The Cost of Business Application Downtime

The Cost of Business Application Downtime

In your organization, you use various applications for everyday activities in your finance, sales, and other departments. These applications rely on systems such as servers to function. For many reasons, your servers can be rendered unavailable at any moment. This in turn leads to application downtime as applications hosted on said servers become inaccessible

Applications hosted on the cloud

Depending on the important functions each application performs, we can categorize them into mission-critical or business-critical applications.

An application, system, or workload is said to be mission-critical when its continuous availability is crucial to business operations. Its failure will likely lead to financial loss. It is said to be business-critical when it is important to business operations but in case of its failure, the business can still operate at a basic level.

If you run critical applications on desktops, physical servers or on the cloud, this article is for you. We aim to emphasize the importance of identifying high availability applications and deploying the correct technology to setup, manage and secure them thus preventing the cost of application downtime.

What is system downtime?

System downtime is an issue that plagues the vast majority of organizations. When a system goes down, many if not all organization’s critical applications become unavailable. This brings operations to a halt while the cost of being unable to do business mounts minute by minute.

Biilboard that reads "downtime just ahead".

What is the actual cost of downtime?

This is a question that organizations must answer in order to adequately prevent system downtime. Many organizations do not measure the cost of each’s application downtime. If they do, they do it incorrectly. What organizations may not know is that without accurate information, it will be difficult to make a sound investment in data center technology.

At the end of the day, the availability of your business depends on the value a computer has to an enterprise, for example. It is important to consider which applications are of higher priority and poses the longest amount of downtime, not to mention the costs of said downtime on your organization. These are the applications you will probably want up and running after a disruption.

What is the value of these applications, and what does it cost you when they are inaccessible? Without knowing the true cost of downtime, your organization cannot properly and cost-effectively protect itself.

Common threats to the availability of critical applications in businesses today

  1. System software or hardware failure for various reasons such as sudden power outage, system crashes, configuration errors, poor deployment, human error, overheating, and system overload
  2. Malware such as viruses and ransomware
  3. Natural disasters such as floods and fire
  4. Hosting critical applications on systems that cannot adequately support it for example on desktops. When multiple users access the application, especially remotely, the application can be at risk of crashing
  5. Complete or partial loss of application data can be caused by the corruption of data by malware or damage to backup media, lack of data backup strategies, etc.

All the above threats and more can render your critical applications unavailable for hours, days and even weeks at any time. It is never a matter of if but when.

The cost of application downtime

The costs of downtime include both direct and indirect costs. Direct costs are expenses that can be completely attributed to the production of specific goods, a particular function or service, whereas indirect costs are more difficult to quantify but can be even more damaging to your organization.

It involves much more than just lost wages and can be categorized as follows;

1. Business costs

These are what come to mind for most business decision makers. Lost wages, overtime, and remedial labor costs all add up during an outage. Other business costs include lost inventory and the scrap of work in progress, potential legal penalties for not delivering on service-level agreements, and litigation costs due to third parties seeking compensation for losses incurred during a system outage.

2. Productivity costs

During an outage, employees cannot perform their regular duties. Though production cost varies from one industry to the other, the most common way of calculating production cost is

Average employee wage X the number of hours of lost productivity + overtime costs for employees to make up lost work time

If employees are salaried and not paid overtime, they may be forced to put in extra work hours. This can take a toll on both employee productivity and morale, tougher to measure but certainly still costly,

3. Recovery costs

These costs include the price paid to repair the system, IT staff overtime, and third-party consultants or technicians needed to restore service. One might also consider the opportunity cost sacrificed when IT needs to focus on system recovery rather than working on other critical projects for the organization

4. Customer Loss

The effects of indirect costs can be felt long after an outage is resolved. Previously loyal customers can lose faith and take their business to competitors. Once a company is seen by its customers as unreliable, it can be very difficult to undo this perception.

5. Reputation damage

Bad publicity can cause major damage to an organization and not just large ones. It’s true that the traditional press loves a good headline about bad news at a big company. But what can a complaint on Twitter or a negative post on Facebook cost you?

Converges found that one bad tweet can cost a company 30 customers. And while industry websites and bloggers don’t always have a large audience base, they do have the rapt attention of your target market. This means that one negative blog post about your company can make a huge impression on your customers and prospects

6. Shareholder value impact

Bad press can also devalue a company’s stock and reduce its market capitalization. Especially in shaky economic times, the stock market reacts to negative press about a company, even more so if the news is about a significant sales loss an event that is entirely possible when servers go down

Prevention is better than cure.

Having in mind the desired availability of your critical applications, it is necessary to develop solutions that will prevent all the above-mentioned losses by minimizing downtime.

Preventing critical application failure and system downtime with local cloud services

Where you choose to host your critical applications is a major factor that determines their availability. Business host applications such as websites, call centers, emails, accounting systems etc. on;

  • Desktops or personal computers
  • Physical servers such as mail servers, file servers etc.
  • The cloud through self-managed or managed cloud hosting services from international or local cloud service providers

We believe that in order to guarantee not only the availability of your critical applications but also ensure fast recovery in case of failure, the best decision any business of any size can make is to partner with local cloud service providers.

Local cloud service providers have data center technology located within the country which reduces costs, improves reliability, access, connectivity, flexibility and security of hosted systems.

Benefits of hosting critical applications on the cloud

If you are not already taking advantage of cloud computing in your organization, here are some of the benefits you stand to gain;

  1. Increased system uptime and functionality. With less physical infrastructure and hardware to deploy, maintain, and secure, hosting on the cloud guarantees that your systems are always available and performing well. Cases of failure and downtime are minimized.
  2. Easy, secure remote access and connectivity even with an increased number of users on-premise or remotely. Stable virtual private connections ensure only authorized users can access your critical applications from anywhere anytime.
  3. Reliable service availability. Most businesses move to the cloud for the guarantee of reliable service availability to its end users
  4. Increased flexibility with the ability to scale up on demand without affecting business operations. Increasing storage capacity or installing upgrades can be complicated and risky when running physical systems.
  5. Increased expertise and technical support ensure that you do not have to hire IT, staff, or consultants. Partnering with the right local cloud service providers provides you with knowledgeable experts who ensure you enjoy the service.
  6. Advanced cloud security such as VPNs, endpoint security, monitoring, etc ensures your data is secure.

Moreover, managed cloud services ensure your systems and applications are correctly deployed, secured, and can easily install updates without disrupting operations.

More businesses continue to opt for local managed cloud services as they realize the value of a solution that ensures your critical applications are always available as well as that you can recover lost data and minimize downtime with cloud-based disaster recovery services.

More resources from Pepea

  1. On-premise vs. cloud management of business systems
  2. The Solution In the Cloud – Managed Server Hosting
  3. Refocusing on core business with Managed Server Hosting
  4. Managed Server Hosting – Securing Business Systems

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