Cost of Hourly Downtime Soars: 81% of Enterprises Say it Exceeds $300K On Average

The only good downtime is no downtime.

ITIC’s latest survey data finds that 98% of organizations say a single hour of downtime costs over $100,000; 81% of respondents indicated that 60 minutes of downtime costs their business over $300,000. And a record one-third or 33% of enterprises report that one hour of downtime costs their firms $1 million to over $5 million.

For the fourth straight year, ITIC’s independent survey data indicates that the cost of hourly downtime has increased. The average cost of a single hour of unplanned downtime has risen by 25% to 30% rising since 2008 when ITIC first began tracking these figures.

In ITIC’s 2013 – 2014 survey, just three years ago, 95% of respondents indicated that a single hour of downtime cost their company $100,000.  However, just over 50% said the cost exceeded $300,000 and only one in 10 enterprises reported hourly downtime costs their firms $1million or more. In ITIC’s latest poll three-in-10 businesses or 33% of survey respondents said that hourly downtime costs top $1 million or even $5 million.

Keep in mind that these are “average” hourly downtime costs. In certain use case scenarios — such as the financial services industry or stock transactions the downtime costs can conceivably exceed millions per minute. Additionally, an outage that occur in peak usage hours may also cost the business more than the average figures cited here.

It makes sense that downtime costs are and will continue to rise. Companies are ever more reliant on their interconnected networks and applications to conduct business. The emergence of the Internet of Things (IoT), virtualization and cloud computing environments also puts greater emphasis on reliability and the cost of downtime. In interconnected environments, there is greater risk of collateral damage — or more servers, applications, connectivity equipment and knowledge workers being impacted by outages when the systems are interconnected.

To put it bluntly: if the servers, applications and networks are unavailable for any reason business and productivity slow down or come to a complete halt. In addition, to the actual monetary costs associated with any hardware, application and network outages also commensurately raise the corporation’s risk and exposure to litigation.

These statistics reinforce what everyone knows: infrastructure matters. And server hardware, server OS and application reliability or instability, can have a direct and far reaching impact on the corporate bottom line, ongoing business operations and irreparably damage companies’ reputation. In some extreme cases, business and monetary losses as a result of unreliable servers can cause the company to go out of business – as a consequence of sustained losses and possible litigation brought on by the outage.

Reliability is among the most crucial metrics in the organization. Improvements or declines in reliability mitigate or increase technical and business risks to the organization’s end users and its external customers. The ability to meet service-level agreements (SLAs) hinges on server reliability, uptime and manageability. These are key indicators that enable organizations to determine which server operating system platform or combination thereof is most suitable.
To ensure business continuity and increase end user productivity, it is imperative that businesses maximize the reliability and uptime of their server hardware and server operating systems.

An 72% majority of corporations now require “four nines” or 99.99% minimum uptime. Businesses should regularly replace, retrofit and refresh their server hardware and server operating systems with the necessary patches, updates and security fixes as needed to maintain system health. The onus is also on the server hardware and server operating system vendors to provide realistic recommendations for system configurations to achieve optimal performance. Vendors also bear the responsibility to deliver patches, fixes and updates in a timely manner and to inform customers to the best of their ability regarding any known incompatibility issues that may potentially impact performance.

Vendors should also be honest with customers in the event there is a problem or delay with delivering replacement parts.
Time is money. Even a few minutes of downtime can result in significant costs and cause internal business operations to come to a standstill. Downtime can also impact adversely a company’s relationship with its customers, business suppliers and partners. Reliability or lack thereof can potentially damage a company’s reputation and result in lost business.

Organizations are well advised to perform their own internal calculations to determine how much a single hour of downtime would cost their corporation in terms of monetary losses; remediation and manpower efforts. Businesses should also consider the risk to the business based on the threat of litigation and “soft” costs such as the potential lost business and damage to the organization’s reputation.