The True Cost of IT Downtime — It All Comes Down To Risk vs. Budget

It’s a typical Thursday afternoon in the office. You go to send an email, but it doesn’t go through. You try to access your shared file, but they won’t load. So you open your internet browser and see that little pixelated dinosaur ready to jump over cacti.

Your network is down. All work grinds to a halt. 

Depending on the size of your business and how long your outage lasts, IT downtime can range from mildly annoying to catastrophic. For many corporations, each hour of downtime costs upwards of $300,000. For smaller businesses, downtime costs may be lower, but can still add up — especially if it takes time to get things back up and running again. 

Downtime often means lost revenue, lost productivity, recovery expenses, and a potential hit to your reputation, but backup equipment can also be costly. So, how do businesses balance spending on redundancy versus the potential costs of downtime? The answer lies in understanding downtime, determining your specific needs, and weighing your backup options.

First, let’s take a look at the financial impact of unexpected IT downtime.

The Financial Impact of Downtime

The true cost of downtime changes depending on a number of factors, including the size of your business, the length of the outage, and the type of equipment involved. In general, the costs associated with a period of downtime fall into one of these categories:

Direct Costs of Downtime

The more measurable costs of downtime include lost revenue from transactions that aren’t able to be processed during an outage and costs associated with recovery efforts, such as the cost of replacement equipment or emergency IT services. 

Indirect Costs of Downtime

The indirect costs of downtime involve factors like customer dissatisfaction, loss of credibility in the market, and opportunity costs. While it’s harder to calculate these indirect costs, they tend to emerge over time — especially if outages cause repeated disruptions.

Costs and consequences of downtime vary across different types of businesses. For example, an IT outage at a retail business could mean losing sales, while an outage at a healthcare facility could disrupt access to patient records or even delay treatment. Costs also vary depending on the cause of the outage.

Common Causes of Unplanned IT Downtime

Your business’s IT infrastructure is an interconnected ecosystem, with software, hardware, and human components that work together to keep things running smoothly. If even one small component fails, it affects the whole system.

Most IT outages are caused by one or more of the following issues:

• Network Outages: Issues with your internal network and/or internet service providers.

• Equipment Failure: Software malfunctions or problems with hardware components such as switches, hard drives, and power supplies.

• Outdated Equipment: Legacy systems that are unable to handle modern demands and are more likely to fail due to age. 

• Human Error: Misconfigurations, accidental deletions, or improper system management.

In rare cases, downtime is caused by something more extreme, like cybersecurity breaches, theft, or an emergency event like a fire or flood.

How to Avoid Downtime

To minimize downtime, some businesses purchase redundant equipment and implement cloud backups. Some even install a second internet connection. There are hundreds of solutions and approaches for avoiding downtime, but ultimately, it depends on your tolerance for downtime and how much that time will cost your business.

The truth is, not all redundancy options are cost effective, and some even require more downtime to repair or to restore your data. The next challenge is figuring out which redundancy options make the most sense for your business and deciding how to weigh the costs against the potential risks.

Budget Vs. Risk Tolerance: A Balancing Act

To gauge your redundancy needs and risk tolerance, consider how an IT outage affects your business. Here are some questions to start with:

• How is my company impacted by an hour of downtime? A day? Three days?

• Can my business continue operating without certain systems, or does everything come to a halt during an outage?

• How much revenue or productivity is lost during an outage?

• With my current equipment, backups, and processes, how quickly can I return to business as usual after an outage?

• What are the downstream effects of an outage? For example, rescheduling appointments or catching up on backlogs of work.

These are tricky questions, and thinking about all these moving parts can be daunting. 

Grand Consulting is a trusted partner that can help you identify the critical pieces of your IT infrastructure and figure out a cost-effective way to approach backups that fits with your budget and risk tolerance.

We’ve seen it all, and we’ll give it to you straight — we will never sell you something you don’t need, but will work with you to find a solution that fits your needs. To talk to an expert about backup options for your business, contact us.