The Cost of Downtime

According to BusinessWire, 1-in-5 US organizations have reported experiencing a “serious” or “severe” outage involving significant financial losses, reputation damage, or compliance breaches in the past three years.

The Average Cost of Downtime

The cost of downtime will vary widely, depending on the size of your organization, how extensive the outage is, how long it lasts, and a number of other factors. While the true cost will vary greatly, there is no denying that downtime costs business owners and stakeholders money.

The costs associated with data loss and downtime can be staggering for a small business. According to Framingham, Mass.-based consulting firm IDC, 80% of small businesses have experienced downtime at some point in the past, with costs ranging from $82,200 to $256,000 for a single event.

What does this mean for operations managers and business owners? Every minute counts in a downtime scenario – to the tune of $137 to $427 per minute.

For larger businesses, the average cost of downtime is $5,600 per minute, according to a 2014 study by research firm, Gartner. The research firm is quick to point out, however, that this is just an average. An Avaya report published that same year found that averages ranged from $2,300 to $9,000 per minute depending on factors like company size and industry. And since 2014, that figure has been rising. A more recent report completed in 2016 raises Gartner’s average from $5,600 per minute to nearly $9,000 per minute. 

To get a quick estimate of your company’s probable downtime costs, use the following formula, based on the size of your business and the number of minutes your most recent incident lasted:

Minutes of downtime x cost-per-minute = Downtime cost

Small businesses are recommended to use $427 as cost-per-minute, while medium and large should use $9,000.

What’s Causing Downtime?

Network Problems

Uptime’s 2022 Data Center Resiliency Survey detailed that networking-related problems have been the single biggest cause of all IT service downtime incidents – regardless of severity – over the past three years. As infrastructures become more complex and operations shift towards hybrid models, the risk of downtime should be considered and mediated during IT planning and budgeting. Coastline will always suggest equipment replacements, additional layers of protection, and necessary upgrades that will minimize your risk.

Human Error

Human error accounts for a large majority of downtime as well. Nearly 40% of the surveyed organizations suffered a major outage caused by human error over the past three years. Of these incidents, 85% stemmed from staff failing to follow procedures or from flaws in the procedures.

Power Outages

Power-related outages account for 43% of downtime incidents that are classified as significant (causing downtime and financial loss). Take this as a sign to invest in a battery backup!

External Providers

Telecommunications providers such as Comcast, Verizon, and Spectrum, and other external industry vendors caused 70% of outages in 2021.

Steps to Minimize Downtime

The Right IT Team

Partner with a reliable, trustworthy MSP. Managed Service Providers like Coastline monitor your IT infrastructure 24/7/365 and can often mediate issues or identified risks before they even present a problem for your business. By outsourcing your IT to an MSP, you also benefit from an entire team of network engineers, rather than depending on a single IT staff that many small to medium businesses try to rely on. We also act as your vendor liaison, communicating with your line of business vendors whenever issues arise with their services or products, including power outages.

Evaluate Your Infrastructure

Our network evaluations help us determine any weak points in your infrastructure, whether it’s a server that’s past its prime or an outdated firewall. Regular audits and tracking can help minimize downtime risk. Of course, upgrades may need to be planned in accordance with budgets, but we can help you determine the proper order to invest.

Create Your Data Backup and Business Continuity Plan

Coastline will help you create a data backup and business continuity plan. Through our industry-leading partnerships, we can ensure your operation can continue uninterrupted in the event of ransomware or server failure. Our award-winning technology allows our team to restore your files within seconds and entire servers within a few minutes. Our solution is also HIPAA compliant.

Invest in a Battery Backup

Unexpected power drops can be more damaging than surges, so battery backups are a good investment for any business. Battery backups ensure reliable connectivity that protects critical infrastructure while we ensure safe shutdowns. These devices include surge protection, as well as Automatic Voltage Regulation (AVR) which adjusts high and low voltages to safe levels, ensuring your equipment has reliable power and the life of the battery is preserved.