5 ways downtime negatively affects your business

Every time a big business faces unanticipated downtime, it's all over the news. 

By Max Burkhalter
July 26, 2021
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Every time a big business faces unanticipated downtime, it's all over the news. You've seen headlines about a major retailer's website crashing down on Black Friday or canceled flights due to network outages.

Business owners tend to overlook what downtime could mean for the business. According to Statista, 25% of respondents worldwide reported that the average hourly downtime costs of servers in 2020 were between $301,000 and $400,000.

Here are five ways downtime can damage your business.

1. Reduced Productivity
Downtime impacts employee productivity, then puts increased demands on them to catch up, increasing stress. The Washington Post reports that that disruptive interruptions may eat up to around 240 minutes per day. On average, restarting after an interruption takes 84 minutes every day. When systems are constantly going up and down, more time is actually lost than simply the moments when nothing works.

2. Diminished Revenues
Unscheduled downtime impacts every business in different ways, so it is essential to understand the financial impacts. A high rate of revenue loss during downtime is attributable to energy services, telecommunication services, financial services and manufacturing.

The easiest way to calculate the potential revenue loss is to use the following equation: Lost revenue = (gross yearly revenue/total business hours in the year) x number of outage hours x percentage impact. While it may seem like a tedious process to quantify lost revenue, it is important to understand how the business is truly impacted due to downtime. Losing money due to down time can eat into products at a staggering rate.

3. Lost Data
Mission Critical points to a report that found that around 50% of employees working with an enterprise have lost access to critical data during outages. The number suggests that the problem is rampant with no set solution in place. The problem is far from temporary as acquiring the lost data relies on the time of the last backup. If the last backup was 12 or 24 hours ago, you may end up losing customer orders, leading to a ripple effect throughout the workflow.

4. Security Breaches
Downtime and data breaches are two scenarios that do not fit well together. In many cases, data breaches may lead to downtime and vice versa. During downtime, employees may find themselves using third-party services such as Dropbox or other unvetted services putting the company's sensitive information at risk of a security breach.

Security breaches are on the rise with many companies facing external data breaches in the past five years. TechRadar notes in a survey of small- and mid-sized businesses that cybersecurity (52%) and software failure (53%) are the most common causes of downtime.

Around half of these data breaches are attributable to human error and system malfunction, costing an average of $3.25 million to the business, according to Varonis.

5. Indirect Losses
While the costs mentioned above were quantifiable for the most part, many "hidden" costs cannot truly be quantified. These include IT initiatives that were abandoned or stalled. This means that every time downtime occurs, all other development projects are placed in the backseat, and important services are interrupted.

The employees may face lowered morale and the damaging effects to the company's culture can never be truly determined. In the end, downtime leads to a damaged reputation in addition to missed marketing opportunities. The losses may be irreversible.

With various factors such as severe weather, natural disasters, cyberattacks, human errors and component failures, unplanned downtime can negatively affect any business. By improving your network and systems, installing firewalls, and implementing employee training to prevent downtime caused by hackers, you can mitigate your risk. Perle can help you with hardware designed to support uptime. Read our customer success stories to learn more.


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