Replacement Value of Item $2.11 $12.07 $12.07 $217.20 $579.20

Combining that value with the number of each item created per month by the typical worker gives us the total replacement value of all items created each month.

Item Mail Appointments Contacts Docs Sites Total per month

Replacement Value of Items Created Each Month $437.77 $351.48 $187.43 $1,472.59 $477.88 $2,927.15

Total per year $35,125.81

2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

Let's stop and do a "sanity check" on this number. We assumed that the average worker gets paid $75,000 per year and creates $150,000 worth of value per year, or $12,500 per month of value. Of this, $2,927 or 23% is tied up in the value of items they are creating in Google docs. This seems reasonable most professionals spend most of their day at their desk interacting with email, documents and meetings, so the value of their creations should be at least 23% of their total time. Now, let's compare this to the cost of a backup service COST OF SERVICE Backupify charges $3 per user per month. RETURN ON INVESTMENT Now we know the new value at risk ($2,927 per month) and the cost of protection ($3 per month). Let's look at the ROI two different ways. Replacing an Item Backupify monitors how often the average Google Apps user restores Google Apps data via our service across all customers over the last year, the average user restored 3.38 items per year. This includes the records restored when an entire account is restored as well as individual item-restores. Given these restore rates the average user saves $90.57 in value per year from restoring rather than re-creating items.

Service Calendar Contacts Docs Gmail Total

Restores per user per year 0.52 0.51 0.34 2.01 3.38

Value per item $12.07 $12.07 $217.20 $2.11

Total Value $6.33 $6.17 $73.84 $4.24 $90.57

Based on these restore rates and item values, the average customer pays $36 per user per year and saves $90.57 an ROI of 252%

2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

Cost per year per user Value per year per user ROI
Replacing an account

$36.00 $90.57 252%

Many organizations report that periodically they see a user suffer some dramatic damage to their account, to the extent that the entire account needs to be restored. It's difficult to find general statistics on this topic, so we'll use a specific example. One organization with 700 users shared that on average they suffer serious errors with roughly 3 accounts per year.

Accounts restored per year Value of accounts restored per year Total # of users Cost to backup all users per year ROI

3 $87,706 700 $25,200 348%

This company's restore rate happens to match the average rate across all Backupify customers roughly 0.4% of all accounts are restored in a year, so this is not an isolated example.

CONCLUSION
In this paper we've presented two ways to evaluate the ROI of backing up SaaS data. We've seen that the number that is most feasible to calculate, Replacement Value, is a very conservative view of ROI since it does not reflect the risk to the business of losing critical data, but rather simply the cost of replacing a lost item. This assumes that all data is replaceable, which obviously isn't true for all items. However, this conservative assumption leads to an ROI for online backup ranging from 252% to 348%. The final way to look at the question of ROI is the most realistic if your organization loses a critical piece of data and suffers significant harm (lost sale, commercial dispute, legal penalty), how will your manager, CEO, or shareholders view the decision not to backup your data? At the end of the day, backing up your data is the responsible business decision; the fact that you can show a positive ROI for even minor losses simply makes the decision easier.
2012 Backupify, Inc.

CALCULATING THE R.O.I. OF GOOGLE APPS BACKUP

ABOUT BACKUPIFY
Backupify is the leading backup provider for cloud application data, offering an all-in-one archiving, search and restore solution for the most popular online services including Google Apps, Salesforce, Facebook, Twitter and more. Backupify ensures that companies can access and control the data they entrust to these systems and prevents data loss from external threats, user error or service failure. Backupify was founded in 2008 and is based in Cambridge, Massachusetts. FIND OUT MORE If you're interested in the peace of mind you get from an automated Google Apps backup solution, feel free to contact us directly at info@backupify.com. Web Phone Twitter http://www.backupify.com 1.800.571.4984 http://twitter.com/backupify

Backupify logo is a registered trademark or registered trademarks of Backupify, Inc. All other names may be the trademarks or registered trademarks of their respective owners. 2012 Backupify, Inc. Item: GAT-WP-EN-20120628

2012 Backupify, Inc.