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By the Numbers: A Look at The Cost of Downtime

Apr 14, 2016 6:45:00 AM / by Emily Holehouse


If your business has never experienced a major computer problem, then it's easy to underestimate just how damaging downtime can be. Let's take a look at the cost of downtime:


20% of small businesses have a major IT accident resulting in downtime every five years; and of the small businesses that are hit with a major disaster:

25% will close for good!

Take for example a downtime situation experienced by Amazon for only two hours in June of 2008, it's estimated that Amazon lost $30,000 a minute during this outage. Nowadays, Amazon's revenues are many times more than what they were in 2008, which would put them close to losing more than $100k a minute if they experienced downtime today.

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In another recent study, this one by CA Technologies, 200 companies across North America and Europe were looked at in order to determine the cost of downtime incurred from an IT outage. Of these 200 (large) companies, it was discovered that $26.5 billion in revenue was lost each year, which comes out to a $150,000 annual hit for each business. This study also discovered that IT outages are frequent, lengthy, and can do more than cause monetary damage. A loss incurred from downtime also hurts a company's reputation, the morale of the staff, and customer loyalty.

The cost of downtime will be different for every business. One thing every company has in common is that experiencing downtime caused by an IT outage will put an organization at serious risk of going out of business. Here are two formulas you can use to calculate the cost of downtime for your business:

Lost Sales Lost Productivity
Yearly Revenue /
Business Hours x
IT Impact to Sales %
Employees Affected x
Average Employee Cost Per Hour x
Average % Affected by IT
 

After determining the cost of downtime for your company, you may be shocked to see how expensive it would be to just lose one day of business to an IT problem. If you don't have a downtime solution in place because you didn't see the need, then you're not alone. In the CA Technologies study, it was revealed that "56% of enterprises in North America and 30% in Europe don't have a formal and comprehensive disaster recovery policy.".

Downtime can be devastating to a business. 

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It's virtually impossible to do business without the aide of technology, but that doesn't mean you have to experience downtime and lose money when something inevitably goes wrong with it. Having a Disaster Recovery plan in place with give your team the tools and information they need to get back up and running quickly.

Don't have a Disaster Recovery plan in place? Check out our free eBook that walks you through the 8 simple steps to a complete Disaster Recovery plan.

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Topics: Best Practices, Strategy & Planning, Business Continuity, Small Business, Disaster Preparedness & Recovery

Emily Holehouse

Written by Emily Holehouse

Hi I'm Emily and I'm Lanspeed's Client Success Manager. My main goal is to help business leaders who are concerned about the security and reliability of their network finally feel secure and prepared for anything when it comes to their technology. When I'm not in the office, you can find me around Santa Barbara baking, watching one of the latest Netflix series, or hanging out with my husband and two kids.

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