Assessing the Cost of IT Downtime

When your organization experiences an IT outage, the setbacks are immediately obvious. Missed deadlines, idled employees, and customer dissatisfaction may come to mind. However, you may not have a good sense of the financial consequences of that type of disruption without a deep analysis of your company’s operations.

Depending upon the size of your company, you could be losing as much as $5,600 per minute as a result of network downtime — the average cited in a 2014 report by Gartner analyst Andrew Lerner. If your company falls into that category, an outage could result in losses of more than $300,000 per hour. With those types of numbers, it’s easy to see how some companies are forced to shut down their operations as a result of an extended outage, such as one caused by extreme weather.

Before developing a disaster recovery (DR) plan — an essential for any business, it’s important to review the potential losses that could result from an IT outage in your operations. This analysis should be in-depth, including the expertise of management and team leaders from various departments, such as manufacturing, sales, marketing, HR, and finance.

Some of the areas your team may consider include:
• Halt in employee productivity
• Loss of customer trust
• Loss of sales revenue
• Damage to brand reputation (company may be perceived as unreliable)
• Marketing costs needed to repair brand reputation
• Compliance violations
• Potential overtime to make up for delayed production
• IT recovery expenses
• Penalties for contract violations

After determining potential losses and the overall financial consequences to the company, the team should calculate an average cost of an IT outage for the company – by the minute, by the hour, and by the day.

Any plan also should assess the company’s current IT infrastructure. If it’s internal, is it cost-effective? How much are you paying in staffing and energy costs to maintain it? How equipped is it in handling your IT requirements, especially if you have had issues with outages? Depending upon your responses, you may want to consider outsourcing those services to a data center as a more cost-effective and efficient alternative.

Since data centers providers are able to spread the costs of operations among numerous clients, they can provide a more economical alternative. They’re also able to invest in the latest technology for equipment, such as cooling machines and backup generators.

If you already outsource your IT operations to a data center, compare colocation services to make sure you’re receiving the level of service and capacity your operations require.

Planning ahead, whether it’s assessing your financial risks, developing strategies and DR plans, or reviewing your IT requirements against your data center facility, is essential in ensuring that your company is able to quickly recover in the event of an outage.

Contact our experts at Lifeline Data Centers for more information. We can help you assess your company’s risks for outages based on your IT needs.

Rich Banta

Managing Member at Lifeline Data Centers

Rich is responsible for Compliance and Certifications, Data Center Operations, Information Technology, and Client Concierge Services. Rich has an extensive background in server and network management, large scale wide-area networks, storage, business continuity, and monitoring. Rich is a former CTO of a major health care system. Rich is hands-on every day in the data centers. He also holds many certifications, including: CISA – Certified Information Systems Auditor CRISC – Certified in Risk & Information Systems Management CDCE – Certified Data Center Expert CDCDP – Certified Data Center Design Professional