What does downtime really cost?

FrownDowntime. The word can strike fear into the heart of even the most seasoned executive—and lead to ever-more catastrophic nightmares. Power outage. Weather event. Terrorism. Alien invasion!

Panic attacks aside, a quick scan of the Internet shows why outages should be feared. Google “cost of downtime” and you’ll find one analyst estimating network downtime can set a business back $300,000 per hour. Avaya suggests the average cost of a network outage is “only” $140,000. (Scarily, they also indicate you have a four in five chance of losing money if your network goes down.)

Are those numbers right? How can downtime possibly cost so much?

If you’re thinking about the impact of a network outage—no matter how it happens—don’t forget to consider these costs.

Lost revenue

Think downtime and revenue is usually the first thing that comes to mind. And for good reason—if your systems are down, chances are you’re not making money. Think about direct losses, but don’t forget lost future revenue either.

Lost productivity

If your company is idle, so are most of your employees. To get an idea of how much that will cost you, multiply the number of employees the outage affects by the number of hours you expect the downtime to last. Then multiply that number by how much you’re paying them to stand around. Ouch.

Miscellaneous expenses

How will you catch up if an outage lasts a while? Temporary employees, equipment rentals and overtime costs—that’s how. With any luck you’ll avoid legal fees, but you may very well have to bring in the lawyers if your outage causes public damage.

Poor financial performance

Many executives forget to consider the impact of downtime on their company’s financial results. Shareholders have a funny way of punishing you when you don’t meet expectations… And if downtime delays a product launch or causes you to miss earnings, look out. (Watch out, too, for things like lost discounts because of missed payments, or impacts on your credit rating.)

Damaged reputation

Customers, suppliers, banks, business partners… If your catastrophe affects enough of them, you can expect to take a lot of heat. There’s a scene in the 1931 version of Frankenstein where villages with torches storm the castle… Don’t be that castle.

Failing to plan is planning to fail

When it comes to business interruptions, you shouldn’t be worried whether one will happen; you need to assume that one will. How long it lasts—and how much damage it does—is up to you.

To help you minimize the impact of downtime, read our guide to developing a business continuity plan from start to finish. If the unthinkable happens, you’ll be glad you did.

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