In the previous article, we explained what server downtime is and we discussed the causes of such downtime. Here we are going to look in more detail at the financial and operational consequences of downtime. Downtime takes place in data centres all over the world. For example, in 2018 on the Microsoft Azure platform. At that time, all servers were automatically switched off due to overheating. It also occurs regularly in the Netherlands. In an episode of downtime that occurred in the Drechtsteden municipalities, the costs mushroomed to half a million euros because civil servants were unable to do their work.
What are the costs of a downtime episode?
The costs of downtime can therefore be high. But how high are those costs really? To clarify this, we collected information about this. We list a number of facts:
- • In 2014, EMC published a study showing that in that year there were 1.5 billion euros in costs worldwide due to data loss and downtime. This represented a growth of 400% when compared to 2012. In the Netherlands, according to EMC, there was a loss of 3.4 billion euros in unplanned downtime costs in 2014.
- An article from computable.nl shows that European companies have an average of three malfunctions per month that cost an average of 115,034 euros each. These costs are mainly attributable to employees being unable to work, a business process being stopped and the time required for repairs.
- Various studies by the Ponemon Institute show that the costs can mount to as much as 8,000 euros per minute during a downtime episode. And this will only increase in the future.
What cost items arise during downtime?
As you can see above, it is important to prevent downtime at your company because the costs can rise quickly. But what causes these costs to be so high?
THP has compiled a table showing you what cost items are present when there is downtime as well as what the minimum costs of these are*:
|Cost item||Explanation||Minimal costs|
|Third parties||Expertise from outside the company||€ 1.367|
|Materials (equipment)||New servers, cooling systems and air flow replacements||€ 1.101|
|Repair||Repair of equipment||€ 1.675|
|Investigation||Locating the problem||€ 773|
|IT Productivity||Decreasing productivity of IT staff||€ 6.168|
|End-user productivity||Decreased productivity of the system users||€ 13.759|
|Lost income||Lost income during downtime||€ 23.452|
|Business disruption||Discontinued business processes (bottlenecks)||€ 13.891|
|Total costs||€ 62.186|
*The data originate from a study conducted by the Ponemon Institute. They investigated the costs of 63 unplanned episodes of downtime at various data centres. The costs have been converted from dollars to euros and can vary per company (this depends on the size of the data centre).
Preventing downtime is very important
We can thus safely conclude that downtime is a huge blow to your finances. You would do better to spend that money on other things within your company. THP is happy to have a look with you at how you can prevent downtime.
If you are wondering how to look after the digital heart of your organisation, use our Risk Management Audit which has been especially developed for this purpose.