Server Failure: The True Cost Of Downtime For SMEs

The True Cost Of Downtime For SMEs

The True Cost Of Downtime For SMEs

We can’t stress the importance of preventing unplanned downtime enough. Server downtime means your business has experienced a disaster which is inevitably going to cost you money in profits and repairs. Downtime is expensive no matter how you view it. But, what exactly is the true cost of downtime? Let’s take a look.

Why is the cost of downtime so high?

First, there are the direct losses in revenue. An hour without your online store functioning is an hour without sales. If a server overload caused the outage from too much traffic, you’re not just losing your regular amount of business; you are missing an hour of peak business sales.

Then there are the expenses you will incur. Unless you have a contract with an IT service provider, you’ll need to pay for the additional help of an IT support technician. Their hourly wage will start to add up fast. Not to mention all the staff you are paying to do nothing while your network is down. If you need new IT infrastructure, this is also going to cost you.

On top of this, there are the indirect costs of downtime to your business. A reduction in customer conversion as your site displays a 404 error often means you will lose customers for life, not just for the hour. There may be legal repercussions from a cyber attack, and you will need to pay fines or legal fees. Can we put all this information into figures?

Putting it into numbers

IT downtime costs businesses in the UK an average of £3.6 million every year, or between an average of £4300 and £258,000 per hour. Companies lose a massive 545 hours of staff productivity per year due to downtime. Based on the mean hourly wage, this equals £7,235 spent on an unproductive employee during downtime. These figures are based on averages. The impacts of unplanned IT downtime will fluctuate with business size.

Smaller businesses

According to research carried out by telecoms firm, the Daisy Group, SMEs suffer an average of  45 minutes of downtime per week. This is more than £500 per employee, per year in lost productivity. The IDC, the global market research firm, says 40% of SMEs don’t back up their data and don’t have adequate business continuity plans. As a result, they are likely to lose an estimate of £5600 per hour, during the event of downtime. The widely used formula to calculate this is:

Estimated average cost of downtime per hour = Employee costs per hour x Fraction employees affected by outage x Average revenue per hour x Fraction revenue impacted by the outage.

This does not include the costs of emergency IT support, new infrastructure, loss of customers or legal fees which can all be much more difficult to calculate. This is why it is imperative you create a relationship with an IT support company who can help you. They will protect your business from unplanned downtime and build a business continuity plan to keep the costs of downtime to a minimum.

We have the knowledge and experience to show you the best ways to minimise the cost of downtime by providing you with a reliable service. Get in touch with us today on 01204 860 050, to take the first steps towards making your business more resilient.

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