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3 Financial Ramifications of Network Downtime

03/09/2016 by: The SunView Team

IT service management allows software to be more responsive to the needs of both the customer and the IT team behind its creation. This angle has something of a positive spin, but another rivals its importance. ITSM suites must also prevent or minimize the impact of network downtime events.

Why? The effect of downtime can reverberate across all corners of a business, amplifying the cost of correcting the issue with each passing minute. A 2016 IHS survey revealed downtime in the U.S. information and communication technology industry accounts for around $700 billion in cumulative losses annually.

Let's break down this figure and examine the many different ways enterprise IT downtime hits modern businesses right in the checkbook.

1. Emergency Response
When widespread failure events occur, perhaps the most manageable cost is simply reacting to it.

For example, analysts at Heavy Reading asked mobile operator providers about the most common causes of network failure in their industry, to which they replied physical link failure. Though the subsequent impact physical link failures may have on a business may be immense, the costs of purchasing and replacing hardware is typically minimal by comparison. However, emergency orders and rush deliveries for necessary equipment aren't cheap.

2. Missed Opportunities
Every minute spent scrambling to solve a downtime event costs companies potential business. According to a Ponemon Institute study, while the average unplanned downtime event was 11 minutes shorter in 2013 than in 2010, the cost per minute increased by nearly $2,300 to more than $7,900.

What does this tell us? Enterprise IT is learning how best to address downtime when it occurs, but as they get wiser, the severity of any downtime at all steepens. As IT networks diversify, this phenomenon will only worsen. Network downtime can take out many different perfectly functional applications with it, magnifying the consequences.

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3. Wasted Wages & Customer Qualms
Employees will still need to get paid, even if something's rotten with enterprise IT.

Business Computing World estimated the average Fortune 500 company spends around $56 per employee per hour when downtime occurs. Depending on the nature of the event, similar costs can hurt the organizations behind the system failures when they're company-facing, but the real problem lies in what happens when their clients are rendered functionless because of faulty IT. That does not make for good business, and IT service providers don't receive many allowances in this regard before their customers look to competitors.

The right change management and ITSM suites help enterprise IT avoid downtime events in a number of valuable ways. First, when IT teams strengthen their change management processes with enhanced automated regression testing, they add a level of security to implementation without drawing out time to release. Additionally, tracking changes through configuration management databases demonstrates to IT personnel what impacts are to be expected upon initiating change.

In the end, these tools can limit the amount of downtime enterprise IT experiences, saving them money, customers and headaches.