The Actual Cost of Unexpected Downtime Made Clear
Can your business afford to lose $7,000 a minute? No business can. But, that’s exactly what data center downtime typically costs any business according to the findings of a study conducted by Data Center Dynamics. Downtime doesn’t just affect your bottom line; the impact is far-reaching and influences every aspect of your enterprise --right from purchasing and ERP to sales and CRM. Let’s take a look at some solid data surrounding the actual cost of downtime and the threats posed by unexpected system outages:
The Cost to Brand Reputation
When larger enterprises hit the two-hour downtime mark, the loss can be millions of dollars. Every year, corporations suffer an average downtime of 85 hours, which translates into a five-figure revenue loss. Outages that recently hit big brands like Amazon, Blackberry, Intuit, and Bank of America lead to two main types of losses:
- The loss of application service due to downtime
- The loss of critical data due to unplanned system outage
The headlines are not forgiving when systems fail and customers are affected. Delta airlines experienced a recent worldwide system failure that halted all flights and left thousands of passengers stranded. Though the outage lasted only around six hours, the news stories showing long lines and passengers sleeping on the airport floor will be hard for the company to overcome.
When Virgin Blue’s online booking system was hit by an unexpected hardware failure followed by an outage, their reservations and boarding system were rendered inaccessible for 11 days. This incident affected close to 400 flights and 50,000 passengers. The booking glitch was compensated by the Reservations Management Company but the brunt of negative publicity and upset customers lasted long after the outage was resolved.
A power failure or an outage is far more expensive in terms of the impact on company reputation and the loss of productive work hours. Enterprises invest a considerable amount of cash in mission-critical applications, but the apps can’t run if the systems driving them have downtime. Despite the recent advances in the IT industry, many enterprises continue to face unexpected outages that last hours to days.
The Impact of System Misconfiguration
It is very common for planned system modifications to turn into unplanned outages. People and process issues can cost companies up to $72,000 every hour. As projected by a recent study, 80% of downtime instances impact mission-critical applications and business data, and the majority are caused by human error. The costs of additional maintenance windows to fix misconfigurations have consistently risen from 20% to 35% annually. How much do you intend to spend on downtime this year?
The Loss of Customer Loyalty
The cost of company reputation far exceeds the loss of revenue. When system downtime results in negative publicity, it can have a major impact on your brand and reputation. We live in a time of instant gratification, where customer loyalty can waiver with the simple click of a mouse. Take too long to load that page of new spring fashion outfits, and you’ve lost that customer not just for today’s purchase but likely for a lifetime. Restoring that customer confidence takes tremendous time and effort. Whether it is an Amazon cloud outage or a huge airline company canceling thousands of flights, making up for the lost credibility can prove to be both time-consuming and costly. The cumulative effect takes a toll on your bottom line.
Calculating the Losses of Downtime
Here are two simple formulas to calculate the loss of revenue and the cost of labor that is associated with outages and system downtimes:
1. Loss of Revenue
GR – Gross annual revenue
BH – Total business hours in a year
P – The total impact in percentage
To calculate the loss of revenue, simply replace the above figures in the formula below:
LR = (GR/BH) x P x H
2. Cost of Labor
N - Number of end users affected
P - The average people affected in percentage
C- The average cost of employee per hour
H- Total outage hours
The cost of labor can be derived by multiplying all of the above factors
CL = N x P x C x H
The numbers you derive from these formulas, when multiplied by the expected hours of outage annually, yield the cost of labor and lost revenue.
How to Reduce the Risk of Downtime and Eliminate Outages
You can’t assign a monetary value to your reputation, so don’t wait for a disaster. Be proactive and plan in advance. Focus on accelerating your time to market and increasing the scalability of your infrastructure. The root cause of all your problems lies in your legacy architecture.
One of IT systems’ greatest vulnerabilities is the database. Without data, your apps can’t run. But while most other infrastructure systems have redundancy built in, enabling that reliability at the data tier – in a way that makes outages invisible to your users – has been elusive.
ScaleArc pairs its software with databases to bring you availability and agility at the data tier and help you sustain outages – planned or unplanned – without taking down your apps. Your critical apps need to be never down, always fast, and scale easily to serve your business. ScaleArc delivers that level of application uptime and performance with its database load balancing software. Use it to protect your vital data center resources. Reduce downtime, and you’ll reduce the revenue losses and reputation impact so many brands have faced.