What is the Cost of Downtime?

Most businesses can find a way to deal with whatever life throws at them as long as they can continue to do business. But, what happens when something impacts that ability? When a business can not continue to operate and perform normal business functions, the company’s reputation is greatly impacted. Therefore, every company’s survival greatly depends on how quickly they can return to normal operations.

What is downtime and how do we guard against it?

Downtime is the amount of time a business is unable to perform normal business operations. It’s inevitable. All businesses have some form of downtime, computers and other office machines require maintenance to keep them running efficiently and securely. Planned maintenance falls into the category of downtime, but since this can be scheduled during off-hours or slow-times to mitigate business impact, it’s disregarded for the remainder of this discussion.

Unplanned downtime, without a plan to resolve it quickly or minimize its impact, is a real threat. Common causes for unplanned downtime include:

  • Network failure
  • Power outages
  • Malware
  • Personnel availability
  • Equipment failure
  • Natural disasters

Each of the items listed above will have a different impact on the business operations and a variable level of severity depending on how much of the organization is affected.

As an example, if one computer is infected with malware and it’s identified promptly, the impact could be minimal. But if malware is allowed to go unchecked, it is possible for the malware to propagate to other devices throughout the network. Once malware infects multiple computers or other devices on the network, the costs begin to rise quickly. Much of this is due to decreased performance capability of the employees, and the mitigation steps necessary to remove the malware and return to normal operations.

Because of this, some businesses opt to have a standby system available in such cases. The standby system allows the employee to continue working on the standby system while a technician removes the malware from their primary machine. But in the case of an entire network affected with malware, this option is moot. System imaging would be the best course of action in this regard.

Businesses usually attempt to minimize the issue of unavailable personnel by cross-training more than one person in various work roles and procedures that need to be performed. This allows Bob to fill in for Suzy while she is out sick or on vacation. The challenge is to ensure all key roles and procedures are cross-trained and documented in detail. This is a necessary safeguard so the business will continue to operate properly.

What does it cost for a business to be “down”?

For this example let’s use the following company information:

$1,000,000 – Revenue for the last year
50 Weeks worked last year (2 weeks reserved for recognized holidays)
5 Days worked per week
8 Hours worked each day
60 Minutes in an hour

So for the company to stay on track and have the same revenue as last year, the business must continue to produce the following:

$20,000.00 per Week
$4,000.00 per Day
$500.00 per Hour
$8.33 per Minute

Note:  These figures are a broad estimation as each business operation is unique as to the actual rate of how the income flows into the business.

How long could it be down?

Note: All figures below are approximations of the estimated costs of Downtime…

Third party services outage (power/internet) – Length of outage plus additional time to bring equipment back online

Length of outage + 30 minutes = Length of outage + $249.90

Malware – Degraded/slow system performance and time to remove malware

4 hours = $2000.00 (Could be less if some users are unaffected)

Ransomware – Time to remove and recover affected files if not totally encrypted.

8 hours – 1 week = $4000.00 – $20,000

Hardware failure / replacement – Depending on availability of parts and time to replace

2 days – 2 weeks = $8000.00 – $40,0000 (Could be less if some users are unaffected)

Illness – Personnel out due to illness (Most likely less since not all users will be affected at same time)

1 day – 1 week = $4000.00 – $20,000

Personnel Long Term Disability – Personnel out due to accident or illness (most likely less since not all users will be affected at same time)

1 week – x months = $4000.00 to ???

Loss of Key personnel Minimal training time is one month. This does not account for time to find and hire a qualified candidate, and assumes all processes are documented in explicit detail.  

Data Breach Notification – These costs are highly variable based on number of records contained in the breach, the amount of fines, and other intangible costs such as reputational damage which can be hard to quantify until a breach happens.  Some of these costs can be minimized through, company policies, processes, procedures, and insurance.  

The average cost of credit monitoring required per record lost is $350.00 per record. Regulatory fines can cost well beyond $250,000.  Costs to correct vulnerabilities and compromised systems are variable based on the amount of work to be done.  Company reputation will take a significant hit after a breach. In fact, many smaller companies end up being forced to close their doors due to financial hardship and reputational damage.

Need more information on how to protect your business from downtime and other threats?

We get it… we really do! As a business, you just want your systems to work as flawlessly as possible so that you can continue to work, serve your customers, and make money. That’s why our suite of solutions are specifically designed to efficiently and effectively save time and money while increasing the sustainability, security, and overall continuity of your business.

Isn’t it about time we had a conversation about protecting your business from downtime and other threats? Get in Touch with ITNS Consulting today or call us at (608) 563-1975. You’ll be glad you did!

Sources and more information:

Data Foundry
https://www.datafoundry.com/blog/how-to-calculate-the-true-cost-of-downtime/

eResources
https://www.itondemand.com/2018/05/29/costs-of-downtime/

Evolven
https://www.evolven.com/blog/downtime-outages-and-failures-understanding-their-true-costs.html

The20
https://www.the20.com/blog/the-cost-of-it-downtime/

Gartner Blog Network
https://blogs.gartner.com/andrew-lerner/2014/07/16/the-cost-of-downtime/
https://blogs.gartner.com/andrew-lerner/2014/07/11/network-downtime/

Downtime Calculator
https://www.expedient.com/cost-of-downtime-calculator/

Ready to have a conversation?

We would really love to hear from you! Give us a call at 608-563-1975 or fill out the form below to start working with our team.

Fill out my online form.

21 Questions to Determine if Your MSP is Ready for Prime Time or is Setting the Stage for Cybersecurity Problems
As if 2020 wasn’t challenging enough for businesses, reports warn that Managed …
The Dangers of the Inbox
There’s a greater psychological undercurrent to cyberattacks than you might think. Cybercriminals …
Securing Your Remote Workers
According to the FBI, daily cybersecurity complaints increased from 1,000 to 4,000 …
New Year, New Risks for IT & Data Security
The COVID-19 pandemic has changed everything about the world as we know …
Ransomware is on the rise again!
Many business's don't realize how common and damaging ransomware attacks have become. …
Attention, Attention… This is not a Drill!
Recently a major Health Insurance Provider sent out a “Security Due Diligence …
What is a Vulnerability Assessment, and why do I need one?
It is important to first understand that every business, regardless of size… …
Paging Doctor Google… Doctor Google, Please Report “Everywhere”.
Initially reported by the Wall Street Journal and corroborated by the New …