Whether your head office location was hit by a hurricane, or your systems are locked by a cyberattack, downtime in all its forms can be incredibly detrimental to the revenue and reputation of a business.
Some Scary Numbers
Downtime costs a lot. Statistically speaking it is the second largest expense after HR. According to ITIC, as of August 2016, 81% of organizations report that downtime costs them on average over $300,000 per hour.
Calculating Your Company’s Downtime Costs
Though there are statistical averages for how much downtime can cost organizations, the numbers vary greatly from business to business. Consider that the cost of downtime per minute can land from $137 to $17,244. If your business is larger or smaller than the “average” you may see higher or lower costs of downtime in your company. The sector or industry of your company will determine where your revenues come from as well, altering numbers. However, there are methods of determining how much downtime will cost your company per hour if a situation does arise. Check out the following formula from Data Foundry for example. To find your productivity cost:
Productivity cost = E x % x C x H where E is the number of employees affected, % is the percentage they are affected or how much of their productivity depends on uptime, C is the average cost of employees per hour and H is the number of downtime hours.
And to find your revenue lost use this method from Continuum:
First determine which specific areas of your business generate revenue. Next calculate how much you make per hour from these areas. You also must estimate how important uptime is to generate this revenue. If for example your business is an online clothing retailer, 100% of your revenue comes from uptime. After determining how much revenue is made during uptime, calculate how much revenue per hour is lost during downtime. If your eCommerce business also has physical stores and you’ve determined 50% of your revenue is generated in uptime online, then multiply that percentage by your total revenue in dollars for that area. When you add the figures of revenue lost per money-generating area, you’ll have your total cost of downtime per hour.
Depending on how much of your business relies on your working tech, you could be looking at thousands of lost revenues for even just a few minutes of downtime. Knowing these numbers may help you find a solution before a problem even occurs.
It Will Likely Still Be More Expensive Than Your Estimations
Remember that once your company’s tech is down, besides your loss of revenue, you’ll likely have to spend extra money and time getting back up. Whether that means hiring professionals to take care of data recovery, paying employees overtime to resolve a problem, or losing clients who were affected by your downtime, there will be extra costs you can’t account for in your predictions.
The best way to minimize your risk for downtime is to ensure your applications and data are backed up and recoverable before a problem arises. Learn more about how the StorageCraft Recovery Solution™ can help you avert a downtime disaster.