Top 5 Dangers of IT Downtime for Your Company

Employee Productivity Affected by DowntimeThe rapid adoption of cloud computing has many organizations playing catch-up to compete, moving their data off-premise without giving enough thought to the reliability of their provider. Many rush to a public cloud like Azure, attracted by name recognition, only to end up in a situation where their provider goes dark for hours (like in 2018, when one of Microsoft Azure’s data centers in San Antonio, Texas was hit by a “severe weather event, including lighting strikes”). It’s only then, when their data, applications, and websites are unavailable, that companies begin thinking about downtime repercussions. So, what are those repercussions? Here are the top five.

 

Top 5 Dangers of Downtime


1. Employee Productivity

No company wants their employees twiddling their thumbs; after all, time is money! But in our digital world, downtime can leave employees with nothing to do but just that. In addition to not being able to do their work, downtime costs can also be evaluated in terms of the wages or salaries being spent on employees who aren’t being productive. Consider an online retailer with 50 employees, each making an annual salary of $50,000; that’s about $25 per employee, per hour. If the system goes dark for an hour, that’s $1,250 spent on employees who aren’t performing. While that may not sound like much to some companies, it quickly adds up if downtime is occurring frequently throughout the year.

 

2. Loss of Business

Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” The truth is, it can get ruined in mere seconds, especially if the company depends on its website for online business and sales. Research shows that 47% of website visitors expect load times of less than two seconds, and that 40% will exit the site after three seconds (with many more falling off every second after that). In today’s marketplace where most products offer similar features, customer service is often what sets companies apart, and in fact, customers are four times more likely to move on to a competitor for service-related problems than issues related to price.

 

3. Damage to Reputation

Along with loss of business, downtime can ruin a company’s reputation. Consider Macy’s. The once-great retail giant, which was already suffering from plummeting revenues, experienced an outage on Black Friday in 2016 that shut down their website and credit card machines. Online shoppers were greeted with a “back in a few” message on the Macy’s website, while in-store customers had to wait in long lines—or abandon their goods. Hoping for a rebound in 2017, Macy’s experienced yet another brand-damaging outage. Of course, it’s not just those affected who are left with a bad taste in their mouth. Today, irate customers will take to Twitter or Facebook to vent their frustrations, getting the message out to millions more. That’s just what happened to Macy’s; one customer tweeted that she left $300 worth of items behind, while others warned friends not to go to Macy’s because it was “getting ugly out [here]."

 

4. Make-Goods & Lawsuits

Following any significant downtime, many companies try to mitigate brand damage by making it up to customers. In 2016, following a major outage that shut down the company’s command center, more than 1,800 flights had to be cancelled. Delta wound up providing a refund to every customer, and offered them each an additional $200 in vouchers. Refunds aside, those vouchers cost the airline $360,000. Of course, that amount may pale in comparison to potential lawsuits. Downtime that has an impact on production, delivery, or the finances of a customer could invite litigation. That’s what happened to Korea’s largest cryptocurrency exchange in 2017. During the downtime, which lasted several hours, the price of Bitcoin Cash plunged from $2900 to $1100, and investors were unable to sell. One of the plaintiffs claimed to have lost $250 million as a result of the outage, and won.

 

5. Loss of Data

Lastly, outages that shut the system down without warning can result in the loss of unsaved data, and cause existing files to become compromised due to improper shutdown procedures. During downtime, failures in security can also invite cyberattacks and data breaches, making a bad situation even worse. While most companies protect against these situations through automatic backups, small or medium-sized businesses may not have those redundancies in place. These are intended to act as a real-time fail-safe measure against outages. Without proper redundancies, these companies can be temporarily brought to their knees.

 

Protecting Your Organization from Downtime

When looking for your ideal cloud provider, the most important question you can ask to understand their reliability revolves around uptime, which refers to how fast the provider’s data center can have you back online following an interruption.

The industry standard for uptime is measured in nines, each nine representing an amount of downtime. A starting point for some cloud providers may be 99% (“two nines”), which is equivalent to about 3 days of downtime per year, while 99.9% (“three nines”) reduces downtime to about eight hours per year. Most organizations find their comfort and cost level at 99.99% (“four nines”), which further reduces downtime to under an hour per year—just a few seconds per day.

In addition to nines, look for a provider offering each of the following:

  • Uninterrupted Power Supply (UPS)

  • Computer Room Air Conditioning (CRAC)

  • Encryption for data-at-rest and data-in-flight

  • Safe proximity from flood zones

  • Hurricane structure rated facilities

  • 24/7 surveillance and physical security (HID card, PIN, biometric access)

At DSM, Florida’s predictable cloud provider, you know what to expect; we pride ourselves on transparency in our conversations, our SLA agreements, and in the work we perform. We offer 99.99%+ uptime, plus each of the precautions listed above. Learn more about finding peace of mind by downloading our whitepaper below; or you can contact one of our experts at 877-376-6381.

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