Cost of IT Downtime
Running a business is about more than the supply of goods and services, it’s also about efficient processes and reliable productivity standards. You don’t just need to do a job well, you also need to do it on time while reducing expenses and ensuring your business reputation. The true cost of IT downtime on business is hefty. Ideally, the problems that lead to downtime need to be dealt with as early as possible.
According to recent reports, 91% of enterprises report downtime costs exceeding $300,000 per hour. For 44 percent of enterprises, hourly costs exceed $1 million per hour. And for 18 percent of enterprises, downtime costs exceed $5 million per hour. From outdated computers through to tech hiccups and security vulnerabilities, there are lots of things that can disrupt your business and reduce your bottom line. Let’s take a look at four common issues that cause downtime and analyze their many impacts.
Old computers and technology infrastructure are a common cause of downtime. While technology normally functions seamlessly when new, outdated hardware and software often lead to compatibility problems, slow processes and lost data. A business is only as strong as its weakest link, with aging technology often causing bottlenecks in critical business systems. While avoiding software and hardware updates might seem like a good way to save money, this short-sighted attitude often leads to lost hours, reduced productivity and compromised processes.
Downtime happens for many reasons, with inefficient business processes just as likely to cause problems as old computers. Whether it’s a process hiccup related to down servers, compromised networks or a backlog due to bad code, your revenue can dry up when the information stops flowing.
Managing business processes is about creating communication channels, eliminating bottlenecks and enabling automation so data can flow between systems with minimum need for human intervention. There is a link between poorly designed system architecture and bad processes, with the wrong technology often creating inefficient processes that limit revenue generation.
While it’s easy to blame the computers, human error is still a significant factor when it comes to measuring the true cost of downtime. In low compliance environments, the cost of a human error data breach was estimated to be $2.3 million USD higher than in environments where good cyber hygiene practices were observed. In cases where employees worked remotely, the dollar figure associated with data breaches jumped to $5.54 million USD.
Whether it’s making an incorrect key entry, using an outdated code fragment or losing key documents, human mistakes often lead to wasted time, bad decisions and lost revenue over time. While a reduction in paid productive hours is one direct impact of human error, downtime can also lead to lost revenue opportunities, recovery costs and negative intangible effects such as reduced trust and a compromised business reputation.
Security issues and disasters
Cyberattacks and natural disasters often lead to severe disruption and downtime. Security vulnerabilities need to be dealt with from the outset, with managed IT services being the best way to ensure ongoing protection. There are many ways to mitigate risk in the case of attacks and disasters, from regular data backups through to cloud migration and on-site security solutions. Security vulnerabilities are responsible for immediate data and financial losses that can influence your bottom line and adversely affect your reputation.
The many impacts of downtime
All of the issues mentioned above can cause downtime and cost your business in numerous ways. While most businesses are familiar with the direct revenue losses that accompany downtime, there are a number of other direct and indirect impacts.
- Lost revenue generating hours immediately accompany business downtime. While losses will be higher for businesses that rely on high-level data transactions, downtime always leads to a reduction in time spent actually earning.
- Lost productivity over time is a significant issue, with things like old computers, incompatible networks and human error often creating ongoing issues that affect revenue generation for weeks or months to come.
- Recovery costs can also be significant, with fixing an issue normally being much more expensive than preventing it in the first place. From repair services and replacement parts through to lost data recovery, recovery costs can threaten business viability.
- Reputation and other intangibles also need to be addressed, with downtime leading to less trust among customers and stakeholders and a compromised business reputation that may take years to fix.
If you want to do everything you can to avoid downtime, managed IT services are a great solution.