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The Cost of Unplanned Downtime

When your IT infrastructure goes offline with no warning, the effects can be devastating. Your business can quickly experience a variety of negative financial impacts: from losing revenue every minute your systems are offline to hiring an outsourced IT infrastructure firm to restore your services. 

Altogether, these costs can add up to huge numbers. That’s particularly true for small and medium businesses (SMBs), who often lack the resources to effectively respond to unplanned downtime and need to seek external support. One study found that a single hour of downtime can cost SMBs $8,600, with a whole day of downtime costing close to $70,000. 

Depending on your size and revenue structure, these numbers may be higher or lower for your business. Regardless, the net result is the same: lower revenue, impacts on productivity, and lasting damage to your business’s reputation. The severity of these impacts makes it vital for IT teams to do everything they can to prevent unplanned downtime.  

A variety of factors can contribute to unplanned downtime, ranging from internal malfunctions to external cybersecurity attacks. Fortunately, it’s possible for IT teams to take proactive steps to protect their businesses from the costs of unplanned downtime. Strengthening your internal IT infrastructure is a good first step, but it’s also important to secure your business network against external threats. 

In this guide, we’ll share the most common causes of unplanned downtime and explore how much unplanned downtime can cost your business. Most importantly, we’ll also outline strategies IT teams can use to prevent unplanned downtime.

What Causes Unplanned Downtime?

Unplanned downtime can be caused by several factors. Some of the most common include:

  • Hardware Failure: all businesses rely on a robust IT infrastructure to function. These intricate networks are made up of a complex web of interconnected hardware devices. Sometimes, all it takes is one faulty router or switch to bring down your whole network. Consider auditing your IT equipment and building redundancies into your system to mitigate this. 
  • Software Failure: it’s not just hardware that can fail, software tools malfunction too. According to IBM, application, operating system, middleware, and database complexities often contribute to software failures that cause unplanned system outages. 
  • External Data Breaches: if your business falls victim to a cyberattack, attackers might block access to key systems until a ransom is paid. This is called a ransomware attack and only adds to the already high cost of unplanned downtime. Other external data breaches can also take key systems offline. Learn more: The Cost of a Cyberattack to Small and Medium Businesses
  • User Error: one of the leading causes of system downtime is human error. This is often a minor, unintentional error that spirals out of control: for example, a network administrator inputting the wrong command on a key system. Investing in proven operating processes and employee training reduces the incidence of user error. 

It’s important to identify the cause of every unplanned downtime as this helps IT teams take measures to prevent the same error from being repeated. Learning from previous mistakes is one of the primary ways that organizations can mitigate the costs of unplanned downtime. 

An Overview of the Costs of Unplanned Downtime

At first glance, it’s easy to equate the cost of unplanned downtime to the cost of getting your systems back online. But in reality, the costs your business will face are often much more significant than that. The costs of unplanned downtime are generally grouped into four categories:

  1. Lost Income
  2. Dips in Productivity
  3. Mitigation Costs
  4. Reputational Costs

Let’s take a closer look at each of these costs. 

1. Lost Income

Perhaps the largest cost of unplanned downtime is the loss of revenue during system downtime. Exactly how much revenue your business loses during periods of downtime depends on various factors, including your business model, the length of the downtime, the systems affected, and more. 

If you operate a retail business, unplanned downtime could cause your Point of Sale systems to go offline, meaning you’re unable to accept payments and have to turn away customers. If you run a more service-oriented business, such as a software business, unplanned downtime might cause your service to be unavailable to customers when they need it. That might lead to refund requests from frustrated users and increased levels of churn. 

The longer your systems are offline, the more revenue your business stands to lose. If your business does $20 million a year in revenue, a day of unplanned downtime could cost over $50,000 – a huge sum, especially when you consider the downtime could have been prevented. 

2. Dips in Productivity

While your business may not be generating any revenue during periods of unplanned downtime, it still continues to incur costs. Employees still have to be paid, even if all of your systems are offline, and that’s not taking into account all of the other costs associated with running a business. 

A 2019 study from Forrester Research found that 47% of organizations experience lost productivity when unplanned downtime occurs. And this productivity loss has serious implications: businesses might miss important deadlines, fall behind on key projects, or be forced to reschedule critical meetings with external partners. 

3. Mitigation Costs

When a business experiences unplanned downtime, it’s a race to identify the cause of the issue and take steps to remedy it. Expect IT teams to log significant amounts of overtime as they work to find a solution as fast as possible. When there’s a more complex issue, businesses often bring in external IT consultants or cybersecurity specialists

Working with these talented professionals is necessary to address issues in a timely manner, but costs can quickly add up, particularly when businesses need emergency support. Addressing the issues that caused the system downtime may also present additional costs such as replacing faulty hardware or patching security flaws in the business’s networks. In the case of ransomware attacks, businesses may be forced to pay a ransom to unlock access to key systems and data. 

4. Reputational Costs

If unplanned downtime negatively impacts your customers and partners, word can spread fast, and it’s easy to find that your business’s reputation has suffered damage. This has the potential to impact future revenue, causing potential customers to view your business as unreliable and vulnerable. 

Unplanned downtime can have a lasting impact. The financial cost isn’t incurred exclusively in the period that your systems are offline – it can linger for weeks or months afterward. Taking steps to defend your business against unplanned downtime is vital to ensuring the long-term growth and sustainability of your business. 

How Can Businesses Reduce Unplanned Downtime

Preparing for the unpredictable nature of unplanned downtime is difficult, particularly for SMBs that may lack the IT infrastructure and resources of larger enterprises. But the costs of unplanned downtime are too great to ignore, and it’s incumbent on businesses of all shapes and sizes to take steps to reduce unplanned downtime. 

Fortunately, there are several steps that business and IT leaders can take to reduce the impact unplanned downtime can have on their bottom line. These include:

  • Upgrade IT Infrastructure: hardware and software failures are one of the primary causes of unplanned downtime, and one of the most preventable. Monitor the performance of existing equipment and programs, and consider an upgrade to superior hardware and software solutions
  • Improve Cybersecurity Posture: strengthening your business’s defenses against common cybersecurity threats is a great way to limit unplanned downtime. Consider updating your cybersecurity policies and investing in security awareness training for employees. Not sure where to start? Get a Cybersecurity Scorecard from Tech Heads to identify your most pressing security issues.  
  • Form a Strategic IT Partnership: if you’ve tried various strategies with no success, consider outsourcing elements of your IT and cybersecurity to a team of experienced IT consultants. At Tech Heads, our experts provide leadership across service areas including cybersecurity and disaster recovery, giving you all the tools you need to quickly respond to unplanned downtime. 


Interested in learning more about working with Tech Heads to reduce the cost of unplanned downtime in your business?

 

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