How Much Does IT Downtime Cost Your Company? IT outages are a part of business life. There can be many reasons for them, fault from planned maintenance and upgrades through to software bugs, internet service provider problems all the way through to hardware failure, viruses, or cyber-attacks.
When IT systems go down, it can affect your business in many ways. They affect companies through losses, lowered productivity and stock prices, compliance failure, legal costs, and, in some cases, the collapse of the business.
A 2016 report by IHS found that in North America alone, IT downtime costs businesses an estimated $700 billion a year. For individual companies, this is estimated to be around $1 million per year for mid-sized companies to $60 million per year for a large enterprise.
A report by Gartner found that every minute of IT downtime costs companies an average of $5,600 per minute. Depending on the size of the business and the scale of its operations, it can cost businesses anywhere from $140,000 to $540,000 per hour.
The 2019 IT Outage Impact Study found that the companies that experience frequent blackouts have cost 16 times higher than companies with fewer ones. The study also found that companies with frequent downtime require twice as may task with problems and in these companies takes twice as long.
The IHS research found that companies were experiencing on average five downtime events every month, and 27 hours of downtime each month.
Causes of downtime
- Network failure
- Usage spikes and surges
- Human error
- Software malfunctions
- Infrastructure hardware failure
- Third-party provided outages
Cybercrime is another contributing factor to issues experienced by large organizations. Hacking, viruses, malware, and other attacks can have a range of negative consequences for a business, from theft of money and loss of data to systems being rendered inoperable.
Cybercrime has become one of the world’s leading causes of data center outages. In 2017 alone, one in five businesses faced at least 25 hours’ downtime as a result of ransomware attacks.
The infamous WannaCry virus that affected NHS hospitals that year affected computer systems for up to a week.
In 2011, Sony experienced a cyber attack that prompted it to take its PlayStation Network offline. The company faced an outage that lasted for 23 days and is estimated to have cost it $250 million in losses.
How Much Does IT Downtime Cost Your Company: Calculating your company’s IT downtime costs.
Determining what IT outages are costing your business, you need to take into account:
- What systems are affected?
- The duration of the outage
- How many employees are unable to carry out key tasks
- How many customers or other stakeholders are affected
- Whether revenue is affected (for example if customers cannot purchase from you, or production is halted)
- Any legal costs
- Reputational risk
- A simple formula you can use is this one:
- The business cost of IT downtime/hour =
- Lost revenue + lost productivity + costs associated with recovery + any other costs
- (hidden or those that can’t be immediately quantified at the time of the interruption).
The longer and more widespread the outage, the more it is going to cost your company. While most run-of-the-mill outages will last a few hours, on the more extreme end of the scale your systems could be affected for many weeks. And the longer your systems are down, the more you are at risk of complete ruin.
How Much Does IT Downtime Cost Your Company: Additional downtime costs
When you’re calculating how much IT downtime costs your company, there are factors you might not even consider – including the productivity costs associated with unplanned disruptions.
A study by researchers at the University of California, Irvine, found that when a professional worker is interrupted it can take up to 23 minutes for them to refocus and get back to the task they were working on before the interruption.
So if someone interrupts your employees to let them know there’s been an internet outage or the email server is down, this can all add up across the organization in ways you might not have captured.
According to the Washington Post, in the financial services industry alone, there can be 238 minutes of interruptions experienced in a company every single day.
When you think about the time taken to restart tasks because of issues, that’s another 84 minutes per company. The end result is 372 minutes – or 6.2 hours each day and accounts for almost one whole employee in lost productivity.
How Much Does IT Downtime Cost Your Company: What can you do to prevent downtime?
Some downtime is inevitable. For example, routine maintenance and upgrades are necessary to keep your business running.
To minimize the impact they have, you can schedule them for times when they will cause the least amount of issues.
Around 75% of all IT downtime can be attributed to nontechnological failures, but user-related issues basically amount to a lack of training or a lack of planning.
Ways to minimize or completely prevent downtime in your organization include:
- Assessing your risks and vulnerabilities and putting plans in place to mitigate these risks and weaknesses.
- Ensuring your systems are configured properly.
- Routinely testing your equipment.
- Closely monitoring systems performance.
- Keeping software up-to-date, including downloading patches and ensuring you’re running the latest versions of software.
- Using antivirus software, firewalls, and malware detecting software.
- Keeping virus definitions regularly updated.
- Assessing the performance of external providers such as data centers, website hosts, internet service providers and changing to more reliable services if necessary.
- Regularly training your staff on cyber security.
- Have good recovery and business continuity plans in place to get back to business as soon as possible after a significant outage.
How DeskAlerts can help your business to reduce negative consequences of downtime
DeskAlerts is a versatile internal communications software solution that can help to improve various aspects of your organization’s operations.
The system works by sending messages to all employees via features such as pop-up alerts, screensavers, wallpapers, digital signage, scrolling ticker tape, and more in a way that cannot be skipped or ignored.
Messages are sent to computer screens and can appear even when PCs are locked, on standby, or on screensaver mode. Push notifications can be sent to cell phones and tablets.
The system can be used to:
Inform employees about any planned outages in advance so they can plan their work around any downtime.
Take the pressure off your IT help desk when there is an unplanned outage. By informing the workforce of a known issue via a mass notification, it is less likely the help desk will receive multiple calls about the same issue. This frees the IT team up to get on with the job of solving the IT problem that has caused the downtime.
Keep employees informed throughout the outage, including providing an update to the estimated time of restoration so employees can be productive and work on other non-IT tasks during the downtime.
Quiz your employees, via the polls, surveys, and quiz module, to determine what their knowledge is around cyber security and build education campaigns that reflect any knowledge gaps.
Give your employees training on cyber security.
Communicate IT and security policies and send reminders, hints, and tips to employees about what to do to keep systems and data safe.
To find out more about how DeskAlerts could work in your organization, get in touch with us to organize a demo.