How much does system downtime really cost your business?

 

How much does system downtime really cost your business?

 

Gartner recently estimated that the cost of IT downtime to businesses is around £4,300 per minute or £258,000 per hour, but what do these figures mean in relation to your business? For a top level view of how much downtime is costing your business, you can apply the following formula: 

Turnover
 ÷
No of working hours in the year
 =
 Loss of revenue per working hour


While it’s certainly useful to understand the loss of revenue during the time period of an outage, the impact can be lot more far reaching. Here, we look at some ways downtime can impact your business, even when your systems are back up and running.

 
 

Reputation

While damage to reputation is difficult to quantify, its cost can far exceed any immediate revenue losses. If downtime leads to your business being unable to meet customer requests or commitments, it can quickly damage your reputation, not just with existing customers, but with new business prospects too, particularly if word gets out.  


Post downtime costs

A lot of businesses breathe a sigh of relief when systems return to working order following a period of downtime. However, the costs can keep piling up in the form of overtime payments for engineers working out of hours to fix the issue, expenses to repair any damage done to the infrastructure and any compensation you need to award customers for a failure to deliver on SLAs. 


Legal repercussions

Going one step further than customer compensation, downtime can sometimes result in serious legal ramifications for a business. This is particularly prevalent with health-related businesses and those handling the personal and financial information of clients, which can be sued for outages, especially if downtime is associated with a security breach. Critically, these companies are also at risk of losing certification with national regulatory entities.


Examining the reality of downtime: British Airways

May 2017 saw a power supply failure in a west London data centre take down BA’s IT systems in around 70 countries, leaving its staff unable to check-in passengers. Even though the outage only lasted 15 minutes, thousands of flights were cancelled with an estimated 75,000 customers directly impacted. BA parted with an estimated £150 million in compensation for its inconvenienced customers. However, the damage to the company’s brand and reputation was the most eye-watering, with a €400 million loss in share value of BA’s parent company, International Airlines Group (IAG). 


 


If you’re looking for more information on how to quantify downtime in your business, or would like advice and guidance on how to reduce it, contact the LIMA team today.

 
 
 
Darren Scott