Emerson Survey Reveals that Many U.S. Businesses Could Be Vulnerable for $2 Million or More per Day in Lost Revenue
ST. LOUIS, May 22, 2006 – Despite the devastation of Hurricanes Katrina and Rita, more than one-fifth of large U.S. businesses (21 percent) have not budgeted to prepare for and maintain operations during natural disasters, according to a new national survey released today.
With the 2006 hurricane season kicking off next week (June 1), the stakes are high:
- 60 percent of respondents say it is likely their business will experience a power outage this year.
- 38 percent of large businesses estimate that one full business day of downtime would result in at least $500,000 in lost revenue, and 15 percent forecast one-day losses of $2 million or more.
- Despite the risk, 45 percent of large businesses say they spend less than $200,000 annually to provide backup power to protect against this costly downtime.
The independent survey of 300 U.S. businesses with annual revenues of $50 million or more was conducted in April and commissioned by Emerson (NYSE: EMR).
According to the National Hurricane Center (NHC) and the National Oceanic and Atmospheric Administration (NOAA), Hurricane Katrina alone produced damage estimated at $75 billion in the New Orleans area and along the Gulf Coast. NOAA announced today that the North Atlantic Ocean could see 10 hurricanes form in 2006, with four to six of them reaching Category 3 strength or higher.
“It’s astonishing to learn how many large U.S. companies are still less than satisfied with their ability to cope with natural disasters,” said Bob Bauer, Group Vice President, Emerson. “We’re not talking about small ‘mom and pop’ stores; we’re looking at companies with an annual revenue of $50 million or more. In that capacity, even a minor investment in business continuity can go a long way.”
But while many large businesses are leaving themselves vulnerable, many others are better prepared. Like the Great Blackout of 2003, the devastating 2005 hurricanes served as a wake-up call. The survey reveals that since last hurricane season, more than 60 percent of large U.S. businesses have audited their backup power needs and three quarters have budgeted funds to prepare for and maintain operations during natural disasters. Also:
- The great majority of large businesses (89 percent) say that a business continuity plan would/does give their company a competitive advantage over companies that do not have such a plan.
- Many businesses are more prepared for power losses than handling threats of disruptions from other sources. For instance, fewer than half (49 percent) of large businesses say their IT departments are prepared to handle an outbreak of the Avian Flu.
“Emerson Network Power (a business of Emerson) works closely with IT departments to help managers better prepare their networks for power outages,” Bauer said. “By providing technology solutions ranging from embedded and inbound power to power systems and mission-critical cooling, we help our customers achieve a greater level of business continuity and reduce costly downtime.”
Other survey findings include:
- Power outages resulting in downtime are common. Forty-seven percent of survey respondents said their large businesses experienced a power outage that resulted in downtime in 2005.
- Customer support (89 percent) is the most important business operation to protect from the effects of a power outage, followed by CRM systems and ERP systems (85 percent), and remote systems (83 percent).
- Seventy-six percent of large businesses have a specific employee or team designated to prepare for and deal with business continuity.
A summary of the survey results follows.
2006 BUSINESS CONTINUITY POLL SUMMARY
Overview
Despite the devastation of Hurricanes Katrina and Rita, more than one-fifth of large U.S. businesses (21 percent) have not budgeted to prepare for and maintain operations during natural disasters, according to a national survey commissioned by Emerson (NYSE: EMR).
Additional topline results include:
- 60 percent of respondents say it is likely their business will experience a power outage this year.
- 38 percent of large businesses estimate that one full business day of downtime would result in at least $500,000 in lost revenue, and 15 percent forecast one-day losses of $2 million or more.
- Despite the risk, 45 percent of large businesses say they spend less than $200,000 annually to provide backup power to protect against costly downtime.
- Seventy-six percent of large businesses have a specific employee or team designated to prepare for and deal with business continuity.
Other Key Findings
Power outages
Past and future power outages resulting in downtime are common. Forty-seven percent of survey respondents said their large businesses experienced a power outage that resulted in downtime in 2005.
Of those experiencing power outages, 44 percent were without power for at least eight hours during the longest outage.
61 percent of large businesses have conducted an audit of their backup power needs since the 2005 hurricane season.
Disruption threats
Many businesses are more prepared for power losses than handling threats of disruption from other sources. For instance, less than half (49 percent) of large businesses say their IT departments are prepared to handle an outbreak of the Avian Flu.
Power advantage
The great majority of large businesses (89 percent) say that a business continuity plan would/does give their company a competitive advantage over companies that do not have such a plan.
Protection priorities
Customer support (89 percent) is the most important business operation to protect from the effects of a power outage, followed by CRM systems and ERP systems (85 percent), and remote systems (83 percent).
About the Survey
The survey was conducted online in April 2006 by Survey.com, and commissioned by Emerson. The sampling error associated with this research is no more than plus or minus five percentage points.
About Emerson
Emerson (NYSE: EMR), based in St. Louis, is a global leader in bringing technology and engineering together to provide innovative solutions to customers through its network power, process management, industrial automation, climate technologies, and appliance and tools businesses. Sales in fiscal 2005 were $17.3 billion. For more information, visit
www.emerson.com.
About Emerson Network Power
Emerson Network Power, an Emerson business, serves the needs of telecommunications networks, data centers, health care and industrial facilities worldwide with a full spectrum of reliable power solutions, including inbound power, connectivity, power supplies, power systems and precision cooling - all backed by the largest global services organization in the power industry. Sales in fiscal 2005 were $3.3 billion. For more information, visit
www.emersonnetworkpower.com.