June 5, 2015
Not A Minute To Lose: How Downtime Costs With each Second That Ticks By
The ultimate goal of all organizations is to achieve 100% uptime for all of their IT and networking services, both for the business itself as well as its customers. 100% means 100%. 24 hours a day. 7 days a week. 52 weeks a year.
This is the ‘goal’, though perhaps a fairer and more realistic way to describe this would be the ‘dream’.
100% uptime is a wonderful idea, but in practice this is virtually impossible – and certainly impossible to guarantee. No matter how many precautions you take, at some point over the course of the year, certain things will happen that mean your network will be unavailable. Even if it’s only just for a few minutes every 2 or 3 weeks – this still isn’t 100% uptime. And each second of downtime will be costing the enterprise in terms of both money and productivity.
What is Downtime?
Put simply, downtime refers to periods of time when your system and network is inaccessible and therefore unavailable. Many organizations require their systems to be available all the time in order to complete their round the clock daily tasks. Think about hospitals, for instance. An organization such as this needs to be up and running constantly, as the health service, of course, is not just a 9-5 gig.
And the likelihood is that your business won’t be either. SMEs are increasingly finding ways to sell their goods and services all over the globe. This means that, even when you’ve gone home for the day and are having a nice night’s sleep, the other half of the world is still going to be trying to access your network, place orders, make enquiries and complaints and all the rest. If you’re online (and you are), then your business needs to be accessible round the clock, 24/7/365.
However, sometimes a system can be ‘up’, yet just lagging along so slowly that users or customers get irritated waiting for it. Strictly speaking, this is still ‘uptime’, for if we all just had the patience then we could still access what we want.
This is the real world, though, and so any systems experiencing performance lag are considered to be experiencing ‘downtime’ as a result. In fact, only certain functionalities might be unavailable to the end user, which may indeed go unnoticed for some time by systems administrators, since the rest of the system appears to be functioning normally, and therefore experiencing uptime. But, if the function is down that a user requires, then it is simply unfunctioning for the user, inaccessible, unavailable. It is essentially downtime – and this costs as well.
What They Promise
Since it is accepted that 24/7/365 availability is not actually achievable in real terms, the target, then is high availability – and so most providers say that this is 99%.
Sounds good, right? Well, yeah it does, but what this actually equates to is a downtime of 3.65 days a year, or 7.2 hours a month, or 1.68 hours a week.
This is significant, of course, when viewed like this.
What are the cost factors of downtime?
Planned or unplanned network outages can set off a chain of costs and consequences. These may be direct or indirect, tangible or intangible, short or long term, immediate or far-reaching.
Depending on the nature of your business, the size of your company, and how critical your IT systems are to your primary sources of revenue, varying costs may be assigned to each hour of downtime. For example, a global financial services firm might lose millions of dollars each hour, while a small manufacturer using IT for administration might lose only a marginal sum.
Potential costs would include:
- Lost transaction revenue
- Lost wages
- Lost inventory
- Remedial labor costs
- Marketing costs
- Bank fees and legal penalties from not delivering on service level agreements (SLAs)
- Lost business opportunities
- Loss of employees and/or deflation in employee morale
- Decrease in stock values
- Loss of goodwill from customers or partners
- Damage to brand image
- Driving business to competitors
- Bad publicity
What this list does not include, however, is the cost of lost opportunities that occurred as a result of the downtime – sometimes referred to as the opportunity cost of downtime.
So, say you’re a company that relies on online sales. On average you gross a profit margin of $1,000 an hour. If your system goes down for an hour and a half, you incur a cost of $1,500. And, if you’re running on 99% up time, this arithmetically equates to $87,600 a year.
Of course, some customers may come back later, so this figure will be reduced, but most will actually just shop elsewhere.
It’s No Joke
The cost of downtime is a real issue. On top of opportunity costs, you must also consider the costs of losing productivity, profit loss, any legal financial penalties that you may incur, the cost of reparation, and of course your cost to loyalty and reputation.
By Igor Varnava