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Understanding the High Cost of Downtime

Many organizations accept IT downtime as a fact of life without realizing the significant costs to the business.

Most businesses depend upon the availability of their IT systems for day-to-day operations and revenue-generating activities. If these systems do not perform optimally, sales, customer service, productivity and reputation suffer.

Many businesses tolerate outages and downtime without taking steps to optimize and modernize their systems and networks. Employees develop workarounds for when “the computers are down” so they can continue to respond to customer needs. In today’s highly competitive business environment increasingly dependent on remote workers, downtime can exact an enormous cost.

“Remember the good ol’ days when the workday was 9-to-5 and the only tools you needed to do your job were a phone, a desktop computer and reliable transportation? All of the data you needed was stored in your PC, a rolodex and a bunch of filing cabinets,” said Michael Smith, President, IronLogix.

“Fast forward to today. Business is global and 24x7. Work happens anytime, anywhere. Employees, business partners and customers require reliable access to your computer systems and network, or else business comes to a screeching halt.”

Why Downtime Is So Expensive

In the IT industry, system availability is typically expressed as a number of 9s — “five 9s” means that systems are up and running 99.999 percent of the time and unavailable just .001 percent of that time. While that sounds like an infinitesimal amount, that .001 percent equates to 8.76 hours of downtime per year, or .73 hour per month.

“Many businesses put up with significantly more downtime than .001 percent when you add up all the small outages and slowdowns,” Smith said. “A lot of executives simply don’t realize how much that’s costing their business.”

According to an IDC study conducted in 2015, downtime costs small to midsize businesses $137 to $427 per minute. Odds are the costs are even higher today. What’s more, the expenses associated with recovering data and getting systems back up and running represent only a small component of that cost.

“If employees cannot process orders or handle customer inquiries because key systems are unavailable, you are losing revenue due to downtime,” said Smith. “In order to calculate those costs, start by determining how much money you generate per hour in each revenue-generating area of your business. Then estimate what percentage of that revenue relies upon your computer systems. That gives you revenue lost per hour of downtime.”

It All Adds Up

Lost productivity is another significant component of downtime cost. If your employees are working to get your systems back online — or worse, sitting idle — they are not doing the productive work you’re paying them to do. To calculate the cost of lost productivity due to downtime, determine how much of each employee’s productive work is dependent upon your computer systems. Multiply that percentage by the employee’s hourly rate. Add up the costs for all your employees and you will have the lost productivity costs per hour of downtime.

The intangible consequences of downtime include lost business opportunities, customer churn and damage to your reputation. This will vary depending upon the extent of the outage, the demographics of your customers, and how reliant your business is upon technology. Keep in mind, however, that in today’s tech-savvy society, many customers take a dim view of downtime. An outage can have a long-term impact on future sales if not handled properly. The longer the outage, the greater the opportunity costs.

“Once you have these values estimated, add them up to get a sense of the total cost of downtime to your business,” Smith said. “The number is likely to be eye-opening. Keep these costs in mind as you consider investments in a managed services solution.”

How IronLogix Managed Services Can Help

The three primary causes of IT downtime are equipment or service failure, human error, and power outages.

Equipment or service failure is typically the result of hardware that should have been replaced, software that wasn’t updated, or service provider outages that weren’t quickly resolved. IronLogix utilizes remote monitoring tools to detect these kinds of issues. Instead of simply fixing systems when they break, IronLogix focuses on preventing IT problems from occurring in the first place.

Human error comes into play when hardware and software are improperly configured, and systems are poorly maintained. IronLogix addresses these issues through proactive maintenance by highly trained engineers and technicians who consistently follow industry best practices.

“Many businesspeople think that IT issues just happen, but most problems are predictable and therefore preventable,” said Smith. “Having experienced engineers monitoring your systems, applying patches and updates, and performing regular management tasks will maximize the availability of your systems.”

Preventing even a few minutes of downtime can mitigate hundreds to thousands of dollars in potential losses. Is there value in knowing how your company compares to the industry standard along with the cost to close the gap?


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