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Top 5 Ways System Downtime Could Impact Your Company

By: Blair Felter on May 10, 2019

 With so many companies today offering products, services, and applications over cloud-based networks, having a solid IT infrastructure matters more than ever. When networks go down, companies are often left scrambling to deal with a wide range of costly consequences. The lost time and money associated with downtime cause far more than an inconvenience; they can easily inflict a blow capable of driving a company out of business altogether.

 According to Gartner research, the average cost of one minute of system downtime is about $5,600. Depending upon the size and scope of an organization, the real hourly cost of computer downtime can range between $140,000 and $540,000. For larger enterprises, the costs are even higher, with 33 percent of companies reporting that a single hour can cost $1-5 million. There are a number of factors that contribute to these figures, so it’s worth taking a moment to understand exactly how system downtime can impact a company’s operations.

Top 5 Ways System Downtime can Impact Your Company

1: Lost Productivity

Today’s businesses depend on online communications and services. From email and virtual chat software to task management systems and customer-facing support systems, losing network access can bring the workplace to a screeching halt. With so many companies, especially smaller businesses, relying solely on cloud applications, employees may be left with nothing to do while they’re waiting for servers to come back online. In most cases, labor and other operating costs must be paid regardless of network availability, so companies end up paying salaries, rent, and other fees even if no meaningful work could be done during downtime.

For manufacturing companies, an unplanned server outage could shut down an entire production line. While some industrial equipment is equipped with sensors that utilize edge computing framework to continue functioning after being disconnected, not all industries have adopted such innovations. Even after the network is restored, system downtime can continue to impact productivity if the service lost was part of a supply chain. Delays in one area can contribute to delays or problems in others. The restoration of services could also result in a workflow backup that requires a great deal of extra work to sort out.

2: Lost Opportunities

For any company that does substantial business online, any loss of network service means that customers won’t be able to find them and purchase products or services. Fewer customers means less revenue. And if the business model relies upon network availability to deliver a service, any downtime to a website could make it impossible to connect with existing customers as well.

System downtime can especially impact any company that depends upon online sales to drive its business. Research has shown that 47 percent of online customers expect a website to load in less than 2 seconds, and 40 percent will go to another site after 3 seconds, with more people following with every passing second. Given these stakes, even slow service is unacceptable, much less a complete loss of service.

3: Brand Damage

Another example of how downtime affects business operations has to do with brand awareness and reputation. While losing network access can cause immediate pain in the form of lost productivity and opportunities, system downtime can cause more harmful long-term damage to a company’s brand. If customers frequently encounter server outages that make it difficult to use a company’s products or services, they will not only stop consuming them, but also share their negative experiences with others. Bad word of mouth can push away potential customers and leave a company scrambling to rebuild its reputation and win back the public’s trust.

To give an example, despite being one of the biggest players in the cloud industry with its AWS platform, Amazon’s brand reputation has suffered due to a number of server outages and a relatively low service level agreement (SLA) of 99.99%, which equates to as much as 52.56 minutes of system downtime over the course of a year. Given the high potential impact of a server outage, many smaller companies simply cannot afford to take the risk and are seeking more reliable solutions for their cloud infrastructure that provide better levels of SLA uptime.

4: Data Loss

The nightmare scenario for many companies, any server outage carries with it the potential for data loss or exposure. While most service providers back up data, the unexpected loss of network access can have unpredictable consequences. Files may be damaged or corrupted, and failures in network security can create opportunities for cyberattacks that either destroy or compromise valuable data. Even if data is securely backed up, the sudden inability to access that data can cause panic, leading customers to lose confidence in a company and seek more reliable services elsewhere. For organizations that rely on big data analytics to drive business decisions, losing even a portion of their data resources due to system downtime can be a crippling blow to their operations.

5: SLA payouts

Customers want to have assurances that they will be able to access products and services whenever they need them. In some cases, companies provide this assurance in the form of SLA uptime contracts that carry specific language regarding financial remuneration in the event of a server outage. It’s one thing when system downtime results from a software problem within the company’s control, but it’s quite another when the server outage results from the company’s third-party cloud or data center provider’s downtime. While a company may be entitled to compensation from those providers, that may do little to repair the damage to its brand in the eyes of customers or make up for lost opportunities.

System downtime can seriously impact a company’s operations, both in the short and long term. It makes sense, then, for every organization seeking a third party data solution to partner with cloud and data center providers capable of delivering the highest levels of SLA uptime possible. The potential consequences of server outages are far too great for most companies to consider, and as more business is conducted online, the costs are sure to increase over time.

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