Four in 10 enterprise organizations – 40% – indicate that a single hour of downtime can now cost their firms from $1 million to over $5 million – exclusive of any legal fees, fines or penalties.
Those are the results of ITIC’s 11th annual Hourly Cost of Downtime Survey. ITIC polled 1,000 businesses from March through June 2020. All categories of businesses were represented in the survey respondent pool: 27% 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 45% were large enterprises with over 1,000 users. data indicates that over 98% 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. These statistics represent the “average” hourly cost of downtime. In a worst case scenario – such as a catastrophic outage that occurs during peak usage times or an event that disrupts a crucial business transaction – the monetary losses to the organization can reach and even exceed millions per minute.
Once again, as in ITIC’s 2019 Hourly Cost of Downtime poll, only a tiny two percent minority of respondents — mainly very small businesses with fewer than 50 employees – reported that downtime costs their companies less than $100,000 in a single 60-minute time period. Downtime costs are also expensive for SMBs with 200 to 500 employees. Nearly half – 47% – of SMB survey respondents estimate that a single hour of downtime can easily cost their firms $100,000 or more in lost revenue, end user productivity and remedial action by IT administrators. To reiterate, these figures are exclusive of penalties, and any ensuing monetary awards that are the result of litigation, civil or criminal non-compliance penalties.
It’s easy to underestimate the cost of downtime, but it adds up quickly. For example: one minute of downtime for a single server in a company that calculates its hourly cost of downtime for a mission critical server or application at $100,000 is $1,667. The overwhelming majority of firms will have multiple servers impacted in an outage — particularly if those servers are located in the cloud or a virtualized environment. That $100,000 of hourly downtime calculation of $1,667 per minute for a single server quickly grows to $16,670 per minute when downtime affects 10 servers and main line of business applications/data assets! Downtime costs add up quickly for corporate enterprises. And once again, these are just the costs of the actual downtime. It does not factoring in any lost, damaged, stolen, destroyed or changed data.
Small businesses are equally at risk, even if their potential downtime statistics are a fraction of large enterprises. For example, an SMB company that estimates that one hour of downtime “only” costs the firm $10,000 could still incur a cost of $167 for a single minute of per server downtime. Similarly, an SMB company that assumes that one hour of downtime costs the business $25,000 could still potentially lose an estimated $417 per server/per minute. Very small SMBs – companies with 1 to 100 employees – generally would not rack up hourly downtime costs of hundreds of thousands or millions in hourly losses. Small companies however, typically lack the deep pockets, larger budgets and reserve funds of their enterprise counterparts to absorb financial losses associated with downtime.
Hourly downtime costs of $25,000; $50,000 or $75,000 (exclusive of litigation or civil and even criminal penalties) may be severe enough to put the SMB out of business – or severely damage its reputation and cause it to lose business.
ITIC’s latest Hourly Cost of Downtime survey revealed that for large enterprises, the price tag associated with a 60 minute outage is much steeper: it routinely tops the $5 Million (USD) mark for the top 10 verticals. These include: Banking/Finance; Food; Energy; Government; Healthcare; Manufacturing; Media & Communications; Retail; Transportation and Utilities.
These highly regulated vertical industries must also factor in the potential losses related to litigation. Businesses may also be liable for civil penalties stemming from their failure to meet Service Level Agreements (SLAs) or Compliance Regulations. Moreover, for select organizations, whose businesses are based on compute-intensive data transactions, like stock exchanges or utilities, losses may be calculated in millions of dollars per minute.
ITIC’s 11th annual Hourly Cost of Downtime Survey, conducted in conjunction with the ITIC 2020 Global Server Hardware Server OS Reliability Survey – found that an 87% majority of organizations now require a minimum of 99.99% availability. This is up from 81% in the last 2 ½ years. The so-called 99.99% or “four nines” of reliability equals 52 minutes of unplanned per server/per annum downtime for mission critical systems and applications or, 4.33 minutes of unplanned monthly outages for servers, applications and networks.
Overall, hourly downtime costs will continue to soar. And this means that companies of all sizes across all vertical markets will have little or no tolerance for downtime.