Calculating the true cost of network downtime
In a tough economy, resources are at a premium. Business leaders are extremely cost-conscious. But are they really looking at the cost of not doing information technology right? The cost of network downtime is as real as the cost of goods sold or the cost to provide a service.
It’s not a matter of if your network will go down; it’s a matter of when. Industry experts estimate:
- Almost 60 percent of network failures are caused by human error
- Natural disasters and utility failures account for 3 percent of interruptions
- Hardware failures account for less than 10 percent of all network failures
- Systems errors account for less than 8 percent of failures; Application errors, 19 percent
Actual dollars and percentages vary drastically from industry to industry. The average U.S. labor cost for a professional organization is about $42 per hour. One hour of unplanned downtime for a professional firm with 20 employees, assuming the outage affected all employees, would cost around $840. If it lasts four hours, it would cost $3,360 in labor alone. But that’s just the beginning.
Tangible costs are measureable hard costs associated with the downtime
- labor costs for idle workers,
- lost revenue,
- the cost to recover lost information and resume business,
What is the cost of losing and then replacing one of your largest clients? What is the cost of replacing your best employees? Intangible costs can impact the business more severely than some hard costs. The four primary intangible costs are:
- lost opportunity,
- loss of customer loyalty,
- damaged reputation,
- diminished employee morale,
Information Technology and business are so intertwined that they cannot be separated. The flow of information is critical, and when disrupted, business comes to a screeching halt. That gets expensive fast. Lost revenues can quickly run up into the six or seven figures. And that’s just the start. Most organizations don’t fully understand the impact unplanned downtime has on their business.
Most executives don’t consider downtime costs until an outage occurs. Then, faced with loss of revenue, productivity and damage to their reputation, downtime becomes a major concern. This problem can be avoided through better training for end-users, network documentation, better network monitoring and management. When businesses and organizations take adequate protective measures, they can survive even major disasters. But without protective measures, a business can be wiped out by something as trivial as the corrupt actions of a disgruntled employee.