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 Understanding the costs of downtime

What is downtime?

cost of downtimeSimply put, downtime is an interruption of your business. This interruption can be caused by a multitude of factors, both internal and external. How downtime affects your business is also influenced by the industry you are in, whether you are service-based, product-based, brick-and-mortar or online. So while the purpose of this blog post is to discuss the costs of downtime in general, a company would be wise to conduct their own personalized review of operations to identify risks and opportunities, so that no one is caught off guard if or when business stops suddenly.

Let’s look at the cost of IT downtime. Within the last few years, industry leaders have noted that the cost of IT downtime has gone up, not down, and even with the advancements of technology, the wide availability of cloud-based services, the increased efficiency of data centers and the like. In 2014, Gartner estimated IT downtime for enterprises to cost $5,600 per minute or $300,000 per hour. Other studies place the actual cost closer to $7,900 per minute. According to CA Technologies, the cost of downtime is estimated at $55,000 per year for small business. For larger businesses, that cost could exceed $1 million.

How do you calculate your cost of downtime? The first step is to make a list of the tangible technology components that have a significant impact on your company’s day-to-day operations. These may include software, applications, email platforms, ecommerce, CRMs, cloud-based applications and tools, hardware (such as servers) and more. Next, think of downtime by a single unit of measurement. How does one hour of unplanned IT downtime impact one employee? Or one client? Or one potential customer? Downtime can impact your reputation so it should never be taken lightly.

A proactive approach to the subject of downtime is undoubtedly the best strategy for any company to employ. If action is taken only after an interruption occurs, the recovery time will be longer, more stressful and more expensive than if that company had taken the time to plan ahead.  For more information about the cost of downtime for your business, please check out our free Downtime Calculator


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