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Three Scenarios to Illustrate the Total Cost of Downtime

It’s easy to dismiss a couple hours of downtime as a simple inconvenience. A time where your staff, frustrated that they can’t get their work done, takes to chatting around the water cooler or catching up on filing. In reality downtime has much greater consequences; each idle employee, every hour of technician time spent restoring your systems, and every moment your critical systems are down has a cost associated.

Have you ever taken the time to determine what this actually costs you?

We took a few typical company scenarios; a small service business (perhaps a consulting firm), a slightly larger company, and a mid-sized OEM. The numbers below are hypothetical but are a powerful illustration. Note that the cost for even two hours of downtime could far exceed the cost of hosting a full rack of servers at XNet for an entire year!

The table below is a simplified version of Sudora’s Cost of Downtime Calculator (referenced with permission from it’s creator, Charlie Meyer). To figure your own cost using your own numbers, use the original calculator here.

Typical Company Scenarios*

Revenue

$1 Million

$10 Million

$50 Million

Employees

6

40

200

Hourly Revenue Per Employee

$83

$125

$125

System Restoration

Labor Hours to Replace Lost Data & Restore System

4

8

20

Per Hour Cost

100

125

125

Cost of Labor

$400

$1000

$2500

Lost Productivity

Total Hours Downtime

2

2

2

Percentage of Employees Unproductive During Downtime

50

70

80

Cost of Employee Downtime

$499.98

$7000.00

$40,000

Lost Sales Opportunities

Number Sales Per Year

50

1000

40000

Estimated Number Sales Lost Due To Outage

2

10

15

Cost of Lost Sales Opportunities

$40,000

$10,000

$18,750

Lost Customers & Damaged Reputation

Total Number Customers Last Year

50

1000

40,000

Average Revenue Per Customer

$20,000

$10,000

$1250

Number Lost Due to System Failure

1

8

20

Customer and Reputation Cost

$20,000

$80,000

$25,000

Total Cost of Network Downtime

$60,899

$97,500

$86,250

* Note: These are hypothetical scenarios designed to approximate the total cost of downtime to various sized organizations.

You can easily see from the above that 2 hours of downtime can cost more than you would have imagined.

Now, think of a situation where you can’t access your mail or database server, even for an hour. What happens in your office? Take yourself through the line items above and estimate your own cost using Sudora’s calculator.

In light of the above, “expenses” relating to securing your equipment and keeping it online 24/7/365 should be viewed as trivial. If you’ve thought before about hosting your equipment but have opted not to due to cost, don’t wait until the next power outage or server failure to revisit it.

  • How many power outages do you have each year?
  • How much time does it take to bring your critical services back online?
  • How many non-technical employees stood idle during this time?
  • Were the phones not ringing? How long was your Customer Service unable to serve your customers?

If the total cost of downtime is more than you’re comfortable paying, or if you don’t like your answers to the above questions, perhaps we should talk.

Posted on May 27th, 2008 by Tim Courtney
Posted in Critical Computing, Disaster Recovery | No Comments »
 

Naperville Sun Article: The big generator that could

Last week, XNet was profiled in the Naperville Sun in the article “The big generator that could: XNet keeps businesses on the grid.” The article focuses on our boutique data center services and how our infrastructure keeps small and medium-sized businesses online in the event of a storm or power outage. In the article, XNet customer Mark Mayle of Equitas Group LLC talks well of his experiences with us over the last seven years. Thanks, Mark!

Read the article on the Naperville Sun web site.

Posted on February 20th, 2008 by XNet
Posted in Critical Computing, Disaster Recovery, Suburban Business | No Comments »
 

Business Ledger Article: Surviving power outages without going broke

XNet’s Arthur Zards wrote this article that originally appeared in the January 21 TechLink section of The Business Ledger.

Surviving power outages without going broke
By: Arthur Zards

The most common IT disruption for small and medium-sized businesses (SMB) is by far a general power outage. From rolling brownouts in the West coast, to springtime Chicago storms; power outages are fairly common and are on the rise due to an ever increasing commercial demand for power, and limited resources to meet the growing demand.

When looking at your business continuity plan for a loss of power (you did do this, right?) You probably found out that there are not too many cost effective options. A typical UPS (usually your only option) will add only minutes of emergency back-up power. Plus, the more computers you stack on the UPS, the less time you have. With how heavily companies rely on technology, a power outage can grind business to an immediate halt. No power means no email, no servers, no website, and equally as important—no Internet access.

Are there any cost effective options for your critical computers? Luckily there’s one, you just may not know about it. The boutique datacenter.

For many non tech-oriented executives, “the datacenter” conjures up thoughts of gigantic warehouses filled with technicians in labs coats busily managing gigantic supercomputers—at a price tag far beyond your budget. This may have been true years ago, but due to the growing need for business continuity for the SMB market, there are now numerous smaller, boutique-style datacenters that cater specifically to the SMB.

What is a boutique datacenter exactly? It is a facility that has all the features of an enterprise datacenter; redundant power with a UPS, back-up generators, industrial-grade cooling (with back-up units), that’s networked across multiple locations with two or more backbone-level Internet connections. Translation: if any one piece fails, you stay connected. These facilities allow you access to your equipment 24×7 while keeping it secure, and best of all, the services are all tailored especially for the SMB.

Boutique datacenters serve small businesses who need to host as little as a single critical email server, where larger facilities require minimum space allotments that dwarf these customers’ needs. Plus they add special services to help the small IT department manage and grow their company network and systems, so their network can keep pace with their growing business. Best of all, they offer friendly, helpful services to non-technical executives who know they need their equipment secure, but might not know exactly how to accomplish it.

If this is you, and you are not too sure how to protect your systems from a power loss, contact a boutique datacenter that caters to your market. You’ll be surprised at the level of IT help they can offer you, at a price that is very attractive.

Bio:
Arthur Zards is President and co-founder of XNet, a Lisle-based boutique data center, the XNet Critical Computing Facility. Since 1992, XNet has been instrumental in growing Internet technologies in the Chicago area, and is now the largest independently owned Internet service provider in the Chicago area.

Posted on January 29th, 2008 by Tim Courtney
Posted in Critical Computing, Disaster Recovery, Suburban Business | No Comments »
 

The “shocking” cost of downtime due to power outages

According to a 2005 whitepaper by APC (PDF Link), manufacturers of uninterruptable power supplies (UPS’s) and power conversion equipment:

“A recent study in the USA has shown that industrial and digital business firms are losing $45.7 billion per year due to power interruptions1. Across all business sectors, an estimated $104 billion to $164 billion is lost due to interruptions with another $15 billion to $24 billion due to all other power quality problems. … Loss of processing in a large financial corporation can cost thousands of unrecoverable dollars per minute of downtime, as well as many hours of recovery time to follow. Program and data corruption caused by a power interruption can create problems for software recovery operations that may take weeks to resolve.”

When looking at national figures, it’s easy to say “that’ll never happen to me.” Let me bring this a little closer to home:

  • If your 24-hour courier business relies on a dedicated server with software to dispatch your drivers, what happens when you have a power outage that last several hours?
  • If your e-commerce site is down for even an hour, how much does that translate to in lost revenue?
  • How do you calculate the value of the lost opportunities when a storm knocks out power to your server room and your sales force can’t access your pricey CRM application? (Remember the storms this summer?)

The average office battery backup lasts a half hour or less. Power outages due to storm damage can take hours to days before power is restored. Fortunately, the recent ice storms didn’t hit the Chicago area as badly as they did Oklahoma City, where:

“About 468,000 homes and business still had no power Wednesday in Oklahoma, suffering its worst power outage on record. That was down from a peak of some 618,000 customers Tuesday, but utility officials said it could be a week to 10 days before power is fully restored.”

To avoid having your business go down in a similar incident — summer or winter — host your servers in a fully-redundant data center like XNet’s Critical Computing Facility™ with backup generator power and full network redundancy. To arrange a tour or for questions on services and pricing, contact us via the web or phone at 630.983.6064.

Posted on December 12th, 2007 by Tim Courtney
Posted in Critical Computing, Disaster Recovery | No Comments »
 
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