Allocating Redundancy to Critical Information Technology Functions for Disaster Recovery

In the present network economy, businesses are becoming increasingly reliant on information technology (IT) to perform their operations and exchange information with business partners. This heavy dependence on IT, however, poses a potential threat for an organization. When natural or man-made disasters strike and cause malfunction to its computing and communicating systems, it would be vulnerable to business discontinuity. Severe consequences resulting from such IT breakdown may include the loss of sales, damages to reputation and consumer confidence, penalty incurred by failure to fulfill the orders, and so on. As a result, the issue of how to strengthen IT capabilities so that a company can prevent or quickly recover from disasters becomes a serious concern. In this paper, we present a discrete optimization model to allocate redundancy to critical IT assets for disaster recovery planning. The objective is to maximize the overall survivability of an organization’s critical IT functions by selecting their appropriate redundancy levels while still satisfying a budgetary resource constraint. A solution procedure based on probabilistic dynamic programming is proposed to solve the formulated problem, and two concrete examples are discussed to illustrate its usage and effectiveness.