Apr
12

Can You Afford Downtime?

Can You Afford Downtime?

April 12
By

If you’re a business owner who uses any form of technology in your daily operations, downtime can be costly. Even just one hour without access to digital client records, software applications, and automated processes creates a ripple effect. This results in lost sales and delays in your delivery and operations schedule.

So just how much do these losses and delays cost?

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Survey Shows Startling Results of True Cost of Downtime

According to a study by Aberdeen Research Group, the average cost of IT disruptions among the 134 organizations surveyed was $138,000 per hour. However, this number is simply an average taken from a variety of businesses. By breaking the results down further we can get a better look at what downtime might cost your business.

Organization Size

The size of a business is related to how much it costs when your systems go down.

In the Aberdeen study, businesses were grouped into small (less than 100 employees), mid-sized (between 100 and 1000 employees), and large (more than 1000 employees) businesses. Not surprisingly, small businesses incurred less of a loss than large businesses with disruptions costing an average of $6,900 per hour for the small businesses, $74,000 for the mid-sized businesses, and $1,130,000 for large businesses.

Smaller businesses generally have fewer staff, less complicated technology needs, and are at risk of losing fewer sales than larger businesses, but that doesn’t mean they aren’t at risk.

Industry

The financial impact of IT glitches on your business also depends on the industry or profession in which you operate, as well as how dependent your business is on the down system.

Supply chain businesses stand to take the largest financial hits when database systems falter, according to ITG’s report Qualifying the Value of Resilience. The study examined the effect of database malfunctions on businesses in six different industries. It says that database issues were the most costly for the auto parts manufacturing business, followed by the retail chain, industrial distribution company, financial services, insurance services, and service-based companies.

Frequency and Length of IT Disruptions

No matter how big or small your business may be, reducing the frequency of disruptions and getting your systems up and running quickly to minimize the “time” in downtime makes a big difference to how much these incidents actually cost.

The Aberdeen study found that the organizations with the most frequent IT problems (4.4 per year) also took the longest (9 hours) to get up and running each time there was a problem. The organizations with the least amount of disruptions had a mere .3 occurrences each year, and were up and running in under an hour.

In dollars, this equates to an astronomical difference in costs – $3,926,340 of total business downtime costs per year for the first group versus just $3,048 total annual costs for the second.

Conclusion? It pays to ensure you have a business continuity strategy that best suits your organization, and can get you back up and running as quickly as possible.

More Technology Means Higher Costs

The more dependent a business becomes on technology, the more expensive an IT service issue becomes. As many businesses increasingly automate everything from order entry to communication and file management, the Aberdeen Research Report found the costs resulting from technology system malfunctions have risen 38 percent between June 2010 and February 2012.

While your business becomes more efficient and processes become more streamlined thanks to technology, remember to update your backup and disaster recovery processes to reflect any changes or recent expansions. This will help reduce downtime when it next occurs.

Photo Credit: Jeff Belmonte via Compfight cc