What is downtime really costing your business?

When your computer systems fail – it has many implications for your business.

And it can mean much more than just a few hours of lost production or sales.

The fact is it only takes one technical failure or snag, power outage or natural disaster, to immobilise your business – both virtually and in reality.

This can lead to an immediate customer backlash, as they go elsewhere when your site doesn’t load or becomes unavailable, even temporarily.

And to make matters worse, some of them may go on Facebook and Twitter to vent their bad brand experiences!

These posts could be viewed by hundreds of people, causing irreparable harm to your brand image.

When your systems are down, it can also have a huge impact on employee productivity.

For example, in a firm of 200 employees that relies heavily on the Internet to access a knowledge base, if the server goes down it could mean the loss of up to 1600 work hours in one day.

The resulting overtime bill to make up for lost production would also be phenomenal.

Another factor when considering downtime is the cost of system repairs.

This is the money the business must outlay to fix the issue and get the server up and running again.

It can be exorbitant – especially if outside specialist technicians need to be called in.

After significant downtime, some businesses are even compelled to give away their products for free or at a discount – just to keep their customers happy.

And in the worst-case scenario in this litigious world, some organisations may find themselves the recipients of damaging lawsuits.

This can occur where the downtime has had a severe impact on production, delivery or finances – and customers believe the company responsible should answer for this in court.

Another area that can be negatively affected when your system crashes is your marketing and promotional campaign.

Extensive downtime can play havoc on your ‘pay-per-click’ advertisements and extensive e-mail campaigns.

Therefore, when preparing your technology budget, it is helpful to know exactly how to quantify the direct costs associated with any downtime.

This will also help prioritise your IT expenditures – and ensure the critical systems and operations which receive funding are kept running efficiently.

The direct costs of downtime include:

Cost of lost employee productivity

This can be calculated as follows:

Average hourly wage for the employees affected,

multiplied by the number of employees affected,

multiplied by the number of hours of downtime.

Cost of employee recovery

This is the amount of money spent to catch up on work once the IT component has been restored. It may include additional expenses, such as overtime pay.

The basic equation is:

Average hourly wage for the employees affected,

x the number of employees affected,

x the number of hours spent catching up.

Cost of IT recovery

This is how much money was spent to get the IT component working again. For example, if your in-house IT staff fixed the problem, you can use the equation:

Average hourly wage of in-house IT staff,

x the number of IT staff working on the problem,

x the hours required to fix the IT component.

In conclusion, downtime can be both expensive and damaging to any organisation.

Therefore it is wise to ensure your systems are always kept up-to-date and running smoothly.

For further information on how to keep your organisation free of downtime, please call Adam at Core IT on (08) 9200 6030.

With Mike Peeters Media