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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
 
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