August 2014

In recent newsletters, we have explained how storage system availability affects business operations and described some of the key causes and costs of system downtime. This month, we conclude with a look beyond IT, at the real cost downtime imposes on businesses.

 

The Real Cost of Downtime to Businesses

 

As cited in previous newsletters, Aberdeen estimates that the average cost of downtime for surveyed small, mid-size and large businesses at $163,000 per hour. This includes the costs of lost revenues, lost productivity, IT labor required to restore system operations, and more.

 

Example:

Estimating Downtime Costs at a Global Company

 

Using a simplistic approach, the cost per hour of downtime might be calculated by adding lost revenue cost per hour to the lost productivity cost per hour caused by the downtime event.

Let’s take a look at a sample global company that operates 24x7, has annual revenue of $60 Million and 600 employees, with average annual salary $30,000 per employee working 50 hours per week. Assuming that a planned and unplanned outage affects 10% and 80% of the workforce respectively, resulting in the following costs. While these calculations have been simplified, they are representative of actual costs.

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