The High Price of Computer Network Downtime

In a startling and recent report from IHS, researchers discovered that information and communication technology (ICT) downtime could be costing North American companies as much as $700 billion every year. The report details the cost, length, frequency and causes of ICT downtime such as failed servers, network outages, application or degradation’s could get exponentially more expensive with time. For the average mid-size company, ICT downtime can create substantial losses that range from $1 million to more than $60 million for a large corporation.

MoneyThe main cost from downtime occurs in lost productivity and revenue. The actual fix of the problem is normally seen as minor and insignificant, but the lower productivity and revenue losses are what add up. In Q3 of 2013, Google experienced a five-minute outage that lost them $543,000. Because they made $14 billion of revenue in Q2 of 2013, that means that they earn around $108,000 every minute, so a single minute of downtime can cost them hundreds of thousands.

Matthias Machowinski, the research director of video and enterprise networks at IHS, said that the main cost of downtime will come from lost productivity. A network interruption becomes the biggest cause of downtime, and it can have longstanding consequences. For example, when a customer cannot access the company information, they are not normally going to spend time waiting. Instead, they will go over to the competitors, and many times, they won’t return because they will find better service elsewhere. The IHS survey showed that most respondents will experience downtime five times every month, and many will encounter as much as 27 hours of downtime on a monthly basis.

The report also found some positive findings like how organizations have started to make changes that will eliminate or lower the amount of downtime. For example, a lot of mid-size to larger corporations have started to invest in IT that has early-detection capabilities, and they have improved the redundancy of these systems. In addition, better training for newer employees has meant that the backup processes no longer rely solely on ICT systems.What all did the report involve? When IHS conducted their survey, they interviewed those responsible for the IT decision making from more than 400 medium to large-sized organizations. The respondents came from a variety of industries, but the key respondents in the survey were healthcare, financial and manufacturing companies who made the contribution. For a long time, IHS has provided reputable expertise, insight and analytics about the critical elements that have shaped the business landscape of today. Many governments and businesses from over 140 countries have relied on the comprehensive and expert delivery methods of IHS for making strategic decisions with greater speed and confidence.

When IHS looked at those who had been surveyed, they found that ICT communication downtime could be expensive. Companies had to pay anywhere from $1 million per year to $60 million when they were a large enterprise. When researchers looked at the total cost to North American businesses, they found that ICT outages cost an average of $700 billion every year.

Looking at the statistics, IHS found that the biggest contributing factor to downtime was network interruptions. Matthias Machowinski said that the biggest source of downtime came from equipment failures, and they were measured in hours. According to Machowinski, these equipment problems contributed to around 40 percent of the reported downtime. The best method of reducing this downtime relates to ongoing network monitoring so that you can handle issues before they arise.