The True Cost of Workload-Related Outages

Vityl Capacity Management IT Capacity Planning Software

Underestimating the consequences of downtime can kill productivity. Motivate your team to calculate the cost of downtime and create more accurate capacity plans.

When all servers and systems are running smoothly, it can feel like your company has no reason to worry about IT performance. But in IT there’s always a cause for concern — if you aren’t prepared, an unexpected overload always has the potential to crash your servers.

Even with the best backup plan that gets you back in business within about two hours. Two hours is pretty fast to get everything back on track — but those hours likely still cost you enormously. If you haven’t done so already, it’s time to calculate the cost of downtime.

Missed Revenue

The first and simplest thing to determine is revenue lost to downtime. You can calculate this using a simple equation:

(Weekly Revenue / Weekly Work Hours) x Downtime in Hours = LOST REVENUE

For example, if you usually make $20,000 per week over the course of 40 work hours, two hours of downtime will result in a loss of $1,000. Those two hours just cost you five percent of your weekly total revenue.

And the bigger the business, the more revenue generated, making the risk even greater. Small enterprises whose success doesn’t rely entirely on uptime can sometimes absorb those risks — a restaurant’s website going down for an hour won’t substantially affect business.

However, if you rely on having your business fully fuctional 100% of the time, downtime can cost your dearly. For example, in 2013, Amazon lost almost $5 million over the course of just a 49-minute outage, according to Network World.

Operation Costs

Of course, when you have an outage, you still have to pay your employees, and you'll need to make up for lost time with earned revenue. Team members could be doing something productive (like bringing the systems back up), but in a worst-case scenario, they could also simply be sitting idly around the office, unable to do their jobs.

Here’s a simple method to calculate those fixed costs:

Number of Employees x Hourly Wage x Downtime in Hours = FIXED COSTS

To provide another example, if you have 25 employees that are paid $20 an hour, two hours of downtime will result in an additional loss of $1,000.

And don’t forget the costs racked up during the recovery period. You'll feel the affects of the crash long after all systems are back online. When the system eventually does go back online, all of the information that was manually tracked in the meantime must be inputted into the system, costing extra time and money.
Lost revenue and operational costs add up, and it could be devastating for your business.

Maintain Your Reputation

Downtime also creates significant intangible costs. A company can easily suffer from a damaged reputation — sometimes irreparably — due to slow response times or downed servers. For example, a retailer that’s unable to respond immediately to its online customers will irritate shoppers and make no sales. Online consumers are increasingly impatient and have plenty of options in the online marketplace. The first sign of a hiccup or loss of service, and they'll bounce over to your competitors.

Vityl Capacity Management provides enterprises with the necessary capacity planning tools to anticipate overloads before they occur, eliminating workload-related outages. A study by the International Data Corporation found that one of its clients virtually eliminated the eight hours of downtime they experienced every week (along with the associated costs) through the use of Vityl Capacity Management software.
 

Ready to find out how you can avoid unnecessary financial hits and damage to your reputation by eliminating your downtime once and for all?