Technology. You can’t live with it, you can’t live without it!
With the ever-increasing reliance of businesses upon their IT systems and electronically stored data comes the equivalent responsibility of protecting them against all causes of loss or damage. The potential costs of failing to do so can be astronomical. Since the operations of many companies are, increasingly, tied together by their information technology, system downtime now hampers the productivity of almost everyone in the organisation. When we talk about ‘downtime’, we mean the internet, website, badly configured servers, out of date hardware and software/apps that are poorly managed or not working. The flow of information is the lifeblood of any business in the modern world and when it’s disrupted, business comes to a standstill.
Most businesses don’t think about network downtime until it is too late and then it’s a race against time to limit the disruption before it spirals out of control. Then, faced with a loss of revenue, productivity and reputation, downtime becomes a costly concern. As soon as the network is back up, amnesia sets in and businesses often do nothing to eliminate future problems. It’s important to remember the key areas that will be affected by downtime;
Every hour that an IT system is down, revenue is being lost. According to studies by IT industry analyst firms, Financial Services, Telecommunications, Manufacturing and Energy, lead the list of industries with a high rate of revenue loss during IT downtime. If an outage creates a disruption in a supply chain with a high level of expectation in responsiveness, the business may be exposed to damages. Damages often stem from the inability to deliver i.e. loss of delivery fees due to late arrivals or lawsuits due to collateral damage. Highly publicised downtime situations can also impact on shareholder value.
Reputation Damage & Loyalty
It’s difficult to measure the value of reputation and customer loyalty but there is no doubt that downtime has a significant impact on brand image and customer attitude. A non-functioning website, for example, damages public opinion of a brand and causes perceptions of an unprofessional and poorly managed business.
Not only does downtime cause a loss of staff productivity (staff can’t work if they can’t access files), it also affects the quality of service that is provided to the customer. Downtime results in lost employee productivity which can be measured in terms of salaries, wages, benefits and overtime costs of idle people.
The average cost of IT downtime per business varies too much to apply any industry statistics but here is an idea:
Lets assume a small business with a turnover of £200,000 and 10 employees with an employee average salary of £20,000 and a working week of 40 hours.
By calculating the profit and salary per hour, we can estimate that the wasted cost per hour is £192.00. Now, consider that the average resolution time per outage is around 200 minutes. This concludes that the direct cost of each downtime event will cost the business around £640.00. If there is two downtime events a month, that’s an annual cost of £15,360.00!…and this is just the calculable costs. Then there is the difficult to quantify intangible costs such as lost opportunity, customer loyalty, damaged reputation and employee morale.
Having said all of this, in any business, IT downtime is inevitable, so it’s interesting to observe just how little is being put in place to limit and prevent outages in the first place. The only way to mitigate the risk is to prepare and have the correct technology in place to monitor, restart and restore.
Network Monitoring is a great example of where a small investment can have tremendous benefits to a company. By proactively monitoring the network, maintenance can be scheduled to avoid peak times and minimise unplanned downtime and outages. By also implementing regular backups, your business can recover much quicker. Once you understand the true cost of downtime for your business, it’s easy to see that preventative measures are key to protecting your business from unnecessary IT downtime costs.