What’s the Real Cost of IT Downtime?

Your IT is a vital part of your business. It’s the backbone of what enables you and your workforce to do your daily tasks. However, like any form of technology, your IT infrastructure is not immune to failure. If your IT environment went down, how would it affect your business?

What Is the Cost of IT Downtime?

Looking at it strictly at the surface level, downtime seems like just a minor annoyance. Instead of being able to go about your day normally, you now have to sit on your hands and wait for your IT department to fix the issue. But there’s more that goes into IT downtime than just not being able to do anything for a while.

Back in 2015, iTunes and Apple’s App Store experienced an outage that lasted for 12 hours. In that 12-hour span, Apple ended up losing about $25 million in revenue. To put that figure into perspective, that’s a little over $2 million per hour and $34,000 per minute. Today, it’s estimated that the average cost of IT downtime that’s unplanned is above $400,000 per hour, according to IBM.

It’s also important to remember that downtime can come in a variety of forms. For example, it could be planned for maintenance purposes or caused by a cyberattack, or maybe your equipment just decided to stop working that day. Whatever the cause, it always comes with a cost to your business.

Now that you have an idea of how bad downtime can be for your organization, it’s time to start answering some questions. Is there something that contributes to these costs? What’s the cost of downtime for small businesses that aren’t Apple? And how can you calculate downtime cost for your own company?

Factors That Contribute to the Cost of IT Downtime

There are a large variety of factors that can determine how much you could lose from downtime. Some of those factors include your:

Industry
Cause of downtime
Size of business
Revenue earned from system that’s down
Number of people affected
Duration of outage
Time of day

For example, let’s look back at the App Store and iTunes outage of 2015. The outage happened during the day in the U.S., millions of people use those storefronts for purchases, and downtime lasted for 12 hours. If that outage would’ve happened at night, when people are less likely to make purchases, Apple likely would’ve lost less revenue.

However, the cost of IT downtime isn’t only about lost revenue—it also involves indirect costs. One such problem caused by downtime is interruptions. When your network is back up and running, most people don’t immediately go back to work. Instead, they take some time to refocus. As reported by the Washington Post, interruptions consume about 238 minutes of your day, on average.

Additionally, if the cause of downtime is the result of something like a cyberattack, your company could have to pay for recovery services, regulatory fines, and more.

Cost of IT Downtime for Small Businesses

If you run a small business, the impact you’re going to feel isn’t going to be the same as a mega corporation like Apple. However, the consequences are still going to be serious. A business that makes less than $50 million and has fewer than 500 employees loses $8,600 per hour on average, according to a study from Aberdeen Strategy & Research.

How To Calculate Downtime Costs

If you want to get a quick estimate of what the cost of IT downtime is for your organization, it’s actually not all that hard. All you need is a formula that considers the three components of downtime costs: lost revenue, lost productivity, and recovery costs. Let’s say your company went down for an hour.

Lost revenue: Take your annual revenue and break it down into how much you make per hour. ($10 million a year / 12 months = $833,333 a month / 4 weeks = $208,333 a week / 5 days = $41,667 a day / 24 hours = $1,736 an hour)
Lost productivity: Take the number of employees you have, times their average hourly wage, times the percentage of productivity you think they lost. (40 employees x $30/hour x .75 = $900 in lost productivity)
Total cost: For total cost, just add up lost revenue, productivity, and recovery costs. ($1,736 + $900 + recovery cost = total cost)

How You Can Minimize Downtime

The real cost of downtime can greatly affect any business. Fortunately, there are downtime reduction strategies you can implement to maximize uptime. Some of these strategies include:

Developing a disaster recovery plan: Having a disaster recovery plan helps you to immediately respond to a disaster and allows your business to rebound quickly from downtime.
Eliminating single points of failure: Removing single points of failure from your existing infrastructure and processes makes sure your IT can stay up and running despite a disaster.
Investing in network management and monitoring: With network management and monitoring, you can take a proactive approach to preventing downtime by implementing fixes before they are necessary.
Having a desktop support solution: If you have a reliable desktop support solution to call on, the technician can help you get your system back up and running in no time. The faster they are able to respond to inquiries, the better.

Maximize Uptime With the Help of BL King

The experts at BL King are dedicated to helping your business avoid the consequences of downtime. We offer a variety of cybersecurity, compliance, and support solutions that ensure your IT remains secure and compliant and continues to run smoothly.