fbpx

Downtime – what is it and how it could affect your business

The nature of today’s business relies on 24/7 365 days of uptime a year. Uptime and availability of critical resources play an important role in determining the success of an organisation. To ensure business continuity, organisations must overcome unique challenges every day. One of these challenges is downtime.

Downtime is best described as a period in which a system, device, or an application’s core services, both internal and/or external, are unavailable or idle for a certain amount of time due to updates, maintenance, safety precautions, and even unexpected outages. During downtime, a computer system, server, or network is offline or unavailable, and employees are involuntarily unproductive and unable to conduct business or service clients.

How system downtime can impact your business: Many people think of downtime effects as solely revenue-based: “If we are down, then we can’t sell product X.” While this may be true, it is not the only loss suffered. In fact, downtime can have far-reaching effects across many parts of your business that will affect your bottom line in ways you might not have anticipated. It’s important to remember how everything ties into the bigger picture.

When starting to determine what downtime will cost you, remember to work through:

  • Lost sales revenue
  • Lost employee productivity due to malfunctioning systems or Internet (think in terms of salaries and benefits)
  • Potential employee overtime costs to meet deadlines following a period of disruption
  • IT recovery costs
  • Cost of restoring IT systems (some data may be forever lost)
  • Supply chain ripple effects
  • Where applicable, compliance violations or materials lost

While this list is in no way exhaustive, it starts to show you just how devastating downtime can be. What’s more, there are other, more intangible effects to your business that may be harder to quantify with a dollar amount. These include:

  • Customer dissatisfaction
  • Low employee morale or turnover due to stress/consequences of downtime
  • Brand/loyalty damages

Downtime costs

Knowing the cost of downtime will help you evaluate its impact on your business. The following formulas can be used to obtain a ballpark estimate for labor costs and revenue loss per hour of downtime:

Productivity cost =

E x % x C x H

  • E = number of employees affected
  • % = percentage they are affected
  • C = average cost of employees per hour
  • H = number of downtime hours

Revenue loss =

(GR/TH) x % x H

  • GR = gross annual revenue
  • TH = total annual business hours
  • % = percentage impact
  • H = hours of downtime

Preparing for the unexpected

  1. Downtime is unpredictable and can happen to any organisation irrespective of its size. So how do you prepare for the unexpected? Here are a few tips that you can follow.
  2. Develop a business continuity and disaster recovery plan to prepare for unforeseen downtime events.
  3. A robust business continuity and disaster recovery solution will ensure your business continuity strategy works.
  4. Regularly update and install patches for operating systems, hardware, and software to ensure the stability and security of your devices.
  5. Securely back up your critical data, this will enable you to quickly get back up and start functioning normally even when disaster strikes.
  6. Implement a network and device monitoring tool to keep a tab on your devices’ health and performance.

Human error is one of the main causes of downtime. However, the frequency of human error can be greatly reduced with regular employee training.

Most outages are predictable to a certain degree, but you can’t plan for everything.
That being said, in the end, 51 percent of outages are avoidable. And for the other 49 percent well there are several ways to help you limit their impact and reduce the time they prevent your teams from being productive, or your clients from buying your products.

By establishing a proactive approach to help minimise the effects of downtime, you will not only save revenue but provide a positive user experience for your entire business – both your staff and your clients.

Related: Our digital dilemma – Does technology have an effect on our mental health?

Mariette Tolmay
Mariette Tolmay
Mariette Tolmay is the marketing lead at Stratus Blue. She can be contacted at mariette@stratusblue.co.nz.

Related Articles

Latest