According to an IHS study, outages cost business over $700 billion a year. According to a 2016 ITIC study 98% of organizations say a single hour of downtime costs over $100,000 this year. 

That’s a lot of dough. 

The cost of downtime can vary when you consider your revenue, industry, the actual duration of the outage, the number of people impacted, the time of day, etc. 

Do you know how much downtime impacts your business? If not, you should. 

Doing the math for your specific organization and calculating your true cost of downtime is critical to understanding how much you should be spending to keep your business running. 

Let’s do some simple math. 

  • For hourly employees: Multiply the number of employees who are unable to work due to the downtime by their hourly salary. Then multiply that by the number of hours of lost productivity. 
  • For equipment: A little trickier, but for example, a web application that tracks incoming leads goes down. Determine the percentage of leads typically converted and how much revenue a converted lead can average. Multiply these values by the number of hours (or even minutes) the application is unavailable. 
  • Add the cost of recovery (new parts, service technicians, etc.). 

Now add it all up. The cost of downtime alone is a lot, not to mention the frustration of your staff operating in chaos. 

Small business example: A server goes down for 4 hours that impacts 30 people who have a billable rate of $125/hour, that’s $15,000 in lost productivity and/or sales alone. Let’s say that happens 4 times a year. That’s $60,000. On top of that, your network has a hiccup 1-2 times a week that bumps everyone off the network for 20 minutes. That’s another $63,750 (17 hours times your $3,750 hourly cost of lost opportunity). You’re nearing $125,000 in lost revenue. 

Perhaps your business can afford to give up $125,000 each year, however, if you could half that number, your CFO would be much happier. 

The good news is, the cost of preventing downtime is drastically less expensive than experiencing it. 

How can you prevent this? 

  1. Invest in your technology. If you’re trying to squeeze another year on that server that has no redundancy, consider upgrading. Set up redundancy in key areas like power and networking. Have additional workstations readily available. 
  2. Invest in your staff. Technology is constantly changing so it’s important that your IT team is abreast of new technologies and solutions. 
  3. Test your backups, test your backups, and then test your backups. This cannot be said enough. It’s one thing to say you have backups, it’s entirely another to make sure that you can actually use your backups to restore to a reasonable point-in-time. 
  4. Outsource your IT management. Hire a company to work with your IT staff. This company will likely have additional resources and advanced knowledge and know how to get ahead of problems and know how to get running faster should something go down.