Optimal redundancy allocation for disaster recovery planning in the network economy

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 disasters strike and cause malfunction to its computing and communicating systems, it would be vulnerable to business discontinuity. 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, a discrete optimization model is proposed to allocate redundancy to 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 problem, and an example is used to illustrate its usage and effectiveness.