How much is downtime costing your business?

May 30, 2018, in Digital Transformation, business strategy , by Chris Davies

SHARE

As technology develops further,  a business' reliance on IT infrastructure grows stronger. Despite the advances in the resilience of IT systems, outages continue to occur at the least convenient of times (...is there ever a convenient time?!). Putting aside the annoyance factor, downtime takes many forms, and the cost of it to your business can add up - fast.

So, how do you uncover the true cost downtime has on your business? In this post we outline the main factors to take into consideration when pinpointing costs:

 

1. The various faces of downtime

In order to calculate downtime, you need to understand the causes of it. A good place to start is by identifying and understanding internal and external downtime threats - what could take your business down?

These can include natural disasters, system failures, cyber attacks and human-error (to name a few!), which can be caused by instances such as failed components or mistakes, among others.  

It's also important to remember not all downtime stems from IT issues!

We recommend spending time evaluating the downtime possibilities, and plan accordingly. Accidental as well as planned events can cause, or contribute to system and business downtime - some may be within your control, others may not!

 

2. The factors to consider when calculating costs

 When IT failure occurs, there are a number of issues that can be distilled down to a dollar cost. Some of these are direct and easily quantifiable (e.g. loss of productivity), others are indirect and more challenging to put a figure to (such as impact on reputation). 

The list of potential losses is long - from lost wages, inventory, transaction revenue, to remedial labour costs. It spans as far as missed service level agreements and opportunities, adverse affects on goodwill with both partners and customers, along with the impact of employee morale. 

An important aspect to consider in all of this is your context - the nature of your business, it's size, as well as it's dependence on IT. 

Though others will understand, as they too can empathise with the reliance on IT, an IT failure can cause a black hole of expenses not previously considered.

 

3. Downtime impacts companies of all scales

Speaking strictly dollar terms, though big businesses might loose more money when struck with an IT failure, their expense is not proportional as they are more resilient, and have the resources available to implement solutions quickly. 

Small businesses tend to not be so lucky. Often times, a small business' recovery plan is not as proficient, so despite the reduced cost of recovery, the ability to recover is significantly diminished with greater impact felt.

In this scenario, it again depends on the business and how well prepared you are for a system failure. It's worth considering the resources you have access to if you rely on an internal IT administrator, as opposed to the vast skill set you can access when utilising an outsourced IT provider. 

Pro tip: it's also worth considering the reliability of declining in-house systems, as opposed to software-as-a-service option with cloud computing. 

 

4. Getting a grasp on your IT

With IT as the cornerstone to modern businesses, it is not only important to consider and understand how much downtime could cost you, but to have a grasp on your current IT situation and identify opportunities for improvement.

To help get you started, we have a free, self-serve IT auditing tool where you will receive a personalised report outlining your businesses IT strengths, weaknesses and opportunities to improve your IT posture. You can access our free auditing tool here

 

New Call-to-action

Chris Davies

Chris Davies

Managing Director

Passionate about the business discipline of Technology Management, and the role it should play in business growth.

understand The big picture of your iT

Learn the strengths and weaknesses of your current IT infrastructure, and practical tips on how to improve, with our self-serve IT auditing tool.

GET ACCESS HERE