Research from business continuity and disaster recovery provider, Databarracks, has revealed organisations are failing to get to grips with the true cost of IT downtime, with a third of organisations (35 per cent), unsure what an IT outage would end up costing their business.
The results were identified in Databarracks annual Data Health Check survey, with other notable findings including:
- From a sample of over 400 IT decision makers, 46 per cent experienced more than four hours of IT related downtime over the past 12 months
- Critically, of those organisations able to quantity what the cost of IT downtime would mean for their business, 23 per cent said that they incurred costs ranging from £10,000 up to more than £1million, per hour
- When participants were asked, what challenges were preventing a better recovery speed, the most popular response (34 per cent) cited financial constraints as the biggest factor
Peter Groucutt, managing director at Databarracks, discusses these findings in more detail:
“IT downtime affects every organisation differently. In the event of an outage some businesses start feeling the effects immediately from a loss of sales, while others won’t notice a loss of revenue for the first hour or two, but can endure a much steeper curve the longer staff are unable to do their jobs. The fact that 35 per cent of businesses are unaware what these financial implications are is concerning. Understanding what downtime costs your organisation is fundamental to making informed decisions on IT resilience, supplier management and continuity planning.”
Groucutt continues: “There are several types of costs that need to be considered when estimating the financial impact of an outage to your organisation but it isn’t a difficult process. To start with, the obvious will be lost revenue, staff costs as well as the associated costs needed for fixing an outage. These are tangible costs, and are usually well known to a business. It is important, however, to look beyond these in order to gain a more holistic view of the impact an outage will have financially. ‘Hidden’ or intangible costs, such as damage to reputation, can often outweigh the more obvious, immediate costs. The problem with these intangible costs is that because they aren’t easy to estimate, they are often excluded from the calculations. Although these costs are harder to determine, they shouldn’t be ignored. Think about customer compensation or the potential defection of a major customer to a competitor and include it in your estimate.
Groucutt concludes: “As a case in point, our survey data showed that the most significant challenge when trying to improve recovery speed was ‘financial constraints’. It will always be difficult to secure budget for IT resilience if you can’t show the board a clear picture of the impact downtime will have. Presenting a downtime cost immediately puts the cost of investment into context and will help IT departments make the improvements they need.