What is the cost of network downtime?
At SOS, we're asked this question often, so you aren't alone. Did you know that downtime is more than just an inconvenience for your business? It can also cost you a fortune!
You may be aware that downtime can be expensive, but you may not know how much it can actually cost you. It’s difficult to manage an IT network, but without it, your organization can’t function. You may be surprised to see how truly expensive downtime is for your company.
RELATED: What is Downtime Cost?
The True Cost of Downtime
More companies than ever are turning to Managed IT Services to guard against network downtime. It’s not hard to see why when you review the numbers. Recent estimates suggest that downtime costs nearly $10,000 per hour for a retail business, over $5,000 per hour for banks, over $4,000 per hour for media companies, and an astonishing $14,836.80 per hour for insurance companies (Source: Schneider Electric, assuming 40 employees).
Other estimates, like the study commissioned by IBM and conducted by the Ponemon Institute, are even more staggering. Their 2016 report states the average median cost of unplanned downtime at $7,003 per minute, with the cost ranging from $137 to $17,244 per minute. As noted in the figures above, this number can range dramatically based on company size and industry.
The news is better, but not great for small businesses. According to a study by IDC, downtime for small businesses ranged between $82,200 to $256,000, per instance. Most small businesses can’t afford downtime of that scale more than once in a single year.
These numbers are staggering, but how are they determined?
The most challenging part of determining these figures for your business is determining the often-forgotten intangible costs, such as the cost of a damaged reputation. Additionally, your business model will often affect these results, as well. For instance, a business that provides most of its services through online channels will experience higher downtime costs.
Use these formulas to assist in calculating the potential cost of downtime for your business:
Downtime Revenue Loss Formula
(Gross Revenue/Total Annual Business Hours) x Percentage of Impact x Hours of Downtime
Downtime Productivity Loss Formula
Number of Employees Affected x Average Cost of Employees Affected per Hour x Hours of Downtime
How Managed IT Services Changes the Story
Managed IT services allow you to outsource your network management, giving you a team of experts monitoring your IT for optimal operation around the clock. You stop spending most of your IT budget on basic maintenance, and instead allow your staff to focus on strategic initiatives.
Managed services have grown exponentially over the years, and with good reason: companies are quickly seeing the benefit of outsourcing tasks to save time and money. Managed services never go on vacation and offer a large portfolio of technical talent and knowledge at your disposal.
Choosing to ignore the potential for downtime and malware attacks by attempting to save money in the short-term is like rolling the dice on healthcare. When you are healthy, you don’t need it. But if you aren’t covered when something goes wrong, it will cost a small fortune to get the help needed.
An IBM study determined that there is an average of 4,000 cyber attacks per day in the United States. Of the companies who were attacked, 60% of small businesses went out of business within six months of the attack.
The most alarming statistic of all…
90% of small businesses don’t use any data protection at all for company and customer information, and two-thirds of all attacks target small businesses.
What Can Be Done?
Managed IT Services is the most complete option for small and medium-sized businesses. Protecting your company from costly downtime can be as little as $8-$11 per working hour. You have to ask yourself the question, "Is keeping my company protected from hackers and network downtime worth a minimum wage salary?"
Managed Services companies like us use industry-leading technology to protect companies by offering the support they would never be able to afford, otherwise.
If you still aren’t sure if managed services are the right investment, here are some suggestions by UPS CapitalTM and VerizonTM that can help your company become better prepared:
- Get cyber liability insurance
- Develop a data breach response plan that includes a communications response plan
- Regularly test your data security systems and procedures
- Invest in physical security (not all data theft is online driven)
- Encrypt sensitive data
- Enable two-factor authentication
- Train staff to learn to easily identify phishing threats.
Want to Learn More?
Posted by Daniel Gray
Daniel has a passion for educating and helping people and has spent over a decade in the education and office technology industries. He has a Bachelor's in Education from the University of West Georgia and an MBA from the University of Georgia. Daniel has been the lead blogger at SOS since 2017 and specializes in managed IT services, copiers and printers, and business phone systems. He lives in Atlanta and has a goofy greyhound named Ticker.