There is no definitive answer for the cost of IT downtime because every business is different. Some businesses generate £1000 every hour, while others make ten times that amount. Some businesses run 24 hours per day and others are strictly 9-5. Some depend on IT services for many or all operations while other’s do not.
To simplify the cost of downtime(d) in your organisation, take your annual revenue(r) and divide it by the number of working hours(h) in that time.
The equation would look like this:
Using that equation, a business with 9-5 working hours with £1m turnover would lose £480.77 per hour in revenue, but there are many business specific factors will contribute to the actual figure. The equation is far too simplistic to establish a real downtime cost.
Is IT Downtime Damage Unquantifiable?
Unfortunately, downtime is not just a pounds and pence problem. It is possible that your businesses will suffer reputation damage that results from a non-functioning customer services department or an online presence disappearing or not functioning properly. Placing a price on public perception is harder to quantify. Some customers will not conduct business with you, if your business appears unreliable. Even if you consider the cost of marketing and PR that it takes to return sales to pre-downtime levels, your market is reduced in size by the number of people who have a negative experience with your brand.
Downtime also affects employee morale. Confidence in supplying a quality product or service creates a healthy workplace culture of success. Scraping through, dealing with disgruntled customers and sales staff who do not believe in their sales pitch are all contributing factors to an attitude of failure. Downtime may not be entirely responsible, but it is an unnecessary hindrance to success.
Threats to Your Business Continuity
Some threats appear unavoidable, but they are rarely catastrophic and possibly non-disruptive with the correct planning and contingency models in place. For example, you can’t avoid a natural disaster, but it doesn’t mean your IT should suffer downtime as a result. Local IT infrastructure could suffer irreparable damage, but your cloud presence will survive. Your cloud infrastructure is also unaffected by natural disasters and downtime is virtually non-existent if you have an ‘always up` disaster recovery procedure.
If you don’t want to expand your data security perimeter by venturing to the cloud, why not use the same principles to protect your on-premise hardware and applications? Automatic failovers or even ‘always available` remote assistance are practical solutions to minimising the cost to your business. Perhaps start with the most valuable or mission critical systems and work to minimise downtime in those areas first then work on the rest of your IT systems when you realise the return on investment by limiting business continuity.
Every Day Business Continuity Threat and Downtime Cost Assessment
Earthquakes and floods are thankfully rare, but loss of IT data services and hardware functionality is a common problem for many businesses. Just one user with loss of data or a loss of IT functions has an associated cost to your business. It is difficult to drill down and establish exact costs for every area of business, but you should begin with separating areas of operation and you will soon see that some costs is more easily calculable. For example, you can place a price on the following:
- Lost sales
- Lost wages
- Lost Capital Assets or Consumables
- Cost to Rectify the issue
- PR and Marketing for Reputation Management or Repair
- Cost of Defaulting on SLAs
Most business can assess each area of operation and attribute a cost(s) from the above list that apply if that area operation suffered downtime.
Solutions range from on-premise RAID storage that minimises the risk of losing all live data on the network, through to cloud backups with instant auto-failover that ensures end users experience no noticeable interruptions to email or other business-critical applications. They also ensure that no data is ever permanently lost. Each solution has a cost and one solution does not fit all. Many people prefer taking traditional on-premise precautions where the business maintains complete governance of the systems.
Your business may have justified or unwarranted fears of a lack of security with cloud backups, but many cloud providers have governance, risk and compliance procedures that exceed the highest levels of security required for data governed by any regulatory authority. Whatever your business decides is the best approach to avoiding downtime, it should always follow a thorough risk assessment that takes into account the cost of downtime specific to the area of operation.