Downtime numbers are downright distressing

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A new study by Gartner finds that while network bandwidth issues are on the decline, network availability and downtime concerns are front and center on the minds of IT managers.

In the July 2013 report, Bandwidth Doesn't Matter; Availability Drives Enterprise Network Costs, authors Neil Rickard and Danielle Young write, "In the developed world, the marginal cost of bandwidth is so low that rightsizing capacity has little impact on WAN cost. However, the cost of improving availability remains high and downtime is less acceptable, making rightsizing network availability the key goal for enterprise network designers."

Indeed, several recent studies on downtime paint a dismal picture for the bottom line.

Consider:

  • A study by CA Technologies reveals that downtime costs North American businesses approximately $26 billion in lost revenues annually. On a global scale, the impact of downtime is 127 million lost man-hours of productivity, according to the same study. And corporate revenue overall drops an average of 29 percent during downtime.
  • Meanwhile, a survey of 200 data center managers by USA Today revealed that 80 percent said their downtime costs exceeded a staggering $50,000 per hour. Even more alarming, for over 25 percent of the firms that were surveyed, downtime costs exceeded $500,000.
  • Confirming the trend, the Uptime Institute recently reported that the average cost of IT downtime for U.S. corporations is $300,000 per hour.

Obviously there are a variety of factors that determine how much downtime will impact an organization. First and foremost are the frequency with which downtime occurs, the duration of that downtime and the time needed to get systems back up and running (the mean time to recovery).

Direct costs from downtime can be measured in lost sales and lost employee productivity. Indirect costs can include damage to a company's reputation in the marketplace, damaged customer relations and lost confidence in IT.

There are a number of formulas available on the Web to calculate how much downtime is really impacting your organization. In general terms, Dun & Bradstreet estimates that for a typical Fortune 500 company of 10,000 or more employees, losses run to $896,000 in employee labor costs weekly.

In its own survey on the impact of downtime, Dun & Bradstreet also reported that organizations experienced 14 hours of downtime per year on average. Half of the companies that were surveyed said downtime experiences damaged their reputations. Unfortunately, 18 percent said their downtime experiences were very damaging.

Downtime costs also vary by industry. Hardest hit tend to be those industries with a strong public connection or those which depend on partners, distributors and suppliers. A typical example: According to research firm IDC, downtime costs the retail sector approximately $18 billion annually. The problem gets especially bad during critical holiday periods.

But if you think all of these survey projections are bad enough, it gets worse. According to research firm Aberdeen Group, from 2010 to 2012 the average cost of downtime increased by 65 percent per hour.