How to Calculate the Cost of Downtime for Your Business

In the business world, every second counts. Downtime can turn those precious seconds into costly minutes, hours, or even days. While downtime is, to some extent, a fact of life for all businesses, there are ways to get around it. Keep reading to learn how to calculate the cost of downtime for your business and what you can do to mitigate it.

HOW MUCH DOES DOWNTIME COST?
The cost of downtime is determined by many things, including industry, business size, and tools and applications involved. In 2019, IBM studied 100 IT organizations to understand the reality of downtime and found that:

• Unplanned downtime costs more, but planned leads to unexpected and unavoidable business costs.
• IT leaders primarily struggle with disrupted business activities during planned downtime and data recovery during unplanned downtime.
• Investments in the right technology can maximize availability and minimize disruptions, driving productivity, and revenue.

According to the study, these businesses averaged 830 minutes of planned downtime the previous year, which resulted in $5.6 million of lost revenue. Another report found that the average cost of an unplanned data center outage is nearly $9,000 per minute.

CALCULATING DOWNTIME COSTS FOR YOUR BUSINESS
To estimate your company’s probable cost of downtime, use this formula based on your business size and the number of minutes your most recent incident lasted:

Minutes of downtime x cost-per-minute = downtime cost
For small businesses, it’s recommended to use $427 as cost-per-minute. Medium- to large-sized organizations should use the $9,000 figure cited above. Here’s an example: say your last planned outage lasted 20 minutes. You run a small business, so you would calculate your downtime as follows:

20 x $427 = $8,540 in downtime costs

If $8,000+ for a 20-minute incident sounds alarming, just imagine how quickly costs can add up for large businesses that experience an hour or more of downtime. It goes without saying that minimizing downtime, planned and unplanned, is in your best interest.

STRATEGIES FOR LIMITING DOWNTIME
There are many effective strategies for reducing downtime, and a little pro-activity can go a long way. Here are a few tips for minimizing downtime.

Establish Regular Maintenance Schedules
Regular maintenance is key to addressing potential issues before they become critical. Be sure to perform routine checks and updates, as these can help identify and fix minor problems that might otherwise escalate into downtime events.

Utilize Redundant Systems and Backups
It’s always good to have a plan B on hand in case one system fails. Redundancy in hardware, software, and data storage provides a safety net and will allow operations to continue seamlessly during an unexpected failure.

Create a Disaster Recovery Plan
No matter the emergency in question, you’re always better off having a disaster plan. It’s not always possible to prevent downtime, but a well-outlined disaster plan can help minimize disruption and get operations up and running again in no time.

TSP CAN HELP CALCULATE THE COST OF DOWNTIME FOR YOUR BUSINESS
Downtime is bad news for any business and can add up to thousands of dollars in lost revenue in mere minutes. The good news is you can limit events with the right tools and preparation, and TSP is here to help you do just that. Get in touch with us today to learn more about our solutions and how to calculate the cost of downtime for your organization.