09 Nov

WHAT IS THE IMPACT OF NETWORK AND OR SERVER DOWNTIME ON YOUR BUSINESS?

Despite huge progress has been made in the field of technology and there has been a tremendous advancement in infrastructure robustness, many organizations still face the deadly issue of database, hardware and software downtime which can last short periods of time or can go to long periods too resulting in shutting down of business. Despite mounting to statistics and making extensive strategies that predict and touch nearly every situation whether related to major enterprise software, vendor, and customer, from ERP to CRM and various others, just bringing up the topic of outages still terrifies those in the industry.

 

So while many IT professionals try to tackle downtime and try to get on top of it, the business of the organization suffers the consequences of this downtime. This downtime can hurt the business in various aspects like the loss in revenue, negative effect on reputation or decrease in productivity. We need to throw a light on how organizations of all sizes should address these threats to their IT operations. Downtime costs vary differently for different industries and can lead to different types of losses

  • Loss of application service
  • Loss of Data which can have significant legal and financial impacts.

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Now in the current technical situation where everyone believes that Data Centers should never go down, and application should be available around the clock since both internal and external users rely on it from anywhere worldwide, it is crucial for the data center to maintain application availability anytime anywhere. The effect of this downtime could be hazardous to any business. For Example, In September 2010 Virgin Blue airline’s check-in and online booking system went down as it suffered a hardware failure. This outage lasted for 11 long days and affected around 50,000 passengers and 400 flights which fired up a lot of negative press as well as cost the company in millions of profits. The result of this situation was that the reservations management company, Navitaire, who were managing their reservation system, ended up compensating Virgin Blue for up to $20 million.

It has been stated that 80% of these unplanned outages are the result of unplanned changes that have been made by administrators or developers. Majority of the time the availability and performance errors are the result of misconfigurations, which are implemented on the environment and system configuration parameters on a continuous basis. These errors in the application configuration can cost up to $72,000 per hour in downtime.

 

To read about:  Trends shaping IT cloud strategies today

 

So what is the impact of Unplanned Downtime on Revenue:

 

It has been stated that businesses lose up to $100000 (US) for every hour of IT System Downtime or up to $5000 (US) every minute. If an outage creates a disruption in the supply chain it may result in the business being exposed to damages which might in return be highly publicized and can impact the shareholder value of the business.

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The impact of Downtime on Reputation and Loyalty:

 

It may be difficult to assess the long-term effect of a damaged reputation and what might be its impact on revenue and profitability. The downtime costs in this regard are calculated keeping both long term and short term customers in mind. This also results in employee time diverted from other tasks to get the systems running again, Value of lost data, emergency maintenance fees, and additional repair costs. To be more accurate the total lost sales might reflect the lifetime value of customers who permanently switch to a competitor. This is as far as tangible costs are concerned, whereas intangible costs vary from organization to organization. Downtime can result in shaken customer loyalty, damaged reputation, lost the opportunity and lowered employee morale.

 

You can also take a look at: Cloud Computing and its Benefits

 

The Impact of Employee Productivity:

 

The impact of application downtime on employee productivity can be measured in terms of the salaries, wages and benefits of the workers and the amount of time that they are made to sit idle during the system downtime.

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