Cost of Hourly Downtime Exceeds $300,000 for 90% of Firms; 41% of Enterprises Say Hourly Downtime Costs $1 Million to Over $5 Million
ITIC Position
In the 21st century Digital Age of “always on” IoT interconnected systems, AI, analytics and cloud computing, organizations have zero tolerance for downtime. This is true for all organizations – from micro SMBs with 1 to 20 users to Fortune 100 global multinational enterprises with 100,000+ workers. Outages of even a few minutes duration cause business and productivity to grind to a halt; negatively impact reliability and security and place companies at higher risk for regulatory compliance as well as civil and even criminal penalties.
ITIC’s latest research indicates the cost of hourly downtime continues to spike. The average cost of a single hour of downtime now exceeds $300,000 for over 90% of mid-size and large enterprises. These costs are exclusive of litigation, civil or criminal penalties. These are the results of ITIC’s 2024 Hourly Cost of Downtime Survey, an independent Web survey that polled over 1,000 firms worldwide from November 2023 through mid-March 2024.
Downtime Dangers in a Post-Pandemic World Economy
ITIC survey data finds the escalating cost of computing/network outages is attributable to several factors:
- An increase in the number of interconnected devices, systems and networks via the Cloud and the Internet of Things (IoT) ecosystems. Connectivity is a two-edged sword. It facilitates faster, more efficient transmissions and data access. But it also creates a limitless “attack surface” and exponentially increases the number of vulnerability points across the entire corporate ecosystem.
- An ongoing sharp spike in security vulnerabilities. These include targeted security and ransomware attacks by organized hackers; Email Phishing scams; CEO fraud and a wide range of malware, viruses and rogue code. The spike in security and data breaches were further exacerbated by the COVID-19 global pandemic that forced countries to go on lockdown and businesses to mandate that employees work from home. This in turn, gave rise to a spate of opportunistic COVID-19 related security scams which continue today.
- End user carelessness. Everyone from CEOs, knowledge workers, IT and Security administrators, developers, full and part-time employees, and contract workers access corporate servers, applications and information. Users regularly access sensitive data assets and intellectual property (IP) via a wide array of devices and networks. These include company and employee-owned (BYOD) mobile phones, tablets, laptops, and desktops as well as public networks. Unfortunately, many of these devices and networks lack adequate security. Absent up-to-date security and encryption, a lost or stolen device leaves the company’s data assets as well as personal employee information and the data of corporate customers, business partners and suppliers all potentially vulnerable and exposed.
- Organizations’ near-total reliance on computers and networks to conduct business. Downtime of even a few minutes interrupts productivity and daily business operations. Downtime also has a domino effect, even if no data is lost, stolen, changed, destroyed, or hacked.
ITIC anticipates that all these trends – particularly security and data breaches as well as the trend towards remote working and remote learning — will continue unabated. The hourly cost of downtime will continue to rise. It is imperative that organizations implement the necessary measures to ensure the reliability and security of their hardware, software applications and connectivity devices across the entire network ecosystem. Security and security awareness training are necessary to maintain the uptime and availability of devices and data assets. This will ensure continuous business operations and mitigate risk.
Security and Human Error are Chief Culprits Causing Downtime
And continuing a trend that has manifested over the past three years, Security, Human error, followed by software flaws and bugs, are the chief issues that undermine server hardware/server operating system, application software, appliances and network reliability resulting in unplanned downtime.
Unsurprisingly, in the 21st Century Digital Age, the functionality and reliability of the core foundation server hardware and server operating systems is more crucial than ever. The server hardware and the server OSes are the bedrock upon which the organization’s mainstream line of business (LOB) applications rest. High reliability and near continual system and application availability is imperative for organizations’ on-premises, cloud based and Network Edge/Perimeter environments. Infrastructure — irrespective of location – is essential to the overall health of business operations.
The inherent reliability and robustness of server hardware and the server operating systems are the singularly most critical factors that influence, impact, and ultimately determine the uptime and availability of mission critical line of business applications, virtual machines (VMs) that run on top of them and the connectivity devices that access them.
Additionally, ITIC’s latest 2024 Reliability research reveals that a variety of external factors are having more of a direct impact on system downtime and overall availability. These include overworked and understaffed IT departments; the rapid mainstream adoption of complex new technologies such as the aforementioned IoT, Big Data Analytics, virtualization and increasing cloud computing deployments and the continuing proliferation of BYOD and mobility technologies.
In the context of its annual Reliability and Security surveys, ITIC broadly defines human error to encompass both the technology and business mistakes organizations make with respect to their network equipment and strategies.
Human error as it relates to technology includes but is not limited to:
- Configuration, deployment, and management mistakes.
- Failure to upgrade or right size servers to accommodate more data and compute intensive workloads.
- Failure to migrate and upgrade outmoded applications that are no longer supported by the vendor.
- Failing to keep up to date on patches and security.
Human error with respect to business issues includes:
- Failure to allocate the appropriate Capital Expenditure and Operational Expenditure funds for equipment purchases and ongoing management and maintenance functions.
- Failure to devise, implement and upgrade the necessary computer and network to address issues like Cloud computing, Mobility, Remote Access, and Bring Your Own Device (BYOD).
- Failure to construct and enforce strong computer and network security policies.
- Ignorance of Total Cost of Ownership (TCO), Return on Investment (ROI).
- Failure to track hourly downtime costs.
- Failure to track and assess the impact of Service Level Agreements and regulatory compliance issues like Sarbanes-Oxley (SOX), Health Insurance Portability and Accountability Act (HIPAA).
On a positive note, the inherent reliability of server hardware and server operating system software as well as advancements in the underlying processor technology, all continue to improve year over year. But the survey results also reveal that external issues, most notably human error and security breaches, have also assumed greater significance in undermining system and network accessibility and performance.
The overall health of network operations, applications, management, and security functions all depend on the core foundation elements: server hardware, server operating systems and virtualization to deliver high availability, robust management and solid security. The reliability of the server, server OS and virtualization platforms form the foundation of the entire network infrastructure. The individual and collective reliability of these platforms has a direct, immediate, and long-lasting impact on daily operations and business results.
[1] U.S. Department of Transportation, “Transportation Statistics Annual Report 2023,” Pg. 1 -39, URL: https://www.bts.gov/sites/bts.dot.gov/files/2023-12/TSAR-2023_123023.pdf
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