Every organization will face a disaster. The question is whether you’ll recover in hours or weeks — and that outcome is determined entirely by the plan you build before it happens. Ransomware, hardware failures, natural disasters, cloud outages, and human error all threaten business continuity. Yet a surprising number of SMBs either lack a formal disaster recovery (DR) plan or have one that hasn’t been tested in years. A plan that exists only on paper and has never been validated is little better than no plan at all.
This guide walks you through building an IT disaster recovery plan from scratch, covering the foundational concepts, a step-by-step creation process, testing strategies, cloud DR options, and the common mistakes that undermine recovery efforts. For a deeper look at what makes a DR plan effective, see our guide on key elements for an effective disaster recovery plan.
What a Disaster Recovery Plan Includes
A complete DR plan is a documented, tested process for restoring IT systems, data, and operations after a disruptive event. It is a subset of your broader business continuity plan (BCP), which covers all business functions. The DR plan focuses specifically on technology infrastructure.
A comprehensive DR plan includes:
- Purpose and scope — what the plan covers and its limitations
- Roles and responsibilities — who does what during a disaster
- Asset inventory — all critical systems, applications, and data stores
- Risk assessment — identified threats and their potential impact
- Recovery objectives — RTO and RPO targets for each system
- Recovery procedures — step-by-step instructions for restoring each system
- Communication plan — how to notify stakeholders, employees, customers, and vendors
- Vendor and contact information — emergency contacts for all critical service providers
- Testing schedule and procedures — how and when the plan is validated
- Maintenance schedule — when the plan is reviewed and updated
RTO vs RPO: The Foundation of Recovery Planning
Before building your plan, you need to establish two critical metrics for every system.
Recovery Time Objective (RTO)
RTO is the maximum acceptable time a system can be down before the business impact becomes unacceptable. An RTO of 4 hours means you must restore that system within 4 hours of an outage. RTO drives your infrastructure investment — shorter RTOs require more sophisticated (and expensive) recovery solutions like hot standby environments or automated failover.
Recovery Point Objective (RPO)
RPO is the maximum acceptable amount of data loss, measured in time. An RPO of 1 hour means you can afford to lose up to 1 hour of data. RPO drives your backup frequency — an RPO of 1 hour requires backups at least every hour. An RPO of zero requires real-time replication.
Example: Your email system has an RTO of 2 hours and an RPO of 15 minutes. This means email must be restored within 2 hours and you can lose no more than 15 minutes of email data. Your backup solution must capture email data at least every 15 minutes, and your recovery process must be achievable in under 2 hours.
Setting RTO and RPO involves balancing business requirements against cost. Not every system needs a 15-minute RPO — your marketing website might tolerate an RPO of 24 hours, while your financial database might require near-zero data loss.
Step-by-Step: Building Your DR Plan
Step 1: Inventory Critical Assets
Document every IT asset that supports business operations. This includes:
- Servers and virtual machines — on-premises and cloud-based
- Applications — business applications, databases, email, CRM, ERP, and custom software
- Data stores — file servers, databases, cloud storage, and SaaS data
- Network infrastructure — firewalls, switches, routers, VPN concentrators, and ISP connections
- End-user devices — laptops, desktops, and mobile devices (if centrally managed)
- Third-party services — SaaS applications, cloud services, payment processors, and communication platforms
For each asset, document the owner, function, dependencies, and current backup status. This inventory becomes the foundation for everything that follows.
Step 2: Conduct a Risk Assessment
Identify the threats most likely to impact your environment and assess their potential severity. Common threats include:
- Cyberattacks — ransomware, data breaches, DDoS attacks
- Hardware failure — server crashes, storage failures, network equipment failures
- Natural disasters — floods, hurricanes, earthquakes, fires
- Power outages — extended power loss affecting on-premises infrastructure
- Human error — accidental deletion, misconfiguration, failed updates
- Vendor failures — cloud provider outages, SaaS service disruptions
- Pandemic/workforce unavailability — situations where key personnel are unavailable
For each threat, assess the likelihood (low, medium, high) and the business impact (minor, moderate, severe, critical). This risk matrix helps prioritize which scenarios to plan for most aggressively.
Step 3: Define Recovery Objectives
Assign RTO and RPO values to each critical system based on its business impact. Work with business stakeholders — not just IT — to set these targets. What IT considers an acceptable downtime may differ significantly from what operations, sales, or finance can tolerate.
| System | RTO | RPO | Priority |
|---|---|---|---|
| Email and communication | 2 hours | 15 minutes | Critical |
| ERP / financial systems | 4 hours | 1 hour | Critical |
| CRM | 8 hours | 4 hours | High |
| File storage | 8 hours | 1 hour | High |
| Company website | 24 hours | 24 hours | Medium |
| Development/test environments | 48 hours | 24 hours | Low |
These targets directly inform your backup strategy, infrastructure investments, and recovery procedures.
Step 4: Design Your Backup and Replication Strategy
Your backup strategy must align with the RPO targets defined in Step 3. Common approaches include:
- Full backups — complete copies of all data, typically weekly
- Incremental backups — only changes since the last backup, typically daily or more frequently
- Continuous data protection (CDP) — real-time replication of every change, achieving near-zero RPO
- Cloud-based backup — offsite backup to cloud storage for geographic redundancy
- Snapshot-based backup — point-in-time copies of VMs and storage volumes
Follow the 3-2-1 backup rule as a baseline: maintain 3 copies of data, on 2 different media types, with 1 copy stored offsite. For critical systems, extend this to 3-2-1-1 — adding 1 air-gapped or immutable copy that ransomware cannot encrypt.
For organizations running hybrid cloud environments, your backup strategy must span both on-premises and cloud workloads with consistent policies and monitoring.
Step 5: Document Recovery Procedures
For each critical system, write step-by-step recovery procedures that a qualified technician can follow under stress. These procedures must be:
- Specific — exact commands, console steps, and configuration details
- Sequenced — systems restored in the correct order based on dependencies
- Tested — validated through actual recovery exercises
- Accessible — stored in a location accessible during a disaster (not only on the servers you’re trying to recover)
Document dependencies between systems. Your CRM can’t function without the database server, which can’t function without DNS, which requires the domain controller. The recovery sequence must respect these dependencies.
Step 6: Establish Communication Protocols
Define how you’ll communicate during a disaster when normal communication channels may be unavailable.
- Internal notification — how to reach the DR team, management, and affected employees
- Customer communication — status page, email templates, and social media messaging
- Vendor coordination — emergency contacts for ISPs, cloud providers, hardware vendors, and MSPs
- Regulatory notification — requirements for reporting data breaches or outages to regulators
Pre-draft communication templates for common scenarios. During a crisis, people don’t write well under pressure — having templates ready saves time and ensures consistent, accurate messaging.
Step 7: Assign Roles and Responsibilities
Define who is responsible for each aspect of disaster response:
- DR Coordinator — leads the overall recovery effort and makes escalation decisions
- Technical Recovery Team — executes the recovery procedures for each system
- Communications Lead — manages internal and external communication
- Business Liaison — coordinates with business units to prioritize recovery and manage expectations
- Vendor Contact — manages relationships with external service providers during recovery
Document primary and backup personnel for each role. Key person dependency — where only one individual knows how to recover a critical system — is one of the most common DR plan failures.
Step 8: Plan for Cloud Disaster Recovery
Cloud-based DR options have transformed disaster recovery by making enterprise-grade capabilities accessible to SMBs.
Cloud DR Options
- Backup and restore — back up data to cloud storage and restore to new infrastructure when needed. Lowest cost, highest RTO.
- Pilot light — maintain a minimal version of your environment in the cloud (database replicas, core services) that can be scaled up during a disaster. Moderate cost, moderate RTO.
- Warm standby — maintain a scaled-down but fully functional copy of your production environment in the cloud. Higher cost, lower RTO.
- Hot standby / multi-site — run a full production-equivalent environment in the cloud with real-time replication and automated failover. Highest cost, lowest RTO (minutes).
The right option depends on your RTO/RPO targets and budget. Most SMBs find that a combination of backup-and-restore for low-priority systems and warm standby for critical systems provides the best cost-to-protection ratio.
Azure-Specific DR Capabilities
- Azure Site Recovery — automates replication and failover of VMs between regions or from on-premises to Azure
- Azure Backup — centralized backup management for VMs, SQL databases, file shares, and on-premises workloads
- Geo-redundant storage (GRS) — automatic data replication to a secondary Azure region
Testing Strategies
A disaster recovery plan that hasn’t been tested is a hypothesis, not a plan. Regular testing validates your procedures, reveals gaps, and builds team confidence.
Types of DR Tests
Tabletop exercise. Walk through the DR plan as a discussion. Participants describe what they would do at each step without actually executing any procedures. Low cost, low disruption, good for identifying procedural gaps. Conduct quarterly.
Walkthrough test. The recovery team physically reviews each step of the recovery procedures, verifying that documentation is current, credentials are accessible, and tools are available. No systems are actually recovered. Conduct semi-annually.
Simulation test. Simulate a specific disaster scenario and execute recovery procedures against a test environment. Systems are actually recovered, but production is not affected. Reveals timing issues, missing documentation, and skill gaps. Conduct annually.
Full interruption test. Shut down production systems and execute a full recovery from backups or secondary infrastructure. This is the only test that truly validates your RTO, but it carries risk and requires careful planning. Conduct annually for critical systems if business operations allow.
After each test, document lessons learned, update procedures, and address any gaps discovered. The testing cycle should continuously improve your DR plan’s reliability.
Common Mistakes That Undermine DR Plans
Never testing the plan. The most common and most dangerous mistake. Untested plans contain outdated procedures, missing steps, and incorrect assumptions that only surface during an actual disaster.
Ignoring RPO when designing backups. Backing up nightly when your RPO is 1 hour means you’ll lose up to 23 hours of data in a disaster. Backup frequency must align with RPO targets.
Storing the plan only on systems it’s meant to recover. If your DR plan is on the file server and the file server is destroyed, you have no plan. Maintain copies in multiple locations, including offline and offsite.
Key person dependency. If only one person knows how to restore the database, you don’t have a DR plan — you have a liability. Document procedures in sufficient detail that a qualified technician who wasn’t involved in the original setup can execute them.
Ignoring SaaS and cloud services. DR plans often focus on on-premises infrastructure and overlook cloud-hosted data. SaaS applications like Microsoft 365, Salesforce, and Google Workspace require their own backup and recovery strategies — the provider’s built-in redundancy doesn’t protect against accidental deletion, ransomware, or account compromise.
Setting unrealistic RTOs without budget to match. An RTO of 15 minutes for every system is aspirational without the hot standby infrastructure to support it. Set realistic RTOs and fund them appropriately.
FAQ
How often should we test our disaster recovery plan? At minimum, conduct a tabletop exercise quarterly and a simulation test annually. Critical systems should undergo a full recovery test at least once per year. Additionally, test your plan whenever you make significant infrastructure changes — new applications, cloud migrations, network redesigns, or changes to key personnel. The most effective organizations integrate DR testing into their regular change management process.
What’s the difference between a disaster recovery plan and a business continuity plan? A disaster recovery plan focuses specifically on restoring IT systems, data, and infrastructure after a disruptive event. A business continuity plan is broader — it covers all business functions including operations, facilities, workforce, supply chain, and communications. Your DR plan is a component of your overall BCP. Both are essential, and they should be developed and tested together.
How much does disaster recovery cost for an SMB? Costs vary widely based on your RTO/RPO requirements and infrastructure complexity. Cloud-based backup solutions start at a few hundred dollars per month for basic protection. A warm standby environment for critical systems might cost $2,000-$10,000/month. The critical question isn’t what DR costs — it’s what downtime costs. If a day of downtime costs your business $50,000 in lost revenue and productivity, a $5,000/month DR solution pays for itself the first time you need it.
Can we use the cloud as our disaster recovery site? Yes, and for most SMBs, cloud-based DR is the most cost-effective and flexible option. Services like Azure Site Recovery allow you to replicate on-premises VMs to the cloud and fail over automatically during a disaster. You pay for storage and minimal compute during normal operations, and you scale up full recovery infrastructure only when needed. This eliminates the capital expense of maintaining a secondary physical data center.