Business continuity is the backbone of any modern IT infrastructure. Without uptime percentages exceeding 99 percent, IT teams run into major issues, incurring the wrath of employees and customers alike. What is more, downtime can result in the loss of sales, market share, and credibility.
Finding partners that can ensure uptime is critically important for those organizations that want to maintain customers and revenue. Eliminating the high cost of downtime with business continuity is one way to protect your investment and systems. As seen in the recent article, 17 Reasons Smart CIOs Leverage Managed IT Services, external partners can help companies reduce costs and gain competitive advantage with reliable services.
The Costs of Downtime
According to a study published by the Ponemon Institute in 2016, the costs of data center outages skyrocketed during the previous six years, to an average of $740,000 compared to $505,500 in 2010.
The study looked at the activity-based costs of direct and indirect impacts of data outages, including:
- Damage to data itself
- Reduction in organizational productivity due to downtimes
- Detection and remediation costs to systems and business processes
- Equipment damage
- Regulatory and legal costs, including litigation defense expenses
- Loss of trust and confidence among key stakeholders
- Brand and reputational cost within the marketplace
Among some of the other observations noted in the study of CIOs, chief information security officers, facility managers, IT operations leaders, compliance and audit managers, and operations and engineering employees were:
- Downtime costs for businesses that are highly dependent on data centers are rising faster than the average costs.
- Cybercrime is the fastest-growing cause of data center outages, rising from 2 percent of all outages in 2010 to 22 percent in 2016.
- The maximum costs of these outages have more than doubled, to $2.4 million in 2016 from just more than $1 million in 2010.
- The greatest areas of costs for unplanned outages were business disruption, with a median cost of $201,000, followed by lost revenue and end-user productivity (see chart below). The business disruption category includes the damages to business reputation and the costs of customer churn.
Cost Centers – Unplanned Data Center Outages (2016)
Source: Cost of Data Center Outages, January 2016, Ponemon Institute
What is striking about the costs incurred is how little time it takes for a business disruption to take a heavy toll. Of the data center outages studied, the average duration was just 95 minutes, ranging from 13 minutes to 415 minutes in total.
The study indicated a linear relationship between the duration of an outage and the total costs to the organization. On average, the cost per minute of an outage was $9,000.
It is not surprising that the costs of downtime are felt most acutely by those industries with a heavy reliance on protecting customer data and digital transactions. The four industries that faced the largest financial impacts were:
- Financial services: $994,000
- Communications: $970,000
- Healthcare: $918,000
- E-commerce: $909,000
As noted above, cybercrime is a growing cause of downtime, representing the lowest percentage of outage causes in 2010 but rising to second in the most recent study. The 2016 cause frequencies were:
- Uninterrupted power supply (UPS) system failures: 25 percent
- Cybercrime: 22 percent
- Accidental or human error: 22 percent
- Water, heat, or computing room air conditioning failure: 11 percent
- Weather issues: 10 percent
- Generator failure: 6 percent
- Equipment failure: 4 percent
Solutions to Preserve Uptime
Keeping systems up and secure is at the heart of managed IT services. With outsourced partners, companies can be confident in the security of data and the reliability and availability of critical systems.
The right Managed IT companies will focus extensive efforts on best practices related to system management and security. Physical locations are guarded by multiple safeguards. Data is encrypted and backed up in multiple locations automatically, ensuring little to no uptime when natural disasters or cyberattacks happen.
Those cyber attacks are limited due to top security measures to keep data and systems locked down, continuously monitored, and aggressively analyzed to ensure bad actors are kept out.
With managed IT services, you can lower operating and personnel costs associated with systems and data management. You also gain peace of mind knowing service providers are on the job 24/7/365.
At Denovo, we help companies with cloud-based managed IT services that enable secure and reliable systems and applications. With our Tier III Gold Certified datacenter, with 100% uptime for over 15 years, and experience managing multiple public cloud providers, you can rest assured your data and systems will be managed at the highest level of performance. To learn more about how Denovo can help your company realize cost savings and systems security, contact us.