09 Mar How Much Does Downtime Really Cost Your Business?
Have you ever heard of the old saying, “an ounce of prevention is worth a pound of cure?” This nugget of wisdom applies perfectly to the ever-changing challenges of IT as a component of business continuity. As a business, network downtime can lead to a chain reaction of negative events, including lost customers, decreased employee productivity, data failure, and ultimately lost revenue.
When it comes to network downtime, it is prudent to implement a proactive plan of prevention. That’s why it’s important to understand the difference between managed IT services and break/fix solutions, which lead to substantially different outcomes, one being proactive and the other reactive.
Here is more information about the costs of downtime and how much it really costs your business:
What’s at stake?
While downtime scenarios may vary, the total direct and indirect costs of what is at stake for your business is crucial to your bottom line:
- Lost sales revenue
- Lost employee productivity due to malfunctioning systems or Internet (think in terms of salaries and benefits)
- Potential employee overtime costs to meet deadlines following a period of disruption
- IT recovery costs
- Cost of restoring IT systems (some data may be forever lost)
- Supply chain ripple effects
- Where applicable, compliance violations or materials lost
- Customer dissatisfaction
- Low employee morale or turnover due to stress/consequences of downtime
- Brand/loyalty damage
- Preventative strategies for these scenarios are key to protecting the bottom line of your business.
The Costs of IT Downtime
Let’s take a look at the impact downtime can have on a business. According to the January 2016 Cost of Data Center Outages from the Ponemon Institute, this study reveals an increasing trend in unplanned downtime, up 38 percent since 2010. How this translates for businesses when the Data Center incurs an unplanned outage, be it on premise or off-site, is an unplanned outage presents a network failure leading to business disruption with incurred costs. Not surprisingly, Cybercrime represents the fastest growing cause of data center outages, rising from 2 percent of outages in 2010 to 18 percent in 2013 to 22 percent in the latest study.
Ponemon Institute © Research Report
What drives downtime expenditures?
Every day of downtime causes expenditures associated with a company’s response to increase significantly. Here are eight main areas where you will incur costs:
- Finding the cause: Detection costs incurred for investigating the partial or complete outage incident.
- Keeping the outage contained: Costs incurred to prevent an outage from spreading, worsening or causing greater disruption.
- Recovery cost: Costs incurred for bringing back up your organization’s networks and core systems back to a state of readiness.
- Ex-post response cost: All after-the-fact incidental costs associated with business Disruption and recovery.
- Equipment cost: The cost of new equipment purchases and repairs, including refurbishment.
- IT productivity loss: The lost time and related expenses associated with IT personnel downtime.
- User productivity loss: The lost time and related expenses associated with end-user downtime.
- Third-party cost: The cost of contractors and project work.
The Ultimate Effect of IT Downtime
The real cost is the toll downtime takes on employee productivity. According to the 2015 IHS Markit study, North American companies lose up to $700 billion a year related to IT outages. This includes a 78 percent loss in employee productivity. The total revenue loss from employees’ inability to access core systems during the outage period marks only the start of the negative domino effect that will cause business disruption and mounting costs.
A proactive strategy is essential, as well as an understanding of the effects of downtime on your business continuity. It’s important to view your IT assets and resources as strategic. Outsourcing your IT is one way to implement a strategic/proactive plan to prevent and minimize downtime network outages instead of operating within a reactive break/fix response that does not contribute toward a preventative plan.
Outsourced IT from professional IT outsourcing companies sometimes includes 24/7 support. There are no holidays or weekends where your support staff isn’t available. This means downtime situations are handled immediately, helping your customers and employees rapidly regain access to your network and services. Here are just a few benefits to outsourcing your IT to decrease your risks of network downtime:
- Proactive preventative plan in place for your business continuity
- Network and server support from knowledgeable IT engineers
- IT Security services monitoring your network and server 24/7/365
- Data Protection
- Hosted email
- Fixed budget for IT managed services