Your business can tolerate a certain amount of downtime before causing unacceptable damage. But what will it cost you?
Many organizations think that downtime events only cost them a few productive hours, especially if they are small and isolated. However, there is much more at stake when your systems go down. Customer satisfaction and loss of brand identity are just a few of the many losses that an organization can experience. A downtime event can cause a chain reaction of bad events – loss of sales and customers, decreased employee productivity, potential data loss, and ultimately loss of profitability.
What’s at stake
While the severity of downtime events will vary, you will most likely be burdened with at least a few of these direct and indirect costs:
- Customer dissatisfaction
- Loss of branch identity
- Loss of sales
- IT recovery costs
- Costs of restoring data from disaster recovery systems
- Compliance violations
- Employee morale
What drives downtime expenditures
Gartner states that the average cost of downtime to an organization is $5,600 per minute. However, this is just an average and there is a large degree of variance based on company characteristics. A Gartner analyst states that downtime, at the low end, can be as much as $140,000 per hour, $300,000 per hour on average, and as much as $540,000 per hour at the high end.
Every extra hour of downtime causes direct and indirect expenses that are associated with the organization’s time to respond. Many don’t think of these as incurred costs but as you have all hands-on deck to remediate a downtime issue, these employees are being taken away from revenue generating projects. Here are a few areas that drive unexpected downtime expenditures:
Time to detection: Costs incurred from investigating and finding the root cause of an incident
Containing the event: Costs that are dedicated to preventing an outage from spreading or causing worse disruption
Disaster Recovery costs: Costs that are allocated to recovering data, bringing your network or systems back up and running
Hardware costs: The repurchase of any devices, equipment or hardware that were damaged during the outage
Post event response: Any incidental costs associated with disruption and recovery of core systems
Third party loss: These are the costs from bringing in contractors, consultants or service providers to help with the remediation of issues
Productivity loss: Productivity loss can be calculated in two ways, IT personnel downtime, those who stepped away from revenue generating projects to work on remediation, and end-user downtime, everyone else in the organization that were not able to complete daily operations.
How to reduce the effect of downtime
During downtime events, organizations often lose valuable hours and profits because of their lack of visibility into the problem. For instance, if you aren’t monitoring your network devices and servers 24×7 and an event happens on a Saturday evening, you could possibly not know about the issue until Monday morning. The lack of visibility into network health can expand your time to resolution because you won’t know where the event started or what caused the issue.
When it comes to downtime, it’s imperative to have a plan of prevention. This is where a proactive model to IT management can shine in comparison to a reactive, break/fix approach. Smaller issues, like fan speed or disk space, are detected and remediated quickly, before they become larger downtime issues.
A more strategic approach to proactive IT can prevent and minimize downtime incidents, network outages and security events. Outsourcing your IT management is one way to ensure 24/7/365 visibility and control. Organizations get access to a trained team of engineers, acting as an extension of your internal IT team, 24/7/365. Downtime events can be handled immediately and effectively to ensure organizations never lose access to core systems. If you think your organization could benefit from having a trusted partner to become more proactive with your IT, contact Magna5 for help.