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September 27, 2010

Downtime costing European business EU17bn a year

Recent survey shines light on cost of downtime

By Cbr Rolling Blog

Downtime’s bad, right? Even planned downtime’s hardly great, especially when customers are inconvenienced and in a global market, one country’s 3-5am server outage for a vital upgrade is the middle of someone else’s shopping or business day. But unplanned downtime is the pits – this is when the computers break and basically, so does the company.

But have you ever calculated exactly how much this costs as a real pounds, shillings and pence figure? Software giant CA Technologies, which since its re-branding styles itself as an IT management player primarily, has taken some pains to put some science into answering that question, and it has to be said has come up with some interesting answers.

Its July 2010 poll into the ‘avoidable’ cost of downtime claims that UK firms may be losing as much as £2bn worth of lost business due to an average 300,000 annual downtime hours. This study breaks that £2bn down into an average £208,000 each, incidentally. (We’ll get to the methodological assumptions behind all this in a second, by the way.)

The total EU figure? A possible eye-popping EU17bn. Why such a high number? When business-critical systems are compromised, organisational ability to generate revenue is reduced by 22% – which, if true, is worrying indeed.

Let’s see what bases are being used to arrive at these scary headline figures. The survey included 200 answers from UK firms out of a global roster of 1,808 organisations in 11 European countries. Of the countries surveyed, companies in France experienced the highest average revenue loss from downtime, at over £424,000 a year, while Italy experienced the lowest at just under £29,000. In this league table, the UK actually came in 8th, after Finland, in terms of putative average corporate loss.

The report also says post that downtime – when IT systems are up and running again – there is an additional delay of 11 hours per year at each organisation during which time data is still being recovered. Across the UK that’s another 120,000 hours when business operations aren’t fully operational, potentially. In this post-outage period when data recovery is taking place, company revenue generation is still hampered, down by an average of 16%.

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Meanwhile, 76% of the organisations surveyed said that the IT systems and applications effected by IT outages were mission critical, with Operations (76%), Finance (52%) and Sales (39%) most impacted.

The survey was based on a total of 1808 online interviews amongst CIOs/IT Directors/IT Managers and a small proportion of COOs/Operations Directors across an even split of small (50-499 employees), medium (500-999 employees) and large (1000+ employees) companies. A small proportion of Finance Directors were also interviewed.

Data from the survey was then used to calculate the impact of IT downtime and data recovery time on the ability of a company to generate revenue. The calculation took into account the total number of hours of downtime when systems are offline; the total number of hours between systems restoration and recovery of all data; the overall, average revenue generation per country/company size/vertical sector; the impact on revenue generation during both of these periods and the overall number of avoidable IT outages a year.

You may – probably undoubtedly do – disagree and there could be other ways of slicing and dicing the data. But the point is that downtime really is a core business issue here, due to the inter-twining of ICT and business process. "Systems haven’t been so closely linked with business, certainly much more now than even five years ago," as its Senior Director, Business Development in the firm’s disaster recovery/back up business, ArcServe, Andy Brewerton, told CBR.

Can you afford to ignore this – or, worse, lose that £200k a year if you don’t have to?

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