The Cost of Downtime
Updated: Nov 10, 2020
Don't underestimate the cost of downtime to your business!
By the end of 2020 Amazon's net revenue will reach $321 billion. Amazon was bringing in $610,730 per minute! On June 2007, Amazon.com - the primary portal to purchase goods through Amazon - crashed for roughly two hours. When working this out, this outage would have cost Amazon a little over $5 million. If that same outage happened in 2020, the cost of a 2-hour outage would be $73 million.
While most businesses are not earning the billions that Amazon does, knowing how much downtime costs is essential to proving the investment in your technology and technology providers. It's also important to note that not all companies bring in all their income from their website. However, there are many other ways that outages affect companies.
I was once working on a project where we were at crunch time. We had a team of 12 who had 24 hours to go before a critical delivery was needed. Most of these people were contractors. The inevitable happened, and the development environment went down for unscheduled maintenance. No problems for the infrastructure team, as dev environments are not critical.
With a total team cost of around $8.6k per day, we were throwing away over $1,000 per hour with the team unable to do what they were paid to do. Along with this, there was a potentially missed deliverable that would have (but didn't, thankfully) caused a blowout in project costs and frustration from the management team.
During a system outage, a client of ours lost one of their critical reporting systems. Their understanding was that there was a backup and it would be an easy restore. However, it wasn't. The restored version merged test and production versions because of incorrectly set up and untested backups. The system was complex in configuration and had integration points throughout the company so rebuilding the configuration was challenging to say the least. It took 4 weeks to rebuild, plus another 2 to test.
The total cost of consultants was around $32k. When we became involved, we insisted on testing backups regularly, before they needed to do a restore. It only takes a small amount of time to test a backup.
Several intangibles can't accurately be costed. A website being unavailable or overloaded for hours could hurt a brand. A malware attack could cause legal issues that run into huge costs but are incredibly damaging. Incorrect data shared with users could create privacy nightmares, and credit card details lost to hackers has affected even the largest companies.
Compliance, privacy, reputation and image cannot be undervalued.
Outages cost companies money. Increasing your uptime from 95% to 99% can mean your business is available an extra 345 hours a year. As a business with revenue of $2m, this 345 hours is worth around $80k in revenue alone without restoration costs, lost productivity or intangibles. The cost of downtime is too high for most small business.
Over the past 5 years, Teamscal has worked with companies to bring their software ideas into reality. While it’s exciting to see these ideas come to fruition, as part of this process we have, by default, picked up a lot of the support for systems that we are replacing. Keeping a business system running and stable while reimagining how customers or internal staff interact with a core system is truly important.
We have taken the time to refine our processes, and while still focusing on our core strengths, Teamscal is now able to offer this service to our clients. During the discovery phase, we work with our clients to come up with a realistic figure around what downtime costs. The work we do in this phase gives decision makers an important ROI figure and also helps setting Service Level Agreements to ensure we know what is essential and what isn't.
Michael Lobb works tirelessly to help clients solve business problems using technology and heads up a team of developers, designers and miscellaneous nerds at Teamscāl. In his spare time, he likes long walks in the park with his dogs, Chappie and Pocky.