The consequences of outages and downtime are vast in an era when just about every business has a digital or IT component. Mohan Kompella, vice president of product marketing at BigPanda, analyzes statistics from recent surveys on IT outages and discusses how to prevent them.
For the average consumer, downtime could range from a slight annoyance to a major inconvenience, ultimately impacting customer satisfaction. For IT teams within an organization, outages can seriously affect morale and productivity. And at a higher level, outages can impact a brand’s reputation and cause it to lose its competitive edge.
And all of this doesn’t even take into account one of the most important factors for business executives: the bottom line.
An often-cited Gartner statistic pins the cost of an IT outage at $5,600 per minute, which is certainly a significant amount. But that number stems from a blog post published in 2014, which may as well be eons ago, considering the rate at which technology and innovation have accelerated in the past eight-plus years. A more recent report from the Ponemon Institute places the cost of IT outages at $9,000 per minute, which appears closer to reality.
As is typically the case, the actual truth is much more nuanced than rounded-off figures created in part to gather clicks on the web or social media. The fact is the average IT outage is much costlier than previously reported, and variables impact said costs for individual organizations.
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A Defensible (but Not Definitive) Average
A recent survey conducted by Enterprise Management Associates (EMA), facilitated by BigPanda, found that the average monetary cost for unplanned outage downtime is $12,900 per minute, a number much higher than any typically cited across the industry. Crucially, the survey of 300 global managers, directors, vice presidents and executives found that the cost varies widely based on the size of a business.
In short, the larger the organization, the costlier IT downtime will be.
For example, the survey found that the cost of IT outages for businesses with 1,000-2,500 employees is $1,850 per minute. On the flip side, the average cost for businesses with more than 20,000 employees is $25,402 per minute, which translates to a whopping $1.52 million per hour.
This makes perfect sense on one level: IT outages create more inherent risks for larger companies. At the same time, however, smaller businesses have a higher risk of being significantly damaged by the losses caused by an untimely outage because they likely have fewer resources to aid recovery.
Of course, every organization brought its own perspective to the survey, which is why the average is not necessarily definitive. There wasn’t a formal definition of the factors that should be considered in calculating the costs of outages, and responses were split between estimating and calculating costs.
Digging deeper, when asked, “What best describes your organization’s approach to reporting the costs of an outage,†the leading response was, “Impact/costs are estimated based on averages†(39.7%). “Costs are calculated for each outage†was a close second at 32.0%, followed by “costs are only calculated when customers are impacted†(21.7%), “outages are not associated with costs†(5.7%) and “outages are not tracked as a separate incident category†(1.0%).
In addition, the number of businesses that said they report outages by the hour roughly doubled the number that said they report by the minute. Similarly, those who said their organization has a defined process to calculate the costs of outages doubled those who said costs are mostly estimates and generally accepted as accurate. And of the C-level respondents who took part, every single one said they believe outage costs are calculated and not estimated.
The Future Holds a Breadth of Challenges
It’s not entirely new, but one major factor will continue to present IT challenges for the foreseeable future: the rate of change. Advancements in technology are exciting on the one hand, but on the other, the scope and pace of these changes easily exceed the human capacity to control them.
Returning to the survey, EMA conceded that outages are increasing in terms of duration, cost and impact. With that backdrop, respondents were asked to identify the main two factors for this.
The top response was “digital transformation and the increased reliance on IT,†which was cited by 42.0% of respondents. The rest of the responses were a relatively even mix, with five separate factors receiving at least 25% of the response:
- Networking complexities
- Hybrid and software-defined architectures
- The pace and volume of change/business innovation
- Increased cloud migration
- Work from anywhere
To that end, the IT leaders surveyed aren’t particularly optimistic about the rising costs of outages. When asked which statement best describes the cost of an outage to their organization, 16.3% said “it’s increasing and likely to continue increasing. Another 36.0% said an “increased reliance on IT guarantees continued increases.â€
A pair of other responses were a bit more measured, with 22.0% saying costs are “increasing, but we think we can lower the cost with AIOps and automation†and 12.3% saying “it has been fairly consistent year over year.†Finally, a segment of respondents cited optimism, with 13.3% saying “it has been decreasing because of proactive systems we’ve put in place.â€
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Combatting the Modern IT Outage
As the survey results make clear, today’s IT outages are personal: the costs and consequences can vary across organizations. That said, there is one constant – IT outages will continue to grow in cost, impact and duration if they’re left unchecked.Â
The survey also illustrated the philosophies adopted by top-performing organizations. Those at the top of their industries tend to calculate the costs of outages to the best of their abilities while considering the factors that matter most to their specific business goals. Most importantly, these organizations don’t simply calculate and report costs, they proactively work to stop them.
Since IT outages are personal, there is no one-size-fits-all “cure†to fix them. Anecdotally, many organizations are taking a “do more with less†approach to IT, implementing automation to handle mundane and repetitive tasks to free up the human workforce so it can focus on more complex and rewarding work. In fact, 23% of respondents with a mature implementation of AIOps – tools that automate various IT operations processes – reported an average duration of significant outages below 30 minutes. Those who haven’t yet adopted AIOps reported average outages of an hour or more.
Ultimately, organizations that implement policies and processes to consistently stop IT issues before they cause problems have the best chance of avoiding an outage altogether. And outages that never happen don’t cost organizations a thing.
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