Unplanned downtime costs the Global 2000 a staggering $400 billion annually, according to Oxford Economics research, with each company facing an average loss of $200 million per year due to unexpected digital disruptions.
The repercussions of this can be severe. In a world where customers demand round-the-clock product and service availability, IT organizations are under constant pressure to deliver it for their mission critical IT services. So, what is business downtime, and what are the solutions?
General Manager and Vice President for Data Resilience at Arctera.
Defining and understanding IT downtime
There’s no doubt that today’s digital landscape is ruled by the applications that we all rely on. While most people don’t spend a huge amount of time thinking about IT downtime, it can be nothing short of a nightmare when it disrupts an application that an organization can’t function without. “IT downtime” describes any period when systems, services, or networks are unavailable. While some downtime is planned, such as maintenance activity, the bigger risk comes from unplanned downtime, typically caused by technical failures, cybersecurity incidents, or natural disasters. For businesses, this unplanned downtime can lead to significant financial and client loss, with Europe and APAC having the longest recovery times from downtime events.
The causes of downtime can range from software bugs to infrastructure configuration errors, networking errors, or even storage failures. Adding to the challenge, IT operations teams often manage hundreds of different inter-dependent applications, making the process of identifying a root cause lengthy, manual and very complicated.
The cyber-attack on the British Museum in October 2023 is one example of just how financially damaging downtime can actually be. A hacker group named Rhysida targeted the British Museum and caused a technology outage. Rhysida demanded a ransom of approximately £500,000 at the time, which the library refused to pay. As a result, Rhysida publicly released approximately 600GB of sensitive data online. The breach forced the library to take its main catalogue offline for several months, with a partial read-only restoration occurring in January 2024. The institution had to use about 40% of its financial reserves, estimated at £6–7 million, to recover from the attack. Ciaran Martin, the previous CEO of the National Cyber Security Centre, said, “This incident has been described as “one of the worst cyber incidents in British history.”
Oxford Economic Research shows that some organizations can expect their stock price to drop between one and nine percent after a single downtime event – and then take an average of 79 days to recover. It’s not difficult to understand how these and other hidden costs could easily amount to more than $200 million annually for a single company.
The business impact of downtime
Financial impact: Beyond the costs of restoring systems, businesses may face hefty regulatory fines and penalties. Additionally, operational disruptions can lead to lost revenue and hinder employee productivity. When customers experience service interruptions, it not only affects their satisfaction but can also tarnish the company’s reputation, leading to long-term trust issues. Impact on innovation: Innovation is essential for economic growth because it creates new markets, industries, jobs and investment opportunities.
When a company experiences any measure of downtime, it can stymie innovation by disrupting workflows, moving attention away from new projects, creating delays in development cycles and preventing development of new ideas. When systems are unavailable, employees are unable to focus on creative problem-solving and exploring new technologies, negatively impacting the progress of innovative ideation.
Customer experience: Not only can financial and productivity losses impact the bottom line, they can also create a negative customer experience. This can bring ill-repute on an organisation, while potentially dissuading new customers from wanting to do business together. Customers expect reliability and availability from applications, and frequent downtime can frustrate users and erode customer trust. A single incident can result in lost customers, negative reviews, and diminished brand loyalty.
Brand reputation: Organizations have regulatory and compliance consequences to manage. Critical systems that are unavailable can impact reporting and recording leading to legal ramifications and fines, damaging an organization’s reputation.
The hidden costs of downtime
With technology, and more specifically applications, becoming increasingly integral to daily operations, business downtime has become a significant risk to the productivity of organizations. In fact, a recent Forbes article reports that large enterprises can see costs as high as $9k per minute from downtime.
The reality is that the cost of business downtime often goes far beyond lost income. The financial impact is compounded by lost opportunities to acquire new customers or expand sales, as well as by recovery costs, such as repairs or overtime compensation. Further, negative publicity can drive away future customers and supply chain disruption can impact supplier relationships.
Actions to strengthen your resilience
So, how can businesses combat downtime as an issue? No one expects businesses to become resilient to downtime immediately, but there are actions organizations can take to navigate and minimize the damage:
1. Agree on a downtime strategy: Regularly testing apps and having the staff on hand to resolve any issues is a strong start to ensure systems are back online as quickly as possible.
2. Analyze historic vulnerabilities: Organizations should get into the habit of analyzing what went wrong every time there’s a forced period of downtime. This helps to avoid issues reoccurring. It is also worth investing in data analytics tools to constantly monitor the performance of critical applications.
3. Enforce data control: By having a clear data governance policy, organizations can better enhance security and resilience by protecting against data shocks and strengthening their ability of recovering and withstanding security threats.
4. Be proactive: Prevention is always better than a cure. Getting ahead of potential issues and coordinating their teams to prevent them from occurring will pay dividends.
In today’s fast-paced, technology-driven world, application failures can have widespread and severe consequences. To mitigate these risks, businesses should adopt proactive and efficient strategies to anticipate potential issues and address them without delay. Prioritizing infrastructure and application resiliency not only minimizes operational risks but also fosters customer loyalty, positioning organizations for sustained growth and innovation in an increasingly competitive market. How resilient is your business?
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