Compuware has announced the findings of a global survey of 304 IT and Line of Business executives into the business impact of technology failures.
The study, which was conducted by independent research and consulting firm Intellitrends, found that 51% of the respondents had experienced a ‘major’ technology problem in the past three months; with the majority of respondents having experienced at least one in the past year. Almost half (48%) experience at least one IT issue that impacts on productivity and performance every week; with 76% experiencing problems a few times a month.
Yet despite the technology available to prevent such problems, respondents demonstrated no signs of improvement: 75% said that the frequency of failures is remaining the same or is even increasing.
The average short-term cost of a single ‘major’ technology failure was calculated at £6.9m, which was spread across product waste (£38k), product recall (£128.5k), and sales and marketing (£6.8m). When only including companies that had reported an impact in those specific areas, the figures show an increase in reported costs: product waste rose to £504k; product recall to £2m; and sales and marketing to £8.3m.
When taking a longer-term view, 45% of respondents reported that they had experienced a loss in market-share or brand equity as a result of a technology performance issue. When looking at what areas of the business suffer the most as a result of a technology performance incident, the majority (69%) of respondents stated that customer services was the worst affected area: this was followed by staff time/resources (41%), and sales (34%).
Michael Allen, director of APM for Compuware, said: "This demonstrates our reliance on IT and the direct impact on revenues, relationships and reputations when technology does not work as it should.
"The figures really are eye watering – especially when you consider the fact that these are not isolated events. Many companies are fire-fighting problems on a daily or weekly basis, hemorrhaging money and damaging the long-term health of their organisation.
"Despite this, companies are still not taking performance management seriously, as shown by the fact that three quarters are failing to reduce the number of incidents that are occurring. Companies should be taking a proactive approach to performance management so that they can identify and remedy potential problems before they have time to impact on the business."
When asked how they responded in the wake of a major technology failure, the purchase of new software or hardware was the most popular course of action. This correlates with the fact that the primary reason given for technology failures, reported by over half of respondents (51%), was provider failure (software/hardware); followed by utility failure (22%) and unforeseen security threats (16%).
"What is clear is that IT is no longer just an operational expense. Technology is critical to a business’ financial health and integral to all lines of business; from finance to marketing; customer service to supply chain and distribution," continued Allen.
" IT is no longer one man in a basement; the IT team is a core function that enables LoB to operate, and as such needs to be integrated into the business at all levels."
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