What is the Real Cost of Systems Down?

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What is the real cost of systems down?

Top 4 Ways System Downtime Impacts a Company

For companies, there isn’t anything worse then having systems go down during peak hours. Data from the 2017 Unplanned Downtime Survey stated that companies experience an average of two episodes of unplanned downtime over the last three years. The causes of system downtime can very greatly. The most common causes include:

  • Power outages
  • Network or Technical System Failures
  • Weather Emergencies
  • Human Error
  • Cybercrime Invasions
  • Critical Data Breaches
  • Equipment or Machine Failures

Regardless of whether the outage lasts minutes or hours, this downtime results in significant unplanned expenses as well as other negative impacts on a company.

The top 4 ways this downtime impacts a company include:

  1. Loss of Revenue & Productivity – According to Gartner research, just one minute of systems down costs a company an average of $5,600. Downtime doesn’t just mean that a company isn’t making money, but that they are also often losing money. This is because although clients aren’t being served, employees are still on the clock, and there are often additional expenses involved in getting operations back up. According to UC Irvine, it takes on average 23 minutes just to refocus after an interruption. Today, companies are dependent on online communications and services. If even one of these systems goes down, operations can come to halt. That loss of productivity continues even after systems come back up.
  1. Damaged Company Reputation – A more harmful and long-term affect is damage to a company’s brand. Today’s customers are no longer forgiving of technical faults. 57% of millennials said that site downtime causes immediate negative brand perceptions. When outages are frequent it becomes difficult for customers to use a company’s services or buy their products. These customers may stop utilizing these products and services but also share their negative experiences with others. It’s extremely difficult to rebuild a reputation that has been damaged.
  1. Loss of Data – Outages that last even a few minutes can destroy or damage days worth of data and/or cause serious system errors when systems do come back online. Employees will often have to work hard to recover lost data and reach out to affected clients, which result in additional labor costs.
  1. Employee Stress and Lowered Morale – One thing no customer service employee wants to encounter when they arrive at the office is an overload of emails or phone calls saying the network is down. This creates unnecessary stress, which can easily lead to more mistakes being made during the process of recovery. Customer service is already a high stress environment. When employees don’t have the tools they need or can’t provide the services they are there to provide, they are confronted with unnecessary stresses. This can lead to dissatisfaction, poor productivity, low morale and even high turnover.

 

So how much is downtime costing you?

Lost Revenue = Revenue/hr X downtime(hrs) X uptime(%)

Lost Productivity = Employee Salary/hr x Utilization % x Number of employees (with same Utilization %)

Recovery Costs = Costs accrued while fixing the issue. These include but aren’t limited to: Repair services, lost data recovery, part replacements, etc.

Intangible Costs = are costs that result when downtime has damaged a company’s reputation or brand.

Were you surprised by how much downtime may be costing you?

Downtime is a cost that many companies cannot afford. Principal and data center design expert, Robert McFarlane, found that up to 75% of downtime could be attributed to human error. The best defense for this is a great offense. A company should be ready for an outage. They are inevitable. The more a company plans for them, the more capable they will be to handle these outages and avoid the negative impact that they can bring.

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