The Cost of IT Downtime

Costs related to IT downtime can create substantial issues for businesses of various sizes and industries. Many focus on the direct losses in terms of revenue, but the effects of downtime can extend well past the obvious budget line items. Learn more about what constitutes IT downtime and how companies can calculate the full costs they may face.

What is IT downtime?

Any restriction or disruption of work due to technology-related issues or failures equates to IT downtime. Business owners and employees face IT downtime regularly, whether they realize it or not, with the average U.S. worker facing two weeks of computer downtime each year.

“Downtime can be attributed to something as simple as your system not being able to take a credit card payment or an employee who can't send emails," says Jason Monroe, Solution Consultant at Bit-Wizards.

He says updates to outdated hardware and software are another simple yet common cause of IT downtime.

“Many times, businesses aren't proactively updating their computers and other work equipment," Monroe explains. “This ends up leading to overly lengthy, forced updates during critical work hours, preventing employees from doing their jobs while on the clock.”

In addition to these everyday inconveniences, factors such as broken equipment and cyberattacks are both major contributors to IT downtime.

“If you drop your laptop and it breaks, you could be out of work for hours or even days," says Monroe. “And hopefully you had your files backed up, because if not, you just lost critical data too. The same goes for cyber threats like ransomware or phishing attacks. If a hacker locks you out of your computer or network, you're not just incurring the cost of the ransom, but the downtime as well.”

How much does IT downtime cost?

On average, the hourly cost of downtime for small- to medium-sized businesses can range from $10,000 to over $50,000. To calculate the estimated cost of downtime for your business, the formula is simple: minutes of downtime x cost per minute = downtime cost.

However, the true cost of IT downtime per minute can be deceiving. Many business owners immediately think of lost revenue due to an outage, but that only scratches the surface of total downtime-related costs.

To get an accurate estimate of a downtime incident for your business, the following items need to be factored into the above formula:

• Revenue losses: Calculate the estimated cost per minute of sales, services provided, and billable hours lost during downtime.
• Productivity issues: Calculate the estimated cost per minute of employee time wasted due to downtime. You also need to calculate the overtime cost per minute of any employee due to downtime.
• Reputational damages: Calculate the estimated cost per minute of any additional time spent repairing business relationships with clients, customers, and partners due to downtime. These expenses and time include the cost of any supplementary public relations and marketing work.
• Remediation efforts: If your business provided pro-bono products and services or special deals to clients and customers to make up for downtime, those extra costs also need to be added to the total. Additionally, if your business completely lost any clients or customers due to downtime, the estimated cost of those losses should be included in the total.

“Yes, lost revenue is a big deal, and of course that needs to be taken into account," says Monroe. “But as a business owner, you can't overlook the outlying costs associated with downtime and how those will affect your bottom line. Those hidden costs can be monumental.”

How can my business reduce the cost of IT downtime?

Downtime comes in so many forms, making it difficult for the average business to defend itself against every single factor. Working with a managed service provider (MSP) to implement business continuity and disaster recovery (BCDR) measures can help take that responsibility off your shoulders.

“At Bit-Wizards, we're proactively looking for issues," explains Monroe. “We're monitoring your emails, tracking when your licenses are expiring, making sure your data is backed up, and keeping an eye out for any potential hazards that could pose a threat to your network.”

Additionally, if your business does experience an IT-related work stoppage for any reason, partnering with an MSP can significantly reduce the cost of that downtime.

“When you work with a company like Bit-Wizards, all you have to do is call us up and tell us what's going on," says Monroe. “We're going to do whatever it takes to get you back up and running as soon as possible. Our Managed IT Services (MITS) are built to prioritize that work immediately, and our Wizards communicate with you every step of the way.”

For Bit-Wizards clients, the cost of IT downtime is rarely a concern.

“We look at each one of our clients as a partner," Monroe says. “We take the time to understand how your business works, how downtime could potentially occur, and how that downtime would cost you specifically. Then we assess and address those vulnerabilities right away to help you stay up and running.”

Ready to reduce the cost of IT downtime for your business? Get in touch.