Do Your Customers Know How Expensive Downtime Is?

Downtime in all its forms can be incredibly detrimental to the revenue and reputation of a business.

July 23, 2018

3 Min Read

As you’re working with your customers to find the right level of RPO and RTO for their organizations, are you sharing real-world numbers on what the impact of downtime can have on their bottom line?  If your customers are hit with data loss–whether their head office location was hit by a hurricane or their systems are locked by a cyberattack–downtime in all its forms can be incredibly detrimental to the revenue and reputation of a business.

Some Scary Numbers

Downtime costs a lot. Statistically speaking, it is the second largest expense after HR. According to ITIC, as of August 2016, 81% of organizations report that downtime costs them on average over $300,000 per hour.

Calculate Your Customers’ Downtime Costs

Though there are statistical averages for how much downtime can cost organizations, the numbers vary greatly from business to business. Consider that the cost of downtime per minute can land from $137 to $17,244. If a customer’s business is larger or smaller than the “average,” you may see higher or lower costs of downtime in their company. The sector or industry of a company determines where revenues come from, also impacting the numbers. However, there are methods of determining how much downtime will cost an organization per hour if a situation does arise. Check out the following formula from Data Foundry, for example. To uncover an organization’s productivity cost:

Productivity cost = E x % x C x H where E is the number of employees affected, % is the percentage they are affected or how much of their productivity depends on uptime, C is the average cost of employees per hour, and H is the number of downtime hours.

And to identify possible revenue lost, use this method from Continuum:

Share with your customers this methodology. First, determine which specific areas of the business generate revenue. Next, calculate how much revenue is derived per hour from these areas. It’s also important to estimate how important uptime is to generate this revenue. If, for example, the organization is an online clothing retailer, 100% of revenue comes from uptime. After determining how much revenue is made during uptime, calculate how much revenue per hour is lost during downtime. For instance, if an e-commerce business also has physical stores and it’s determined 50% of revenue is generated in uptime online, then multiply that percentage by your total revenue in dollars for that area. When the figures of revenue lost per money-generating area are added, that’s the total cost of downtime per hour.

Depending on how much of the business relies on the technology infrastructure being up, that organization could be looking at thousands of lost revenues for even just a few minutes of downtime. Knowing these numbers may help you find a solution before a problem even occurs.

It Will Likely Still Be More Expensive Than Estimations

Remember, if one of your customer’s infrastructure is down, the business will likely have to spend extra money and time getting back up and running. It’s important to discuss with your customers that whether they need to hire professionals, such as yourself, to take care of data recovery, pay employees overtime to resolve a problem, or potentially lose clients who were affected by downtime, there will be extra costs that can’t always be accounted for in predictions associated with downtime.

This is an important conversation you should be having with your customers. A lot of them brush over the threat of downtime costs, and bringing this kind of knowledge to them is an important way to ensure they have the most robust data protection solution in place.

The best way to minimize risk for downtime is to ensure all applications and data are backed up and recoverable before a problem arises. Learn more about how the StorageCraft Recovery Solution can help you avert a downtime disaster.

This guest blog is part of a Channel Futures sponsorship.


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