Posted May. 5, 2008
How much would it cost your company if your computer network went down? If you add up all the costs, you might be shocked.
Infonetics Research, a top research firm, for example, found that overall downtime costs for U.S. businesses averaged an astounding 3.6 percent of annual revenue. Even so, most executives have little or no idea how much IT downtime could cost their business.
According to a recent survey, two-thirds of 400 enterprises quizzed by Forrester Research could not provide an estimate of the financial cost to their business. Many organizations monitor the effects of application-related failures from a technical or fault-diagnostic perspective but fail to relate any problems to an organization’s bottom line.
The one-third of those who did come up with a figure said the cost of application failure was $10,000 to $100,000 per hour. Forty-two percent set the amount at a minimum of $100,000 an hour. Twenty-five percent estimated application-related outages would set them back between $100,000 and $500,000 per hour, and 13 per cent estimated costs at between $500,000 and $1 million per hour. Four percent predicted losses of greater than $1 million per hour if their key applications ceased to operate.
Organizations today need to move to a strong offense as their best defense when it comes to designing a resilient network. Instead of simply reacting, they need to uncover and fix the weakness in their network before it impacts their business.
Downtime for technology companies can be particularly devastating. Customers today expect tech companies (especially!) to have their own technological house in order. They will not be understanding if your organization can’t deliver its products on time and process orders electronically just because your network is down.
Today companies select their suppliers based on numerous metrics that are used for evaluating their ability to perform consistently and meet delivery requirements. These types of metrics cover an extensive list of criteria, including overall equipment efficiency, run-time, downtime, standby time, count rate downtime and time to goal. The wrong numbers in these areas can make or break a deal.
Unfortunately, technology companies, like other businesses, continue to allocate most of their IT budget for “lights on” operational and maintenance functions without enhancing their network infrastructure. They – like their non-tech counterparts – need to move from a reactive mode to a proactive mode.
But the IT department alone can’t solve the problem. IT leaders must create alliances with the key business leaders within the organization to create a strategy that assures strength in its investment and strength in the network. These leaders are stakeholders within the organization and the ones whose applications can severely impact the business when they are not operating effectively.
C-level executives in finance, sales, manufacturing and human resources can provide the perspective needed to align spending with the true requirements of the entire organization. By bringing together all these perspectives, you can truly understand the cost of downtime.
There is not any one problem area that companies need to focus on. A plan to assure a super-reliable network must be comprehensive and look broadly at many factors and consider the details of the way technology is fused with the business. Every decision is critical, from hardware selection to product setup, from employee training to service-level agreements with service providers. All budget initiatives need to include details on the impact of failure, the risk associated with the potential for failure and the percentage of staff impacted due to failure.
This approach, combined with historical data based on past outages and buy-in from organizational stakeholders, will provide a forward-leading approach to business continuity. It takes a commitment to learning from your experiences and to understanding your environment and the many risks all firms face today. •
Paul Cronin is vice president of Atrion Networking Corp. in Warwick, a systems integrator and network services provider and a Cisco Gold Partner.
