Downtime: The Real Costs to Your Business

Downtime = Costs

With the continued advancement of IT technologies in today’s world companies are still faced with unplanned downtime and outages that affect their business in a number of different ways. Downtime costs vary significantly within industries, especially due to the different effects of downtime. In order to measure the costs that are associated with downtime you must first be aware of the impact it has on your business.

Depending on your business model and size, downtime can have a significant financial impact. A recent survey from the Ponemon Institute, revealed that the average cost per minute of unplanned downtime is currently $7,900, which is a significant increase from a 2010 survey that was done estimating cost per minute at $5,600. Couple those numbers with the average resolution time of an outage at 200 minutes and you have a recipe for a disastrous mid-morning snack. The financial numbers of downtime can be eye opening statistics for any business owner that has yet determined what the costs are for their company. Downtime costs are expected to increase over time as more and more businesses rely heavily on their IT infrastructure to support their business efforts and critical data.

While the financial impact of downtime is more of a tangible measurement, there are other business costs that are affected by unplanned downtime and outages that may be overlooked such as employee productivity, lost opportunity, and company reputation. While putting a cost to these intangibles can be difficult the effects of downtime can be catastrophic.

Employee productivity is an essential piece for any successful organization. When an unplanned outage or downtime occurs at your company, your IT staff drops everything that they’re doing in order to help resolve the issue as quickly as possible. This could mean working overtime hours at overtime rates or possibly hiring a temporary staff to recover any lost data and enter hard copy paper transactions. While the staff is working diligently to restore normalcy, other employees across all departments are sitting idle unable to perform their daily responsibilities and current projects, or work is halted and deadlines could possibly be missed.

Lost opportunity due to downtime is one of the hardest pills to swallow. Imagine that your website is down and a while your IT staff is trying to correct the problem a potential customer comes to your website to try and contact sales, however, the prospect receives a 404 page, or worse, cannot connect to your website and moves on to the next competitor. While you may never know that they even came to your website, you could have potentially missed an opportunity to make a big sale. The prospect could have found your site via paid advertisement or organically from your company’s blog; either way it’s costing you money both in revenue and paid expenses for the Marketing team’s efforts.

A company’s reputation can be the difference between landing a client and losing a client. For example, if your company is a SaaS provider and your customers rely heavily on your software to run their business efficiently and effectively then a downtime can hurt your company’s reputation. Lost hours of service equates to your customers losing revenue and possibly being unable to support customer service calls and inquiries. This could easily turn into lost customers and a bad online presence as you could receive unwanted reviews for your company. In turn, it leads to more marketing time and dollars spent in order to help preserve your reputation that was present prior to the downtime.

Most business owners don’t consider downtime costs until an outage happens. It’s not until after the loss of revenue, productivity, and damage to company reputation that it becomes a major concern. It’s not a question of if an outage or downtime will occur, but when it will occur and how often. Don’t wait until your business experiences downtime to try and figure out what it will cost you because it’s more than lost revenue, it could mean your business.

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