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Over 95% of large enterprises with more than 1000 employees say that on average, a single hour of downtime per year costs their company over $100,000, over 50% say the cost exceeds $300,000 and one in 10 indicate hourly downtime costs their firms $1 million or more annually.

Moreover, for a select three percent of organizations, whose businesses are based on high level data transactions, like banks and stock exchanges, online retail sales or even utility firms, losses may be calculated in millions of dollars per minute.

Those are the results of ITIC’s 2013-2014 Technology Trends and Deployment Survey, an independent Web-based survey which polled over 600 organizations in May/June 2013. All categories of businesses were represented in the survey respondent pool: 37% were small/midsized (SMB) firms with up to 200 users; 28% came from the small/midsized (SME) enterprise sector with 201 to 1,000 users and 35% were large enterprises with over 1,000 users.

These statistics are not absolute. They are the respondents’ estimates of the cost of one hour of hourly downtime due to lost revenue and lost end user productivity. Additionally, these figures did not take into account the cost of additional penalties for regulatory non-compliance or “good will” gestures made to the organization’s customers and business partners that were negatively impacted by a system or network failure. In fact, these two conditions can cause downtime costs to skyrocket even further.

The overarching message is clear: downtime of even a few minutes is expensive and unwelcome. Only five percent of enterprise respondents said that downtime costs their companies less than $100,000 in a single hour.

There is well documented evidence from a variety of sources in recent years, tracking the rising cost of downtime in the Internet age where business is increasingly conducted 24 x 7. To reiterate, hourly losses of $50,000, $100,000 or even millions due mainly to lost productivity and lost business revenue are common.

ITIC’s own 2013 Technology Trends and Deployment Survey found 63% of large enterprises with 1,000 or more workers reported that one hour of downtime costs their business from $101,000 to $400,000 per hour exclusive of any litigation or compliance penalties.

  • Some 11% of large enterprises with over 1,000 end users indicated that a single hour of downtime costs their organizations $1 million or more, on average.
  • Only five percent of the large enterprise respondents said that an hour of downtime cost less than $100,000!

Consequences of Downtime

There is never a good time for a network, system or service failure. The hourly costs associated with downtime paint a grim picture. But they do not tell the whole story of just how devastating downtime can be to a business’ bottom line, its productivity and its reputation.

The ITIC survey data revealed that although monetary losses topped users’ list of downtime concerns, it was not the only factor worrisome to organizations. The top five business consequences that concerned users are (in order):

  • Transaction/sales losses
  • Lost/damaged data
  • Customer dissatisfaction
  • Restarting/return to full operation
  • Regulatory compliance exposure

Consider these scenarios:

  • Healthcare: A system failure during an operation could jeopardize human lives.
  • Banking and Finance: Unplanned outages during peak transaction time periods could cause business to grind to a halt. Banks might be unable to process deposits and withdrawal transactions and customers might not be able to access funds in ATM machines. Brokerage firms and stock exchanges routinely process millions and even billions of transactions daily, could conceivably lose millions of dollars if transactions or trading were interrupted for just minutes during normal business hours.
  • Government Agencies: A system failure within the Social Security Administration (SSA) that occurs when the agency is processing checks could result in delayed payments, lost productivity and require administrators to spend hours or days in remedial action.
  • Retail: Retailers and sales force personnel trying to close end-of-quarter results, would be hard pressed if an outage occurred, which rendered them unable or delayed access to order entries and the ability to log sales. This could have a domino effect on suppliers, customers and shareholders.
  • Travel and Transportation: An outage at the Federal Aviation Administration’s (FAA) air traffic control systems could cause chaos: air traffic controllers would find it difficult to track flights and flight paths, raising the risk of massive delays and in a worst case scenario, collisions. An airlines reservation system outage of would leave the airlines unable to process reservations and issue tickets and boarding passes via online systems.

In these situations and many others, business grinds to a halt, productivity is impaired or ceases altogether and the impact on customers swiftly follows. Aside from the immediate consequences of being unable to conduct business and loss of revenue, unreliable systems also undermine quality of service, potentially causing firms to be unable to meet SLA agreements. This can lead to breach of contract, cause the company to lose business and customers, and put it at risk for expensive penalties and litigation.

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