The Cost of Downtime in Business

Everybody wants to reduce expenses for their business. Reducing expenses ultimately means increasing your bottom line, which in turn means increasing the amount of money in your pocket.

Once upon a time downtime was seen in the form of something like a temporary power outage. However, with the current digital ecosystem, downtime has adopted a whole new meaning.  

Downtime is costly for all businesses, but especially for small businesses; it can deliver a noticeable blow to your finances. And the cost of downtime continues to be on the rise.

Information Technology Intelligence Consulting does a study each year to see just how much downtime costs. In the 2019 Global Server Hardware, Server OS Reliability Survey, which polled over 1,000 businesses worldwide from November 2018 through January 2019, ITIC found that a single hour of downtime now costs 98% of firms at least $100,000. And 86% of businesses say that the cost for one hour of downtime is $300,000 or higher; this is up from 76% in 2014 and 81% of respondents in 2018 who said that their company’s hourly downtime losses topped $300,000. 

However, did you know that downtime is not just seen in the form of network downtime?

One of the biggest financial losses in a business when it comes to downtime is actually employee downtime – when employees are spending company time doing their own thing. Do you know just how much downtime is actually costing your business?

Calculating the cost of downtime

There is a formula for just about everything, so of course, there is a formula for calculating downtime, too.

The following percentage is known as the utilization percentage:

Lost productivity = employee salary/hour x utilization % x number of employees (with the same utilization %)

This can help you determine how much their lost productivity is actually affecting your bottom line.

In addition to their salary, you are also putting expenses into their benefits, their office equipment, and ultimately the space they are using.

While we are not saying this should be something you put all your time and energy into, this is something to help you determine if someone’s loss in productivity is really worth pursuing consequences. This is also a great way to demonstrate to your employees why the company is so serious about productive hours.

Downtime is more than dollar bills

While downtime can directly correlate with things like the cost of rebooting your technology or having a service request fulfilled, it can also be seen in other ways that are not necessarily an immediate withdraw of dollars from your bank account.

When your business is in the middle of a network outage, customers are not receiving the full experience or possibly even good experience. And if a customer’s needs are not being met appropriately then you are risking their business and possibly even your reputation.

The same thing goes for when employees are spending company time doing something that is not related to their job or the task at hand. How can they be fully serving the customers while focusing on something completely unrelated?

One article notes that a recent survey of found human resources representatives estimates employees waste about 94 minutes of each workday, not including lunch and breaks. Additionally, that same survey found that employees claim to waste about 3 hours.

Now, let’s plug that into the utilization percentage above – startling, right?

Minimizing downtime

When it comes to minimizing downtime, it takes a strategic plan, both in IT and for your employees’ overall productivity.

You will never be able to completely eliminate downtime, but with a plan and procedure in mind, you can minimize it and ultimately save your business money.

How do you plan to start minimizing downtime?