Blair Felter

By: Blair Felter on June 1st, 2018

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The Steep Cost of Outages and Subpar Data Center Management

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According to a 2017 global reliability survey from Information Technology Intelligence Consulting (ITIC), 79% of businesses and their IT leaders require a minimum uptime of 99.99%. The intensifying demand is no coincidence either. The cost of unplanned downtime is simply too steep to accept anything less than four 9s.

Yet, even 99.99% uptime still equates to roughly 53 minutes of unplanned downtime over the course of a year. One more nine – 99.999% – and you limit your annual downtime to just over five minutes. Seven 9s equates to just three seconds a year.

From power outages and hardware failures to network issues and lack of routine maintenance, outages are the result of many problems. No matter the cause, an outage comes with steep costs – both direct and indirect.

Fortified data center management and the uptime percentage you’re comfortable with have a great effect on your business. How steep of a price do you have to pay for unplanned downtime?

Financial Costs of Downtime

The direct financial implications of outages depend on a great number of variables – from your industry and revenues to the timing and duration of the outage. E-commerce and banking businesses have some of the highest downtime costs thanks to their critical and high-volume data transactions. The size of your company is also a key factor in your financial ramifications. Typically, the larger your organization, the more costly unplanned downtime will be.

The root of downtime is often due to a reliance on infrastructure that can’t accommodate your true computing needs. The solution may require you to invest in new technology and systems that will not come cheap. Beyond the costs associated with repairing the cause of an outage, compliance violations and contract penalties loom as potential additions to your total cost.

In another ITIC survey, the consulting firm found that over 98% of organizations average over $100,000 in hourly downtime costs. More startling is that 81% of businesses reported hourly costs exceeding $300,000 and 33% reported hourly downtime costs between $1 million and $5 million.

Whether your financial burden is six figures or seven, can you afford such a hit to your bottom line?

Indirect Operational Costs

Unplanned downtime is hardly limited to the direct cost outlined above. As ITIC notes, the negative impact on business partners and suppliers “has a domino effect that can raise Total Cost of Ownership (TCO) and undermines the return on investment.” In fact, ITIC attributes these costs as the reason why corporations’ reliability requirements have increased every year for the past 10 years.

When your network goes down, your IT team will become overburdened trying to address the problem. Meanwhile, the employees affected by the outage will either be limited in what work they can accomplish or have no way to complete any work at all. They may also lose their ability to communicate with other employees over your network.

The total labor costs that result from downtime depend on how many of your employees are affected, how much they’re paid, the extent to which they’re limited, and how long the outage lasts. You can estimate the financial impact of an outage using the following formula:

N × P × W × T = Labor Cost

N = number of affected employees

P = avg percentage of work unable to be completed

W = avg hourly wage of affected employees

T = outage time, measured in hours

Not included in this formula is the potential overtime costs you may have to pay or the possibility that your sales revenue may be diminished if your sales team can’t access prospects and customers. Speaking of which...

Customer Costs

Ponemon Institute’s 2016 Cost of Data Center Outages study reported that the combined costs of customer churn and reputation damages caused by downtime can cost your business $250,000. While this sum is harder to trace to your bottom line than the direct costs that come out of your pocket, it has an equally harmful effect.

The erosion of consumer trust and confidence may compel your customers to reevaluate your services and result in immediate loss of business. It dissuades sales leads from choosing your business over competitors. The most difficult effect to measure is how many future customers, who would have considered your company, will no longer give you the time of day.

While it may be interesting to estimate the financial severity of an outage – and the poor data center management that likely led to it – there’s no guessing whether or not your business will suffer. The cost of unplanned downtime is steep, and limiting the possibility of an outage is an absolute must.

If your data center’s uptime and management are lacking, you can expect to lose hundreds of thousands of dollars a year (if not millions). Are you partnering with a formidable data center provider?

Learn how to choose a data center that can maximize your uptime and safeguard your business from costly outages. Click below to download your copy of the informative whitepaper:

Choosing the Right Data Center

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About Blair Felter

As the Marketing Director at vXchnge, Blair is responsible for managing every aspect of the growth marketing objective and inbound strategy to grow the brand. Her passion is to find the topics that generate the most conversations.

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