A couple of new studies have recently been released highlighting the growing costs of network downtime. One study, conducted by the Ponemon Institute, determined that the average cost of unplanned downtime for a business is $7,900 each minute, which is up a whopping 41 percent over the figure from 2010, which stood at a not-inconsequential $5,600 per minute. The growth in costs is attributed largely to the increase in the value of business operations that are supported by data centers.
The Costs of Downtime are Up for All Industries
Equipment failure reigns in terms of causes of downtime, but human error plays a significant role, as well. Network attacks are actually among the least common causes of downtime, attributing to about 10 percent of overall downtime incidents.
The Ponemon Institute survey studied 67 different data centers, all with at least 2,500 square feet of space and representing a number of different industries. The study was designed to determine measurable damage to data that was deemed mission-critical, to assess the impact of downtime on the productivity of the organization, to assess the damage to equipment, examine legal and regulatory compliance effects, and evaluate the loss of confidence and trust among key stakeholders for the business and network administrator as a result of the downtime.
The industries that saw the largest increases in the cost of downtime and deteriorated performance of the data center were the hospitality sector (which saw a 129 percent increase in downtime costs), the public sector (which went up by 116 percent), the transportation industry (which increased by 108 percent), and the media (which climbed 104 percent).
According to Larry Ponemon, the founder of the Ponemon Institute that was responsible for the recent survey, "Given the fact that today's data centers support more critical, interdependent devices and IT systems than ever before, most would expect a rise in the cost of an unplanned data center outage compared to 2010. However, the 41 percent increase was higher than expected. This increase in cost underscores the importance for organizations to make it a priority to minimize the risk of downtime that can potentially cost thousands of dollars per minute."
Some Key Findings of the Ponemon Institute Survey
Highlights from the Ponemon Institute survey include:
- The average downtime event lasts about 86 minutes. The average cost of each incident was $690,200.
- For a complete data center outage having a recovery time of 119 minutes, average costs per outage went up to $901,500.
- In a partial outage that lasted 56 minutes, the average cost ran about $350,400.
- Most of the respondents to this survey (91 percent) reported that they had experienced some sort of unplanned data center outage within the past two years. This was actually lower than the 95 percent that said the same back during the 2010 survey.
The study also concluded that revenue models that are more dependent on the data center's delivery of networking and IT services incur heavier costs. The highest cost of any single event found during the study climbed higher than $1.7 million. According to Peter Panfil, VP of global power for Emerson Network Power (which funded the study by Ponemon Institute), "As data centers continue to evolve to support businesses and organizations that are becoming more social, mobile and cloud-based, there is an increasing need for a growing number of companies and organizations to make it a priority to minimize the risk of downtime and commit the necessary investment in infrastructure technology and resources. This report gives these organizations the data they need to support more informed business decisions regarding the cost associated with eliminating vulnerabilities compared to the costs associated with not taking action."
The IHS Study Also Determines Downtime More Costly Than Ever
Whatever the reasons for the downtime, all of the relevant research points to the fact that the costs of downtime are incredibly high, and are rising all of the time.
An unrelated study conducted by IHS determined that every instance of a network slow down or complete outage costs the enterprise an average of more than one million dollars. Both studies were conducted during 2015, with the final report and results delivered this year.
The IHS report was done using 400 respondents to a survey involving mid-size businesses to large enterprises within North America. Respondents were of the decision-making level. It determined mid-size businesses to be those with an average yearly revenue of around $100 million per year and between 100 and 1,000 employees. Enterprises were categorized with an average of 13,000 employees and about $2 billion in revenue annually.
Downtime is Not Just Expensive, It's a Regular Problem for the Network Administrator
Among these businesses, an overall average of five downtime events happened every month, ranging in costs of $1 million each year for the usual mid-size business, up to an eye-popping $60 million per year for those larger enterprises. That works out to about $700 billion per year for North American businesses, and includes lost productivity of workers (78 percent of the costs), lost revenue (17 percent of costs), and the actual cost of fixing the issues that led to the downtime (5 percent of the costs).
The IHS report concluded that interruptions in network services are the single greatest contributing factor to downtime, however, what leads to the interruptions in network services is somewhat varied. According to Matthias Machowinski, the IHS director of research for enterprise networks and video, equipment failure is the number one reason for interruptions in network services.
Equipment failures account for about 40 percent of all network downtime. Twenty-five percent is due to issues with the service provider. Another 25 percent is attributed to human errors by insiders, typically employees of the business. About 10 percent of all downtime is due to cyber security issues, such as attacks by hackers.
How can the network administrator take a bite out of downtime? Network monitoring is the best way, according to Machowinski. About 64 percent of those who responded to the IHS survey indicated that they are currently pursuing a monitoring strategy. Monitoring is followed by network redundancy, better training, better hiring processes, better backup solutions, and a combination of these strategies.