Alarmingly, almost half of Australian businesses have seen an increase in IT downtime since the pandemic began. This includes outages – where an organisation’s services and systems are unavailable, and brownouts – where services and systems remain available but aren’t operating optimally.
In the past three years, 100% of Australian businesses surveyed said they had experienced a brownout and 93% had experienced at least one outage. Common causes range from human error to malicious activity and hardware failure.
Downtime is not just a huge inconvenience for your business and customers; it costs you in all sorts of ways.
- Lost revenue and sales
The most obvious cost of downtime, especially for retailers, is lost revenue and sales. In 2018, Amazon’s website suffered consistent issues on Prime Day, estimated to have cost them anywhere between USD 77m-99m in missed sales. Not a massive amount of money to them, granted, but still significant. The risk for smaller retailers and start-ups is even worse, with many not prepared to weather a storm that could see them lose out on even a day of sales.
- Reputational damage
While customers might understand that IT outages can and do happen to anyone, it goes without saying they expect larger companies to allocate more resources to ensure it doesn’t happen. When an outage impacts millions of customers being able to access their money or receive payments, like this CBA outage, an organisation suffers reputational damage. Customers wonder, can I trust you with my money? Do you know what you are doing? Worse still, it can often have negative effects on a company’s stock price.
- Customer churn
Downtime is a cause of customer churn. Using the recent Facebook outage as an example, advertisers spent $28bn USD on the platform in Q2 alone. The knock-on effect on these businesses is significant. It means they will now be reconsidering whether they spend all their advertising dollars with that platform going forward. Maybe they should diversify? Maybe leave altogether given all the other negative news to come out of the organisation. The reality is, when downtime happens, you are going to lose customers. So reducing and avoiding downtime must be a priority.
- Employee productivity
Lost productivity topped the list as the most negative impact ANZ IT leaders have experienced due to downtime. Employees are unable to complete critical tasks and assist customers. One report estimates that, on average, companies lose 545 hours a year to lost employee productivity due to downtime. That’s not taking into account the time spent then resolving the issue. Additionally, these experiences impact employee experience. Too many system problems may result in them looking elsewhere.
- Financial penalties and litigation
Financial institutions are at risk of outages causing them to breach regulatory requirements, resulting in hefty fines from the Government or other governing bodies. Software companies that miss SLAs may incur financial penalties, and anyone providing a service to another business could face litigation or lawsuits resulting from downtime, such as the ASX.
The bottom line is that downtime is a massive pain in the backside for any organisation, and while it can’t be avoided 100% of the time, businesses can do things to mitigate their risk.
These include:
- Having a disaster recovery plan
- Removing single points of failure in IT systems
- Prioritising prevention.
We help businesses get in the best shape possible, focusing on prevention to avoid downtime and keep everything ticking along smoothly.
Talk to us about your downtime issues today.
Photo by visuals on Unsplash
