What Is The Cost Of Downtime In Your Company?

IT outages are a part of modern business life. There can be many reasons for them, ranging from planned maintenance and upgrades through to software bugs, internet service provider problems all the way through to hardware failure, viruses or cyber attacks.

Table of contents

What is IT downtime?

What is the cost of IT downtime?

What are the different types of downtime?

Causes of downtime

Calculating your company’s IT downtime costs

Additional downtime costs

What can you do to prevent downtime?

It can come at a significant cost to a company’s bottom line and can even completely hamper its ability to operate. Understanding what the cost of downtime is and having plans in place to mitigate it are crucial for business success in the modern world.

What is IT downtime?

IT downtime refers to the period of time when an organization’s computer systems, networks, or applications are unavailable or not functioning properly. This can be caused by a variety of factors, including hardware failures, software bugs, network outages, and power cuts.

When IT systems go down, it can affect your business in a range of ways. Companies are impacted through lost revenue, lowered productivity, the cost of recovering from the outage, lowered stock prices, reputational damage, compliance failure, legal costs and, in the worst case scenario, the total failure and collapse of the business.

Downtime can be classified as either planned or unplanned:

• Planned downtime is scheduled in advance and is typically used for maintenance or upgrades
• Unplanned downtime is unexpected and occurs as a result of an unforeseen event such as a power outage, hardware failure, or cyber-attack.

To minimize the impact of IT downtime, many companies implement disaster recovery and business continuity plans. These plans outline procedures for quickly and efficiently restoring systems and data in the event of an outage and can help to minimize the potential losses caused by downtime.

What is the cost of IT downtime?

According to a survey conducted by IBM and the Ponemon Institute in 2021, the average cost of an hour of IT downtime for a small to medium-sized business was $150,000 and for a large enterprise, it was $5.5 million.

The survey also found that the average number of downtime incidents per year for small to medium-sized businesses was 13, while for large enterprises it was 45.

Meanwhile, the ITIC’s 2022 global Server Hardware Security Survey found that the hourly cost of downtime is more than $300,000 for 91% of large enterprises and SMEs. And 44% of survey respondents from mid-sized and large organizations said a single hour of downtime has the potential to cost their organization more than a million dollars.

LogicMonitor’s 2019 IT Outage Impact Study  found that those companies that experience brownouts and outages frequently often experience costs 16 times higher than companies with fewer downtime instances.  The study also found that companies with frequent downtime require almost twice as may team members tasked with troubleshooting problems and troubleshooting in these companies takes almost twice as long.

The IHS research found that companies were experiencing on average five downtime events every month, and 27 hours of downtime each month.

What are the different types of downtime?

It’s important to understand the different types of IT downtime and their potential impact on your organization.

1. Planned downtime

Planned downtime is scheduled in advance and is typically used for maintenance or upgrades. This can include software updates, hardware replacements, or server migrations. While planned downtime is necessary to keep systems running smoothly, it can still cause disruptions to business operations. To minimize the impact of planned downtime, it's important to schedule it during off-peak hours and to communicate the planned downtime to staff and customers well in advance.

2. Unplanned downtime

Unplanned downtime is unexpected and happens as a result of an unforeseen event such as a power outage, hardware failure, or cyber-attack. This type of downtime can seriously impact business operations and can lead to lost productivity, lost revenue, and reputational damage.

3. Downtime caused by cyber-attack

Cyber-attacks are becoming more frequent and sophisticated, and they can cause significant IT downtime for affected organizations. A cyber-attack may target a company's networks, servers, or applications, leading to system outages. Implementing strong security measures such as firewalls, intrusion detection systems, and incident response plans can help mitigate this risk.

4. Downtime caused by human error

Human error is another common cause of IT downtime. This can include mistakes made by employees, such the accidental deletion of important files or misconfiguring systems. To minimize the likelihood of human error downtime, it's important to have clear computer usage and data management procedures and to provide regular training on best practices for IT operations.

5. Downtime due to natural disasters

Natural disasters such as hurricanes, earthquakes, and floods can cause significant IT downtime for businesses. These events can damage or destroy IT infrastructure, leading to system outages and data loss. To minimize the impact of natural disaster downtime companies should ensure they have disaster recovery and business continuity plans in place as well as implementing solutions such as cloud-based disaster recovery or off-site data centers.

Causes of downtime

 The LogicMonitor survey found that the most common causes of downtime globally are:

• Network failure
• Usage spikes and surges
• Human error
• Software malfunctions
• Infrastructure hardware failure
• Third party provider outages

Cybercrime is another contributing factor to downtime experienced by large organizations globally. Hacking, viruses, malware, phishing and ransomware attacks can have a range of negative consequences for a business, from theft of money and loss of data and sensitive information, through to systems being rendered inoperable resulting in excessive downtime.

Cybercrime has become one of the world’s leading causes of data center outages. In 2017 alone, one in five businesses faced at least 25 hours’ downtime as a result of ransomware attacks.

The infamous WannaCry virus that affected NHS hospitals that year affected computer systems for up to a week.

In 2011, Sony experienced a cyber attack that prompted it to take its PlayStation Network offline. The company faced an outage that lasted for 23 days and is estimated to have cost it $250 million in losses.

Calculating your company’s IT downtime costs

Determining what IT outages are costing your business, you need to take into account:

• What systems are affected
• The duration of the outage
• How many employees are unable to carry out key tasks
• How many customers or other stakeholders are affected
• Whether revenue is affected (for example if customers are unable to purchase from you, or production is halted)
• Any legal costs
• Reputational risk

A simple formula you can use is this one:

Business cost of IT downtime / hour = 

Lost revenue + lost productivity + costs associated with recovery + any other costs

(hidden or those that can’t be immediately quantified at the time of the interruption)

The longer and more widespread the outage, the more it is going to cost your company. While most run-of-the-mill outages will last a few hours, on the more extreme end of the scale your systems could be affected for many weeks. And the longer your systems are down, the more you are at risk of complete ruin.

Additional downtime costs

When you’re calculating how much IT downtime costs your company, there are factors you might not even consider – including the productivity costs associated with unplanned disruptions.

A study by researchers at the University of California, Irvine, found that when a professional worker is interrupted it can take up to 23 minutes for them to refocus and get back to the task they were working on before the interruption.

So if someone interrupts your employees to let them know there’s been an internet outage or the email server is down, this can all add up across the organization in ways you might not have captured.

According to the Washington Post, in the financial services industry alone, there can be 238 minutes of interruptions experienced in a company every single day.

When you factor in the time also taken to restart tasks because of interruptions, that’s another 84 minutes per company. The end result is 372 minutes – or 6.2 hours each day and accounts for almost one whole employee in lost productivity.

What can you do to prevent downtime?

 Some downtime is inevitable. For example, routine maintenance and upgrades are necessary to keep your business running smoothly.  To minimize the impact on your company you can schedule them for times when they will cause the least amount of disruption, for example late at night or on weekends or holidays.

Around 75% of all IT downtime can be attributed to non technological failures, but user-related issues that basically amount to a lack of training or a lack of planning.

Ways to minimize or completely prevent downtime in your organization include:

• Assessing your risks and vulnerabilities and putting plans in place to mitigate these risks and weaknesses
• Ensuring your systems are configured properly
• Routinely testing your equipment
• Closely monitoring systems performance
• Keeping software up-to-date, including downloading patches and ensuring you’re running the latest versions of software
• Using antivirus software, firewalls and malware detecting software
• Keeping virus definitions regularly updated
• Assessing the performance of external providers such as data centers, website hosts, internet service providers and changing to more reliable services if necessary
• Regularly training your staff on cyber security
• Having good recovery and business continuity plans in place to get back to business as soon as possible after a significant outage

How DeskAlerts can help your business to reduce negative consequences of downtime

DeskAlerts is a versatile internal communications software solution that can help to improve various aspects of your organization’s operations.

The system works by sending messages to all employees via features such as pop-up alerts, screensavers, wallpapers, digital signage, scrolling ticker tape and more in a way that cannot be skipped or ignored.

Messages are sent to computer screens and can appear even when PCs are locked, on standby or on screensaver mode. Push notifications can be sent to cell phones and tablets.

The system can be used to:

• Inform employees about any planned outages in advance so they can plan their workloads around any potential downtime. This is a more reliable way of communicating this information than email, which is often overlooked because of email overload and email fatigue.
• Take the pressure off your IT help desk when there is an unplanned outage. By informing the workforce of a known issue via a mass notification, it is less likely the help desk will receive multiple calls about the same issue. This frees the IT team up to get on with the job of solving the IT problem that has caused the downtime.
• Keep employees informed throughout the outage, including providing an update to the estimated time of restoration so employees can be productive and work on other non-IT tasks during the downtime.
• Quiz your employees, via the polls, surveys and quiz module, to determine what their knowledge is around cyber security and build education campaigns that reflect any knowledge gaps.
• Deliver education and training on cyber security. For example, education about phishing, viruses, ransomware and so on.
• Communicate IT and security policies and send reminders, hints and tips to employees about what to do to keep systems and data safe.

To find out more about how DeskAlerts could work in you organization, get in touch with us to organize a demo.

FAQs

How much does downtime cost a company?

The average cost of IT downtime can vary greatly depending on the size and type of organization, the duration of the downtime, and the severity of the consequences. On average, it can range from hundreds to thousands of dollars per hour.

What does downtime cost meaning?

Downtime cost refers to the financial losses and expenses incurred by a company as a result of its IT systems or equipment being unavailable or not functioning properly. This can include lost productivity, lost revenue, and additional expenses incurred to resolve the issue and restore operations.

How do you calculate the cost of downtime?

The cost of down time can be calculated by considering these factors:

• Direct costs: The direct costs include lost revenue, lost productivity, and any additional expenses incurred to resolve the issue.
• Indirect costs: The indirect costs include reputational damage, lost customer trust, and other intangible costs that may impact the business in the long term.

The exact calculation of downtime cost will vary depending on the specific circumstances of the downtime and the organization.

What is a downtime in IT?

Downtime in IT is the time period when a computer system, network, or other technology infrastructure is unavailable or not functioning properly. This can result in a loss of access to data, applications, and other critical business functions, potentially leading to lost productivity and revenue.

What causes IT downtime?

Causes of downtime include hardware failures, software bugs, network outages, power cuts, cyber-attacks, and insufficient capacity to handle high traffic.