Calculating the Cost of Downtime

Downtime in a business isn’t fun for anyone. Not for your employees, not for your customers, and most definitely not for your IT guy. No matter what triggers a downtime incident – equipment failure, data corruption, DDoS attacks, weather events – most businesses need to restore systems as quickly as possible. Deciding how much to invest in recovery will depend in large part on the cost of downtime as compared to your company’s profitability.

How to calculate the cost of downtime

According to the IT research company Gartner, the average cost of downtime is $5,600 per minute. Note that this is an average cost – that number could be lower or much, much higher depending on your business. So how do you calculate the cost of downtime for your business?

The Cost of Downtime

Every moment, every hour that your business’ systems are offline can potentially cost you thousands of dollars. What’s worse, the longer recovery takes, the more likely it can spell the end of your company.

How much downtime can you tolerate before significant damage to your productivity occurs?  You can answer that question by examining the following criteria:

Recovery objectives

  • How many hours can your business be without its critical systems? Or more to the point, how many hours of productive time can you sacrifice?

Data storage

  • How much data do you have stored in critical systems? What is the backup schedule for these systems? Is the data stored locally or in the cloud?

Recovery process

  • How much time will it take to prepare your system for recovery?

Downtime and recovery costs

  • How many employees would be affected by a loss of critical systems? What is the cost for you to pay these employees for unproductive time? How much net revenue do these employees generate?

Don’t Guesstimate

Fortunately, there are formulas that can help determine how much downtime your business can tolerate. Lieberman Technologies frequently helps businesses assess their downtime tolerance. However, this information is only part of the puzzle.

Once you’ve determined the cost of downtime for your business, you’ll want to determine if that figure is tolerable. Many companies find that their business continuity and disaster recovery plans are inadequate based on this tolerance. This is where we can step in and help you plan for a swifter response to downtime.

Want to know more? Contact us!