The Real Cost of Downtime

Downtime is a serious issue in business today. It can affect all businesses and can take many forms. Not to mention that any business interruption can cost a fortune in time and money. You could also risk damaging your reputation if your customer cannot get hold of you. The good news is that it's easy to mitigate the risks and minimise the impact it has on your business.

So what is the real cost of downtime? How does it affect my business and what can be done to prevent it?

The term downtime refers to a period when a system is unavailable. A few examples of this could include internet outages, power cuts or hardware faults. The severity of the interruption could be a complete inability to trade, or just difficulty in performing a specific function. Whatever the severity, any form of business interruption is not ideal.

Let’s dive a little deeper into the effects of downtime. We’ll start by looking at the most obvious problem associated with downtime: Money.

In 2017 British Airways suffered a power supply failure in their data centre. This caused physical damage to the centre and took out all the airlines core IT systems. This outage cancelled hundreds of flights, stranding passengers and losing their luggage. The outage affected some 75,000 passengers and BA estimated that they paid out over £100,000,000 in compensation. It turns out that the cause of the outage was down to human error. An engineer had disconnected a power supply at their data centre. When he plugged it back in it caused a power surge and resulted in major damage.

1 year later in April 2018, the large banking firm TSB suffered a similar ill fast after an IT migration went wrong. It was reported that roughly 1.9 million customers were locked out of their online banking, some for several weeks! The firm were migrating their customers online banking onto a new platform when disaster struck. An enquiry by law firm Slaughter & May suggested that the platform had not been fully tested before going live. This outage cost the bank more than £180 million. It also caused significant damage to their own reputation and the reputation of their IT provider, Sabis.

These incidents give you an idea of the potential cost of downtime to a business, but what is the real cost of downtime?

A 2014 Gartner report estimates the average cost of downtime to equal roughly $5,600 per minute! This adds up to roughly $300,000 per hour. We should point out here that this is an average figure. This does not take into account the individual details of your business. Nor does it consider your industry or the nature of the outage.

To demonstrate how the effects of an outage can differ we will take a couple of examples. Let’s say you run a restaurant and you lose access to your till system for an hour on a busy Friday night. You are now unable to process orders or take payments. This is a big problem for you! Now let’s compare that with an email outage at the same time for an accountancy practice. We’re going to assume that very few accountants will be working on a Friday night and as such, they are unlikely to even notice! In this situation we can safely say that the restaurant is going to come out a lot worse off.

Let’s take another example. This time you are the owner of an organisation that sells unique products or services. Or you own an organisation where your customers commit to a contract. If you suffered a payment system outage you would be unlikely to lose too much business. Now let’s say you suffer the same outage but this time you own a corner shop. In this case you are going to come off a lot worse because your customers can go elsewhere to buy the same goods. You see what we’re getting at here, right?

What can you do to mitigate the threat of downtime?

Well the first thing you’re going to want to do is assess your costs. Look at your IT systems, ideally with a qualified IT professional and spend some time thinking about everything that could go wrong. This might take you a while, especially if your systems are large and complex, but it is definitely worth it. Some businesses choose to look at the most likely or the biggest things that could go wrong. This is a reasonable approach, but we always recommend going a little deeper than this. Once you’ve got a good idea of what can go wrong, take your findings and work out exactly what each issue might cost your business.

It is very tempting to inflate the estimated cost of impact ‘to be on the safe side’ but we don’t recommend this. This is actually a counterproductive approach. It doesn’t provide an organisation with an accurate insight into how many resources it should devote to mitigating the threat. It also doesn’t help them to estimate where these resources should be deployed.

Your cost assessment should includes the loss of revenue per working house and the cost of salaries. It should be easy enough to identify lost sales and to calculate the amount of money you are paying staff who are unable to work. Your figure should also include the cost of restoring the IT services. Don’t forget to include any potential compensation, penalties or legal costs that you might incur either.

For this exercise you shouldn’t take into consideration indirect affects such as damage to reputation. Although this is a serious consequence, it does not contribute to the total cost of downtime.

Now to making your downtime plan.

Now that you’ve completed this exercise you should have a better idea of what an outage might cost you. You can also identify the systems and the departments that are most critical to the business and the generation of revenue. Doing this has allowed you to prioritise the correct resources to mitigate the impact of downtime and minimise the cost.

Using a managed service provider is a great way to help with this. Trehane Tech’s managed services reduce the risk of outages by focusing heavily on proactive support. We utilise state-of-the-art monitoring and alerting tools to stay ahead. We have also developed a proprietary AI program to spot any potential issues before they happen.

Proactive support is far more efficient than reactive support, which is where an IT company only jumps in after something bad happens. Our proactive support ensures that your servers and infrastructure are secure and available at all time. It does this by making sure that you have the latest patches and updates installed. But only after our AI program has carefully scanned them and trawled knowledge bases and release notes to make sure that there are no bugs in there that could disrupt your trading.

In summary, downtime is a serious problem in business today, but it can be prevented or at least have the impact minimised. You could spend an age working through your infrastructure looking for potential issues and areas that may cause disruption, but we recommend working with an MSP. Especially one that specialises in the wonder that is cloud technology. 

Cloud technology completely removes both the cost and the risks associated with running your IT systems from servers on site. It also makes it much easier to mitigate the risks of downtime. Your MSP will be able to set up as many redundancies and failovers as you need to keep you running, no matter what. With our Microsoft Azure based cloud service, you are guaranteed 99.99% uptime on all virtual machines.

Working with an MSP is one of the best decisions you can make for your business, not only to avoid downtime, but to greatly reduce your IT costs and ensure that you have qualified professionals to speak to whenever you are unsure about something or you need help with an IT issue. Hit the button below to get in touch and find out how working with Trehane Technology will help your business fly!

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