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The REAL Cost of Downtime - iSAFE Complete Managed Services

The REAL Cost of Downtime


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Unfortunately with computer technology downtime seams to be a fact of life.  Let’s face it, if technology worked like it was supposed to work all the time, the need for IT service companies would cease to exist.  So in that regard, I’m glad there is still room for products like our iSAFE Complete Managed Support.  On the other hand, our motto is, “Technology that Works for You!”  Our goal is to keep your technology working as smooth as possible, and meeting the needs of your business.

That service is designed to provide unlimited support (reducing user downtime), and keep your network secure, updated and virus free (reducing network down time).  Small businesses often still prefer a “break/fix” model because of the price or commitment, and many just hope that their computers will work great without any maintenance or support.  What most fail to realize is the REAL Cost of computer and network downtime.

SMB’s using the Break/Fix IT model can expect between 96% and 98% up-time during business hours.  That sounds pretty good right?  Well that actually means they will have 83.2 hours of downtime over the course of a year.  The average SMB looses more than $55,000 in revenue due to IT failures each year.  Understanding the REAL cost of downtime is a critical exercise in order to determine what kind of investment makes sense in implementing an IT services model.

What is Downtime?

Within the scope of down time, there are two main categories; Everyday Issues, and Site Wide Issues.  Within the Everyday issues category there are both obvious and hidden issues.

Everyday issues

Everyday issues account for 95% to 98% of the businesses total downtime.  The obvious issues consist of hardware failures, such as fried motherboards, hard drives, or power supplies.  These issues prevent employees from working for obvious reasons.

The everyday hidden issues are not so obvious, but contribute just as much if not more to the total loss of productivity.  These issues consist of things like slow computer performance, slow Internet, or slow printing.  These issues not only affect the bottom line, but also impact employee morale, which in turn can even increase turnover which is extremely costly.  On the other hand, a recent study by the Social Market Foundation found that happy employees were 12% to 20% more productive.

Site Wide Issues

Site wide issues do not happen as often, but when they do occur they have a tremendous impact on employee productivity, revenue, customer loyalty, and employee contentment.  These events can include something as simple as the Internet being out for a few hours, or a server crash that takes a full 2 days to restore.  In these situations there are often large segments of the employee base that cannot work, or are drastically inhibited.  Sometimes customers can’t be served effectively resulting in loss of direct revenue and good will.  If the site wide issue includes a network breach, then the cost of data loss, liability, and customer good will is astronomical.

Calculating Hidden Downtime

While the tangible loss from obvious and site wide down time is easy to see and evaluate, calculating the cost of hidden downtime is a little more complicated.  Yet it’s not impossible to get a realistic idea of what your business is losing.  Here is a sample case study to get you started…

Let’s say your average employee wage is $35,000 per year, they get two weeks off per year and make $16.80/hour before benefits.  During the typical hour of work, their computer is a little slow which results in them waiting a couple of minutes each hour to perform their usual tasks.  That calculates out to 80 minutes per week.  The weekly cost of this “hidden” downtime for this one employee would be $23.28.  The annual cost would be $1,164.00 for just one employee.

Now let’s say you have 10 employees.

  • 3 employees @ $20,000 / yr = $60,000
  • 4 employees @ $35,000 / yr = $140,000
  • 2 employees @ $50,000 / yr = $100,000
  • 1 owner @ $80,000 / yr = $80,000

Total Payroll is $380,000 / year

If we use the same calculation standard above to calculate the total loss for this sample company of 10 employees, the total annual wage loss would be almost $12,000 / year.  And that’s only calculating wages lost from hidden downtime.  It does not include other intangibles like productivity, employee morale, customer satisfaction, etc.  It also doesn’t include the other categories of “obvious”, and “site-wide” downtime.

Conclusion

The real cost of downtime is huge even for small businesses, and there is really no such thing as a system or service that can remove all of it.  However, a competent, reliable managed service provider that is constantly monitoring and maintaining your network can greatly reduce downtime, and your risk of a catastrophic failure.

 

Credits:  Much of the data in this article was gleaned from this article by Phillip Long.

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