How Much Does Downtime Really Cost?

October 26, 2012 3 min Read

Calculating the Cost of Downtime

The term “disaster recovery planning” is unfairly misleading. Because of the inclusion of the word “disaster,” the phrase tends to invoke imagery that is tied to events of epic proportion – things like, hurricanes, floods and earthquakes.

However, in the IT landscape, disasters are defined with a little more subtlety. Small scale events like power interruptions, downed phone lines, or really any event where there is a momentarily loss in data are lumped into the disaster category. And while these disasters may not invoke the same type of ominous imagery, they can carry with them equally financially devastating consequences.

Calculating the Costs of Data and Network Interruptions

Consider this: industry statistics estimate that medium sized businesses, ranging from 100 to 1000 employees, are losing an average of 1% of their revenue every year due to downtime. This adds up to somewhere in the neighborhood of 140 hours of downtime and $867,000 in lost revenue.

While this number may seem large - when you start adding up the myriad of ways that downtime can affect your company, it’s actually surprising that it is not larger.

In fact, here are just a couple of ways a momentary loss in downtime can impact a company:

  • Disrupt invoicing and reduce cash flow
  • Create lost orders
  • Cause lags in productivity and result in idle employees
  • Increase human resource costs for the additional labor needed to resolve outages
  • Negatively impact quality & customer service
  • Interfere with the ability to meet contractual agreements

And remember, these are just small interruptions to data. If your company is ever faced by a larger scale disaster, your chances of loss are greater, and your chances of recovery are much lower - with some studies indicating that 40 percent of companies suffering from a major disruption go out of business within two years.

The solution is to plan for this downtime and prevent it from interrupting your business, And this is where Expedient can help. Contact us today to learn more about our business continuity and disaster recovery solutions.

As Senior Vice President and Chief Operating Officer, Jonathan Rosenson is responsible for overseeing organizational functions that drive growth at Expedient. Jon additionally acts as an external spokesperson conveying the Expedient story. Follow him on Twitter.

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