Share This Article
IT downtime is getting worse. One in five organizations experienced at least one severe IT outage between 2019 and 2022. 60% of IT outages in 2022 cost over $100,000, and 15% cost over $1 million. These numbers are sharp increases from rates in 2019.
It’s clear that downtime is becoming much more common and the costs associated with it are skyrocketing.
Downtime refers to when IT systems are offline, unable to communicate, or otherwise unable to function as intended. Planned downtime involves taking systems offline to perform routine maintenance, upgrade systems and hardware, and other scenarios where interrupting service is needed. Unplanned downtime is when systems unexpectedly stop working. It’s more of a wildcard — harder to predict and often expensive to deal with.
This guide will cover measuring the cost of IT downtime, highlight some impacts and common causes, and discuss strategies to mitigate costs to keep your company from grinding to a halt.
Measuring the Cost of IT Downtime
If company decision-makers don’t know how important that expensive software upgrade is when compared to something with a more obvious benefit, they may shift funding elsewhere. Measuring IT downtime cost is a powerful way to show how important it is to fund IT.
The first step for measuring IT downtime cost is determining what metrics would be most helpful to communicate the cost of downtime. Once you have an idea what numbers you’re looking for, you can make those numbers as accurate as possible by combining data from your company with estimates and figures from other similarly sized companies in your industry.
Calculating Downtime Costs
For a quick back-of-the-envelope calculation, you can use an estimated downtime cost-per-minute multiplied by the number of minutes a downtime event is expected to last.
For a more accurate estimate, you may want to calculate total cost of ownership (TCO) and a few key performance indicators (KPIs).
Key performance indicators measure how a company is performing. For IT downtime, good KPIs to track include server downtime, Mean Time Between Failure (MTBF), and ROI.
Cost Variances by Industry
Downtime costs vary from industry to industry. When you’re comparing how your organization is performing, you’ll want to look for statistics that match your industry to get an accurate picture of how well your business is doing.
High-risk industries include banking, finance, government, healthcare, manufacturing, and media. These industries are more likely to experience high costs from IT outages, often in millions of dollars. Using data from a low-risk industry if you’re in a high risk one can set you up for failure by providing estimates orders of magnitude too small.
Another thing to keep in mind when comparing companies is the business size. The larger the company, the more each minute of an outage could cost — and the more critical it is to plan ahead.
Calculating TCO for IT measures a tool’s overall costs including the expense of using, maintaining it, and what happens when outages may occur. It can help evaluate if it might be time for a change, or if you’re getting the right value from an impending investment. It can seem overwhelming if you don’t know what costs to include, so we’ve put together The IT Professional’s Complete Guide to Calculating TCO to help.
Downtime Frequency and Statistics
The number of incidents, length of downtime, and financial impact of IT outages have all sharply increased over the last three years. According to Uptime Institute’s 2022 Outage Analysis:
- Outages remain frequent with 80% of data center operators reporting an outage over the previous three years.
- The cost of downtime has shot up: in 2019, 39% of failures caused over $100,000 in losses. In 2022, that percentage has increased to 60%.
- The time to get systems back online has increased. In 2017, 8% of outages took longer than 24 hours to resolve. In 2021, almost 30% of outages weren’t resolved within 24 hours.
The numbers are clear: downtime is on the rise, it’s becoming harder to resolve, and it’s costing companies even more than it used to.
Impacts of IT Downtime
IT downtime can have impacts across every branch of your organization. Frequent or severe outages can even damage your company’s reputation and reduce customer trust.
Immediate Impact: Lost Productivity
When systems go down, it causes a ripple of disruption. One of the first waves is the hit to productivity. Depending on the outage, a company’s employees might not be able to do their jobs until the outage is resolved. Deadlines get pushed out. People have to scramble to catch up, mistakes get made, and things slip through the cracks.
The company’s IT team may have to reroute resources and employees to resolve the outage, putting other projects on hold. Preventative measures like maintenance and upgrades might have to be delayed to cover the cost of an outage, increasing the likelihood of more downtime in the future.
Customer Impact: Frustration and Lost Trust
Customers lose trust when an organization doesn’t deliver on their expectations. Downtime may prevent them from accessing the products and services they purchased from you. It can delay customer service, put a halt to communications, and cause problems with processing financial information.
In other words, it makes your organization unreliable.
Financial Implications
The financial implications of downtime can cost millions of dollars in lost revenue, lost productivity, fines, legal fees, settlements, damaged products, supply chain delays, and more.
SLA Violations
Service-level agreement (SLA) violations occur when a business fails to meet the standards set by an SLA. SLAs often specify things like uptime guarantees, response times, performance levels, and quality standards. Violating these factors breaks customer trust. Often, SLAs have clauses about penalties to be paid to affected customers if violations occur.
Hidden Costs: Beyond the Obvious
There are costs to downtime that are harder to measure, like customer trust, reputational damage, and lost potential business. These have a big effect on a company’s bottom line. If you develop a reputation for unreliable service, potential customers are heavily motivated to look for your competitors.
Common Causes of IT Downtime
Security and data breaches like ransomware are the biggest cause of IT downtime according to 76% of corporations surveyed in 2022. Failures, human error, maintenance, and technology issues contribute to security and data breaches, and can cause outages on their own.
Outages and Failures
Power outages are one of the most obvious causes of an IT outage. Small scale power outages can be mitigated by maintaining company equipment, but power outages affecting entire grids are common as well.
Natural disasters like hurricanes, earthquakes, solar storms, and thunderstorms can cause catastrophic power outages that may take days or weeks to resolve.
Human Errors
Changes to how companies use IT, like the recent explosion in remote work, have made it more difficult to track what tools employees are using. With workers now spread out geographically, IT systems have followed suit. IT sprawl is an overabundance of software, tools, infrastructure, and other purchases meant to solve problems — but too many tools create clutter and introduce new vulnerabilities.
Human errors also cause outages in other ways, especially with cybersecurity. Phishing attempts, lost verification tokens, and other mistakes can open vulnerabilities for hackers to slip in and cause a shutdown.
Maintenance Activities
System maintenance, updates, and hardware upgrades sometimes require a planned network outage. Since these are usually accounted for in advance, they can be scheduled for times that are less disruptive.
Software and Hardware Issues
Hardware fails, and software has bugs. Sometimes failures and bugs are significant enough to cause system shutdowns and network failures. These are often hard to fix quickly — it can be difficult to pinpoint the source of the shutdown, so it can be difficult to estimate when systems will be back online.
Strategies to Minimize IT Downtime
It’s clear that downtime is a growing risk, so how do companies manage the costs? There are strategies to reduce the likelihood and length of downtime. Good system management is a strong building block for testing new strategies, identifying issues, reducing IT sprawl, and more. Some other ways to reduce downtime include:
- Using cloud and hybrid architecture
- Proactive maintenance, patching, and monitoring
- Using redundancy and failover systems
- Training employees and using best practices
Utilize Cloud and Hybrid Architecture
IT stacks can become riskier and difficult to manage if they’re spread out across multiple solutions. Switching to a cloud-based or hybrid architecture can help offload single points of failure, and even work to consolidate your stack to reduce interruptions of service that can stem from unstable integration points.
It can also reduce the impact of downtime — if your systems are cloud-based, they aren’t dependent on your servers and failover procedures. Modern cloud providers have robust systems capable of maintaining uptime even in dire situations, allowing your organization to function even if local conditions are difficult.
Proactive Maintenance, Patching, and Monitoring
Proactive measures like regular maintenance and patching can help fix problems before they become big enough to cause system failures. Regular patching and updates are a critical part of cybersecurity, as well. When exploits are found, software developers are often quick to put out a patch to fix the vulnerability, but this only works if the patch is installed. Once a vulnerability is well-known, the risk of it being exploited drastically increases so updates should be a priority.
Monitoring system health can identify problems while they are still small and ensure compliance with IT policies. It can also provide data on how well IT tools are performing, which can be used to create better cost estimates of downtime.
Implementing Redundancy and Failover Systems
Single point failures can cause systems to go down, but many of them can be avoided entirely by having redundant systems in place. Hybrid architecture is a good example of this — if the cloud goes down, a company’s servers should still be able to operate, and if the company servers go down, the organization can rely on their infrastructure in the cloud.
Having redundancy can make a downtime event into a blip on the radar instead of a multi-day outage.
Employee Training and Best Practices
Employee training and best practices go hand in hand. IT policies can make downtime less likely and easier to recover from, but they only work if employees follow them.
Educating employees on why the policies are important and the risks involved can help people understand why the policies should be followed. An example would be IT unification. Some employees might have preferences for other tools, but using a unified stack improves security.
Case Study: Building Downtime Resilience
The Inland Valleys Association of Realtors (IVAR), a nonprofit based in Southern California, was looking for a backup directory service in case an earthquake caused failures to their current setup. Their systems were secured on a single server running an outdated operating system — a single point failure that could make disaster recovery a nightmare.
When the COVID-19 pandemic hit, IVAR was able to hit the ground running with remote work because they had set up JumpCloud as a cloud directory running in parallel with their old system. What could have been weeks of downtime as the world scrambled to set up remote work turned into discussions over a weekend. Their employees were able to start working from home right away, securing their income and safety during a crisis.
Strengthen Your Resiliency with JumpCloud
JumpCloud is an open cloud directory that can be a standalone solution or run in parallel to an existing setup. It can unify your IT stack, improve security, and act as a key part of a disaster recovery plan to create a more reliable IT setup. You can test out JumpCloud’s features without impacting your live environment through our Guided Simulations, or if you’d like to talk to an expert, request a personalized demo.
If you’re looking for the right tools to slash downtime costs and improve stability, security, and business continuity, you can check out our pricing. We have multiple packages to meet your needs, and offer special pricing for educational institutions, nonprofits, partners, and more.
Have questions about downtime costs or JumpCloud’s offerings? Please reach out to our team, we’d love to hear from you.
