Measuring the cost of downtime to your business.

14th April 2016

Measuring the Cost of Downtime to your business

All businesses will experience some form of downtime and some point, irrespective of your business size, industry or IT budget. It is vital that you measure the potential cost of that downtime and, as technology is increasingly crucial to the success of your organisation, it is vital that you work out where your greatest risks lie so that you can formulate strategies to cost effectively mitigate the risk of such downtime.

There are a host of reasons why you could experience downtime. The list of possible risks is a long one and could include events such as natural disasters, hardware errors, system crashes, power outages, rogue employees etc. Your challenge is to mitigate these risks and put strategies in place to return to full operations as soon as possible, limiting the cost of the disruption.

To determine what an outage would cost you, you need to ask the following 5 questions:

  1. Which of your systems are critical to your business operations?
  2. Which employees would be affected by a loss of access to your critical systems and how will they be affected?
  3. What is your total hourly wage bill for those employees?
  4. How long would you expect an average outage to last?
  5. What impact would an outage have on your business reputation?



1. Your Critical Business Systems

If you are in finance, your order execution and management systems are critical and if you are in retail or the restaurant trade, your EPoS is similarly critical to your successful operations. That is because without those systems, your respective businesses can no longer trade, which has an immediate impact on your bottom line.

Other systems that could be seen as critical include access to your email and voice communications.

Less critical systems could include back office systems, CRM access and the like, where a lack of access would be an inconvenience to you and your team, but you could continue to trade for a time without them.

2. Affected Employees

Once again, depending on your industry and setup, you will find that different people are affected differently by the non availability of critical business systems. To continue with our examples above, without your order execution system, your traders will not be able to place trades, which is a vital function. Without your EPoS, your retail and restaurant service team will not be able to process orders and payments.

It is important that you work out the percentage of time employees interact with your critical systems and how much of a part they play in their role as a whole. If half of their time is using your critical systems, they could still be productive for the the half of their time where they don’t need your critical system.

3. Employee Cost

Now that you know which of your team and how much of their time will be affected by a particular outage, you can then determine their effective hourly rate and the cost to your business of them not being able to work as normal.

You may find that access to critical systems are more important during specific parts of your day, so there would be more of a cost during such a busy period as opposed to a period where access isn’t as vital.

A day without EPoS access could, for example, mean a day where your restaurant or retail establishment can not trade, which would impact your business massively. Half a day would still be incredibly costly, whereas an hour may be a huge inconvenience, but potentially manageable.

4. Length of Outage

You can now run simulations, working out how the length of an outage would affect you cost wise, again taking into account the time of day for such as outage.

A loss of EPoS for an hour over lunch would be a disaster, whereas a loss at 10am wouldn’t have as much of an impact. Similarly, your order execution system going down at any time during the trading day will delay time sensitive trades and will cost both you and your customers, but an after hours snag can be managed. It almost goes without saying that the longer the outage, the greater the cost.

5. Loss of Reputation

One of the hardest costs to calculate, but potentially one of the biggest, is the loss of reputation when a outage occurs.

As suggested above, an inability to make time sensitive trades may mean a valuable client will move their ongoing business away from you, which will have a direct impact on your business, in both the short and long term. They may, in turn, relate your downtime story a number of times, and that negative word of mouth may affect your ability to on-board new customers. A worst case scenario is if your outage gets covered in the press and by a wider community, which will mean a lot of time and expense to get some goodwill back.



Having determined how much any downtime will cost you, you can then look to make informed decisions as to mitigating your risk and putting solutions in place to recover from that downtime.

For a scenario where you absolutely can not afford any downtime, you would want to have completely redundant infrastructure at multiple sites, with real time replication of business data between those sites. On the other hand, you may find that you are willing to risk a few hours of downtime and, as such, you can adopt a less costly disaster recovery solution where it takes longer to get you operational again, with the possibility of some data loss.

Having measured the cost of downtime to your business, you then need to decide what level of disaster recovery suits your needs, reviewing your decision and going through the process outlined above every time your circumstances change.

Once agreed, it is important that you test your disaster recovery plans often to ensure that they are fit for purpose. That gives you the opportunity to adapt your plans as appropriate.

Our engineers have a great deal of experience working with organisations in a number of industries, helping determine the cost of downtime to their business and advising on the best strategies to get them up and running again quickly.

Contact us on 0333 123 0360 or contact us online to engage with our team, ensuring that you have the right plans in place for when disaster strikes. 

Read more about our Online Backup and Disaster Recovery Services.


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