How Much Does IT Downtime Cost Your Company?

Caroline Duncan - Nov 8, 2019, 5:51:36 PM

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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.

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.

A 2016 report by IHS found that in North America alone, IT downtime costs business an estimated $700 billion a year. For individual companies this is estimated to be around $1 million per year for mid-sized companies to $60 million per year for a large enterprise.

 

A report by Gartner found that every minute of IT downtime costs companies an average of $5,600 per minute. Depending on the size of the business and the scale of its operations, it can cost businesses anywhere from $140,000 to $540,000 per hour.

 

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.

 

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.

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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.

 

Topics: IT Outage

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