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The True Cost of IT System Downtime

In the modern business world, there is no room for error from an IT perspective. Realistically, how much work could you accomplish today without a high-speed internet connection or access to the files your company keeps stored in data centers? Every minute of system downtime caused by an IT incident could have a devastating effect on your revenue and your employees’ productivity. But just how much exactly will an IT incident cost your company?

Loses in the areas of revenue, labor, and services all contribute to the total downtime cost of an IT outage. Recently, IDC released a report sponsored by AppDynamics that examines the true cost of system downtime and found that the average total cost of unplanned application downtime for the Fortune 1000 per year is $1.25 billion to $2.5 billion. In fact, data center system downtime costs rose 41% from 2010 to 2013, bringing the average cost to $7,908 per minute.

To discover what an IT outage may cost your company’s revenue and its employee productivity, there are two simple formulas you can use:

Estimating Lost Revenue Due to IT System Downtime

System Downtime Revenue Costs

To give an example, consider a brick and mortar retailer generating 40% of its revenue online for a Gross Yearly Revenue of USD 1.2 Billion.

How much does a 90 minute outage cost?  (($1.2 Billion * 40%/(365*24)  * 100% * 1.5 = $82,000.

In the same way, you can calculate the Labor cost of an IT outage

 Estimating Employee Productivity Loss or Labor cost of an IT Outage

IT System Downtime Productivity Cost

While these two formulas are very helpful for determining the tangible costs of system downtime, keep in mind there are also a number of intangible costs associated with an IT outage as well. These costs could include paid overtime for employees making up for lost productivity, lose of customers, and damage to the company’s image and reputation, to name a few.

To learn more about reducing the cost of system downtime due to an IT outage with the Everbridge IT Alerting solution for critical IT communication and escalation, visit our website.