Here’s how much downtime is really costing your business
Service downtime and slowdown seriously affect organizations in user experience and even end up losing their brand reputation. Traffic management is now not an option but mandatory to be controlled and analyzed to live up to users’ expectations.
WHAT IS DOWNTIME IN BUSINESS?
Downtime refers to a period during which business or production processes come to a halt due to the unavailability of applications, technical glitches, network outages, or natural disasters.
During downtime, computer systems, servers, or networks are offline or inaccessible, rendering employees unproductive and unable to conduct business or serve clients. Without a comprehensive business continuity plan, downtime has the potential to cripple an organization, and in some instances, it may cause irreversible damage.
TYPES OF DOWNTIME
Downtime can be broadly categorized into planned downtime and unplanned downtime.
Planned Downtime: Planned downtime is scheduled and anticipated in advance, often taking place during holidays, weekends, or after regular business hours. This scheduling ensures that routine business operations remain uninterrupted, and employee productivity remains unaffected. Planned downtime is typically reserved for activities such as routine maintenance, inspections, hardware/software upgrades, repairs, or testing. When executed properly, planned downtime has no adverse impact on the business and is crucial for keeping systems, applications, and servers up-to-date and functioning optimally. During planned downtime, IT professionals can also conduct tests to identify potential issues and address them proactively.
Unplanned Downtime: Unplanned downtime, in contrast, is unintentional and unanticipated, striking at any time. It can be caused by various factors, including hardware or software failures, human errors, malicious attacks, or natural disasters. Since unplanned downtime occurs suddenly and without warning, preventing it can be a significant challenge. Regardless of the underlying causes, unplanned downtime has the potential to bring business operations to a standstill. However, a well-established business continuity plan can mitigate its impact to a considerable extent.
Independent of downtime for these specific systems, organizations also indicated an average of 67 hours per year of unplanned downtime across these systems due to human error. It is interesting to note that the downtime for hyperconverged systems alone is higher than the hours of unplanned downtime reported for any of the other systems in the survey. This is a key driver for expanding automation in IT operations, a trend IDC has seen accelerating in recent years.
Furthermore, respondents revealed that the majority of these downtime incidents across various system types resulted from configuration errors made during deployment. For servers, a significant 70% of reported downtime events were attributed to configuration errors, and notably, 62% of these deployments were executed primarily by internal IT personnel. These findings emphasize the potential advantages of considering external providers for technology deployments, leveraging their expertise to mitigate configuration errors that can ultimately lead to downtime.
According to a study conducted by IBM Global Services focusing on large enterprises, the average cost in terms of revenue due to an unplanned application outage was estimated to be in excess of $400,000 per hour. What’s even more striking is that 35% of these organizations reported experiencing such outages on a monthly basis. This frequent occurrence of unplanned outages results in a significant loss of productivity and financial impact for these enterprises.
According to data from Dun & Bradstreet, a notable 59% of Fortune 500 companies face a minimum of 1.6 hours of downtime per week. To provide context for the impact of this downtime, let’s consider an illustrative scenario:
Let’s assume an average Fortune 500 company employs 10,000 workers, each earning an average hourly wage of $56, which includes benefits. In this scenario, the labor component alone, reflecting the productivity lost during downtime, would amount to a staggering $896,000 per week for the company. When extrapolated over a year, this equates to over $46 million in annual costs attributable to downtime.
This illustration underscores the substantial financial consequences that downtime can impose on large organizations, emphasizing the critical importance of minimizing and managing downtime effectively.
In contrast to unplanned downtime, planned downtime is within the purview of IT leaders who can schedule, monitor, and control it. This sense of control often leads to the common belief that planned downtime does not result in significant business losses. However, the findings from the survey indicate a different story.
On average, the respondents in our survey estimate that planned downtime has incurred a substantial cost to their organizations. In the previous quarter alone, it was estimated to have cost their organization an average of $1.5 million, while over the course of the previous year, the cost amounted to a substantial $5.6 million. These figures underscore that planned downtime, despite being under management’s control, can indeed lead to considerable financial impacts.
Due to the significant cost associated with planned downtime, some enterprises may attempt to avoid it altogether. However, this avoidance can come at a price. Postponing necessary bug fixes and security updates in an effort to sidestep planned downtime increases the risk of unplanned downtime, thereby creating a potentially costly cycle of downtime-related challenges.
COMMON CAUSES OF DOWNTIME
Several factors can trigger downtime, and some of the primary causes include:
- Human Error: Human error, whether accidental or due to negligence, ranks among the most frequent causes of unplanned downtime. Employees inadvertently deleting data, accidentally disconnecting cables, or failing to adhere to standard protocols can result in costly downtime. While human error is difficult to eliminate entirely, regular training and well-documented IT checklists or policies can help reduce its occurrence.
- Hardware/Software Failure: Outdated or obsolete hardware and software increase the risk of application failures and system outages. Aging hardware and software also lead to inefficient performance, impacting productivity significantly. Applying patches without proper testing can lead to the corruption of entire applications.
- Device Misconfiguration: Device misconfiguration is another major contributor to unplanned downtime. Configuration errors can create security vulnerabilities in your network, making it susceptible to cyberattacks. To mitigate misconfiguration errors, automation can be employed instead of manual parameter settings, and configurations can be tested in a controlled environment before implementation.
- Bugs: Bugs in a server’s operating system can hinder performance and lead to security vulnerabilities. Failing to apply patches promptly or applying them without proper testing can result in application corruption and server failure.
- Cybersecurity Threats: Cyber Threats, including advanced ransomware and phishing attacks, represent some of the most perilous and common causes of IT downtime. Malicious actors can exploit vulnerabilities in a network, infiltrate systems, and gain unauthorized access to sensitive data. Employee training and the implementation of security solutions, such as spam filters, multi factor authentication, and file encryption, are critical in addressing cybersecurity challenges.
- Natural Disasters: Natural disasters such as hurricanes, floods, and earthquakes can disrupt power supplies, communication networks, and even damage hardware. Prolonged downtime due to natural disasters can have catastrophic consequences for a business.
DOWNTIME COSTS
Downtime costs can vary depending on the size and nature of your business as well as the duration of downtime. As per Statista’s survey, which included respondents from across the globe, 25% reported that the average hourly downtime cost of their servers was between $301,000 and $400,000.
A recent survey of the Fortune 1000 conducted by IDC revealed that the average cost of an infrastructure failure is $100,000 per hour while the average total cost of unplanned application downtime per year ranges from $1.25 billion to $2.5 billion.
According to a recent survey conducted by Infrascale, 10% of SMBs reported their per-hour downtime cost was more than $50,000, while for 13%, the cost was between $40,001 and $50,000. For 25% of SMBs, the per-hour cost of downtime was between $20,001 and $40,000. A slightly larger share (26%) said the loss was around $10,000 to $20,000 while 27% said their cost of downtime per hour was under $10,000.
Additional Costs and Consequences of Downtime Beyond the immediate financial losses, organizations must contend with various other repercussions of downtime, which can have both short-term and long-term effects on their operations. Below are some of the significant consequences of downtime:
- Lost Productivity: When downtime occurs due to equipment failures or network outages, mission-critical systems become inaccessible. Without access to essential applications, systems, and network services, employees are unable to perform their work effectively. As a result, employees find themselves involuntarily idle during the downtime period. The extent of unproductive time is directly correlated with the duration of the downtime.
- Lost Business Opportunities: In today’s interconnected digital world, where businesses heavily rely on the continuous uptime and availability of applications, even a brief moment of downtime can have a detrimental impact. Downtime can lead to negative customer experiences, as customers may be unable to access your products or services. Simultaneously, your employees may be incapable of providing support, as the necessary tools are rendered inoperative. Such instances can easily drive away both existing clients and potential prospects, potentially causing a decline in business opportunities.
- Lost Brand Equity or Trust: In the fast-paced business landscape, customers have come to expect quick and seamless experiences at all times. Delays are increasingly seen as intolerable, and downtime is considered unacceptable. In such a competitive scenario, even a single downtime event can jeopardize your organization’s reliability and tarnish its reputation. Repeated downtime incidents can result in disgruntled customers, leading to negative reviews and a diminished brand image.
These additional costs and consequences highlight the multifaceted impact of downtime on businesses, underscoring the importance of effective downtime prevention and mitigation strategies.
DOWNTIME, AVOID IT AT ALL COST
The overarching message is unequivocal: downtime of even a few minutes is expensive and unwelcome. It underscores the necessity for businesses to take proactive measures, collaborating closely with their infrastructure and cloud vendors to guarantee the utmost level of reliability for their systems, applications, and networks. This becomes especially critical as the industry shifts towards interconnected ecosystems.
In the IBM study cited below, 63% of IT leaders said that they expect their organization’s revenues to increase if they can achieve zero downtime.
HOW CAN NETFUNNEL HELP?
Given the unpredictability of downtime, organizations of all sizes face a real threat. NetFUNNEL enables organizations to keep their website and applications online without outages. Virtual waiting rooms provide organizations with the means to manage their web traffic effectively, ensuring a fair and smooth user experience for their visitors. Along with the EUM (End-user monitoring) tool, you can prevent bots and abuse while enhancing protection against sudden traffic surge. NetFUNNEL empowers them to focus on core business strengths which involve delivering good-quality products & services to their visitors, ultimately improving user experience.
