Downtime, What Does It Really Cost?

1st June, 2017 by

There’s never been a better time to ask yourself this question.

Ask Mr Alex Cruz, after all the CEO of British Airlines (BA) could be a great person to talk to. Today’s estimate suggests that BA’s short-term bank holiday IT blackout has cost them 150 million in compensation alone. That figure makes no consideration of the mounting bad press and scrutiny the company is also facing. The BA story is nothing unusual, a report into Fortune 1000 companies suggested that The average cost per hour of an infrastructure failure is $100,000.

But if the BA story tells us anything it’s that the cost of downtime is greater than lost revenue. Public outrage can be a furious thing and BA is facing the full front of it. When we let customers down, it draws their attention. British Airways, for example, is now having to justify a boatload of redundancies, in addition to defending their decision to outsource the majority of their technical support to India. They are adamant that shifting a large portion of their system to India had nothing to do with the fiasco. The population at large doesn’t seem to believe them.

Downtime Backlash

It’s not only the lost revenue and the compensation bill either. BA’s parent company AIG saw their shares drop 4% after the bank holiday debacle. If that wasn’t bad enough, the whole thing only adds fuel to the fire British Airways is already facing for cutting costs and lowering the quality of their service.

What boils the blood for many, though, is that this isn’t an isolated incident. Only last year, thousands of customers at London City Airport had to contend with delays, cancellations and chaos. That time around was a different IT issue, which grounded their operations at London City Airport.

The crucial question we need to ask is: Where do we place the importance of our IT systems? It is evident British Airways drew their line in the wrong place, and it could take years for the firms to recover from the subsequent disaster.

How Vital Are Your Systems?

To make the correct call, you need to know how vital your systems are. Ask yourself, how would your firm cope without the internet, its website, communications, payroll and every other aspect of your day to day business? Ask yourself if British Airways had done those sums, would they have risked saving a few percent by shipping jobs overseas?

Once the genie is out of the bottle there’s no way to getting it back in. It must be better to know the cost before letting the cap come off.

British Airways is a very newsworthy example and footage of frustrated passengers trapped half a planet away is a prime pick for the 6 o’clock news, but what about other firms? Take a firm which relies on the internet, a business that can’t function without the online world.

Cost/Benefit Realizations

Take Facebook, for example. Facebook is actually a great indicator of the importance of keeping downtime in check. The company is so serious about its systems that the last major outage in the firm’s history was in 2014 and lasted all of 19 minutes. Still, in those 19 minutes, Facebook lost half a million dollars in revenue alone. It’s worth noting that revenue for Twitter in the same period rocketed. The numbers were in fact so similar that Facebook may as well have written them a check. There was little to no lingering customer resentment due to the black-out’s short window, but the upsurge in Twitter traffic just shows how loyal Facebook’s customers were likely to be in the event of a more major mishap. Remember, this was three years ago, can you imagine what the numbers would look like if it happened tomorrow or for a whole weekend?

A study last year by UK firms Opinium and Beaming estimated that UK firms suffer from an average of 43 hours of downtime each year. The study, which compared figures from over 500 companies, found that the UK economy lost over £12.3 billion in revenue from a staggering 149 million hours of downtime. This lost productivity costs each firm around £543 per employee in unnecessary overtime and related expenditure.

There is no easy way to say it, if you rely on technology like the internet or communications then you need to sort your IT out and you need to put it at the top of the agenda.

We understand the needs of our customers and we realize this as the internet gets faster and consumers get more demanding, we know how foolproof our services need to be.

(Visited 3 times, 1 visits today)