Recently there was an article that discussed the measurable and unmeasurable costs of downtime. To quote from the article:
Measurable Costs of Downtime
Once you’ve understood the scope of the impact, you can quantify the actual dollar value of losses associated with downtime. In general, measurable downtime costs fall into the following areas:
- Direct and indirect employee costs with respect to loss of productivity. This is very simple to calculate (multiply the number of employees who can’t work as a result of downtime by their hourly labor cost, and then multiply that by the number of hours of downtime).
- Added work-related costs such as needing to hire temporary workers or pay workers overtime to compensate for downtime.
- Recovery costs from IT or response team overtime, outside support services, and other opportunity costs or expenditures required to bring the system back up.
- Business or opportunity costs that can be quantified from lost sales or lost productivity, especially when contrasted to expected output under normal circumstances.
- Contract and penalty costs in which customers covered by a Service-Level Agreement (SLA) must be paid out in the event of an outage. In fact, if the impact of the downtime on your customers was sufficiently severe, you may even face lawsuits or other harsh repercussions — especially in regulated industries.
Unmeasurable Costs of Downtime
However, while there are many measurable costs of downtime, perhaps some of the most important costs are those that aren’t inherently measurable, as they significantly impact your organization’s culture, operational framework, reputation, and competitiveness, among other things. Some of the costs of downtime that are difficult to measure but impossible to ignore, include:
- Damage to employee morale, as bouts of downtime both raise doubts about the company’s viability and the competence of the team, as well as precludes employees’ ability to get important work done.
- Blocked development and IT projects, as disruptions to systems that are crucial for ongoing development or IT work both interrupt work progress, as well as increase cognitive load on the technical team.
- Irreversible loss of key technology-based market opportunities, as your company’s reputation as a preferred choice among ever-growing competition is largely dependent on how effectively you can keep your systems reliable, up and running at all times.
The costs associated with downtime, as well as the probability for specific failures, should be calculated on a frequent basis. This will allow IT managers to prioritize what should be tackled in a methodical order.
For the full article, see here.