For most SMBs, downtime is the second highest business cost after HR. It is also one of the widest reaching problems a business can face, affecting everyone from clients and suppliers to employees and managers. Understanding exactly where downtime becomes expensive is vital if you want to uncover the true cost of downtime in 2016. Recent studies have tried to break down the areas where downtime spending increases and where losses occur, revealing the following important statistics:

  • Just 5% of downtime losses are related to repairs
  • Missed sales opportunities and lost revenue make up 17% of losses
  • A huge 78% of downtime costs relate to reduced worker productivity

Downtime has reached an estimated cost of $700 billion per year to US businesses in 2016, so it seems fairly apparent that the issue needs to be taken seriously. International mega-retailer Amazon recently suffered downtime of around fifteen minutes; the brief outage was estimated to have cost them an incredible $66,240 per minute.

Downtime costs have been rising, too. In 2010, downtime was around 38% cheaper to manage than it is today, according to the Cost of Data Center Outages study. A 2013 update to the same study confirmed that downtime costs continued to rise as more businesses moved their services and databases online. By last year, downtime cost Fortune 1000 companies between $1.25 billion and $2.5 billion in estimated business losses.

Those are some scarily large numbers, but how realistic are they for the average company? For small to medium enterprises, downtime losses may not run into the thousands of dollars per minute – but they are certainly no less catastrophic. Companies that are not supported and monitored by MSP packages and instead rely on a break-fix support model of operation might find that downtime periods last significantly longer than fifteen minutes – and this is where costs can quickly start to mount for these SMBs.

A Breakdown of the True Cost of Downtime

The breakdown shows a staggering 78% of downtime costs relate to reduced worker productivity.

Downtime Costs in 2016 Through Reduced Productivity

The average worker loses 38 hours every year through slow internet connectivity and downtime, a British study recently found. That’s a full working week in every year that each employee is entirely unproductive – a scary statistic when you consider the median weekly wage for US workers is $830. Multiply that across an entire company, and the scale of the problem starts to become clear. Downtime is bad news, and it is well worth a little investment to prevent it from occurring to keep overall costs down.

In the event of a major tech catastrophe such as critical data loss or a complete network outage, workers can be left entirely unable to complete their tasks and operations can grind to a halt. However, there are other ways downtime will affect productivity from day to day:

  • Slow systems and frequent errors reduce employees’ work productivity
  • Staff support colleagues and take on extra work or perform IT tasks
  • Managers are tied up helping staff through computer issues
  • IT teams are stuck battling support tickets with no time for vital maintenance work
  • System outages prevent field sales and remote employees from accessing services

When work is slowed down for any reason, businesses lose money. Preventing downtime is a necessity for companies of all sizes, but addressing problems before that stage will also save costs in the long term. Managed hosting not only provides an uptime guarantee but also ensures that network issues are caught early, before they become expensive.

How Managed IT Easily Outperforms In-House IT Every Time

Budgeting for a Tech Crisis – the Hidden Cost of Downtime in 2016

Around 90% of companies report that they have experienced some form of downtime, so most businesses know they need to plan for it. But how do you budget for the unexpected? Repair costs are just one small part of the necessary expense when a service outage happens; lost work hours and missed sales opportunities also need to be considered.

Then there is the matter of brand reputation. Sixty-two percent of consumers expect a web page to load in under five seconds – and they are not willing to wait longer. If a network runs slowly or if a service drops out completely, those potential customers will soon find another company that offers what they need. If those technical problems recur often, word will get out and the brand could take a serious hit as a result. Negative market impact can cost businesses in an incalculable, but very serious way.

Managed hosting services can be the solution to downtime.

Managed hosting is the solution to downtime, ensuring staff are always able to access the necessary sites and services.

The Solution to Escalating Downtime Costs

Downtime may be extremely common, but it is also preventable. The problems that cause most technical failures can be spotted before they occur, through network monitoring and testing. Fixes can be applied and systems adjusted to resolve slowness or service faults, ensuring that websites, applications, and internal services remain accessible to staff and clients. Managed hosting is designed to keep company sites and services up and running at all times, enabling businesses to deliver their own uptime guarantee.

Budgeting for managed services is simple, allowing businesses to work out costs per machine for ongoing monthly management. Instead of worrying about repair expenses, lost work hours, missed sales, and the hit to brand reputation, companies can manage their IT needs with one steady monthly payment and avoid those unknown escalating expenses. Studies indicate that the cost of downtime in 2016 will continue to increase, as businesses rely more heavily on technology for all operations. Understanding just how expensive downtime can be should spur any business owner or manager into action. There are ways to prevent downtime from occurring, and managed hosting is a very sensible way to protect a business, its profits, and its reputation.

For more information on managed hosting solutions and how to prevent downtime, contact Data Resolution and speak to our experts today, or download our helpful eBook, How Managed IT Outperforms In-House IT Every Time, for more information on the unbeatable value of managed IT solutions.

Calculate the true cost of running IT in-house in 2016. Download the eBook.

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