Over the last two decades, the business world has increasingly relied on the internet as a considerable source of revenue. With this reliance, a greater need for the right IT infrastructure has evolved.
According to Gartner, IT downtimes can vary by industry. However, the average cost across the board is a whopping $5,600 per minute. While the monetary cost to remedy a system failure is relatively low, the expense incurred from related downtime costs can be substantial.
We’ll explore both of these areas to paint a complete picture of just what a business can stand to lose in the case of an unplanned outage.
The first problem to address is clear. IT outages can hit where it really hurts, right in the money.
In such a fiercely competitive age, downtime clearly spells a loss of dollars for any business.
For this reason, business disruption and lost revenue are the biggest costs incurred during an outage, making up 60% combined.
Business disruption prevents the revenue generation needed to cover fixed costs. Examples of fixed costs are employee salaries, rent, equipment costs, insurance etc.
Perhaps this is why KPMG reports that 2 hours of downtime is simply unacceptable for 24% of organizations.
How to calculate financial costs
The following formula is a great place to start for an idea on what an unplanned outage costs your business. Calculating your cost-per-minute requires an understanding of your yearly operational costs that can be broken down into cost-per-minute.
Outage cost = minutes of downtime x cost-per-minute.
In addition to immediate costs, unplanned outages come with other costs. Some of these costs may be unintentionally left out of cost analysis since they may be difficult to accurately assess.
These opportunity costs should be on every business’s radar and effectively calculated into total downtime costs.
Perhaps one of the most troublesome costs directly impacted by an unplanned outage is the decrease in productivity that employees will experience due to interruption.
In order to have an accurate idea of the effect on productivity, businesses should account for the length of the downtime and the average time it takes an employee to refocus on an abandoned task. This time can be considerable according to The Washington Post. They reported that an average of 238 minutes are lost to interruptions daily.
The chain reaction from unplanned outages extends much further, compromising the following areas:
- Employee morale
- Customer loyalty
- Brand image
- Supply chain management
- Compliance violation fees
- Lost or damaged equipment costs
While it’s true that outage costs have skyrocketed, the answer to this dilemma is clear. Businesses must commit to implementing a plan.
Unplanned outages are an unavoidable aspect of being in business, but with the right team in place you can minimize them. This is exactly why your business can benefit from managed IT services.
As an experienced managed service provider, we can provide an IT infrastructure that manages unplanned situations before they even occur. Call us today to schedule your consultation and discuss what solutions we can offer to your business.