Outages and system failures in IT are common occurrences when regular maintenance is not carried out. When that happens, the company affected will experience downtime, which can be very expensive. Gartner, a technology research firm pegged the hourly cost of downtime at a conservative estimate of $42,000. On average, a company experiences a downtime of 175 hours a year. A company that experiences a downtime longer than that can incur losses of more than $7 million annually.

Of course, the cost varies from company to company, depending on the size of the business. But even for small companies, an average loss of $314 per hour of downtime (~$54,950 per annum) is not uncommon.

Moderate interruptions to an IT system is unavoidable for various reasons, such as upgrading works, hardware obsolescence, software incompatibility or just plain bad luck. However, such interruptions can be better handled when you engage the services of a proactive IT firm. With regular maintenance, downtime would be kept to a minimum and the IT firm should already have contingency plans in place to minimise disruptions.

How to calculate the total cost of downtime for your business 

There are two types of losses when you experience system downtime at work: Productivity losses and revenue losses. When you add up the monetary losses for both, you will have the total cost of downtime for your business.

Productivity losses

LOST PRODUCTIVITY = UR x I x SL x H
UR = number of affected users
I = percent effect on productivity
SL = salary per hour
H = numbers of hours of outage

Revenue losses

LOST REVENUE = (GR/TH) x I x H
GR = gross yearly revenue
TH = total yearly business hours
I = percentage impact
H = number of hours of outage

That is not all. Downtime can also incur intangible costs, such as lost opportunities, shaken customer loyalty, damaged reputation and negative press.

So if you want to protect your business from such losses, your best bet would be to engage a reliable IT firm that carries out proactive IT support services.

Author

Zell Low

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