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12/9/2010
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IT Outages Cost Businesses Billions

North American businesses lose $26.5 billion in revenue each year from IT system downtime with the biggest impact on SMBs, according to a CA Technologies report.

Business are losing more than a quarter billion dollars annually due to IT system downtime with small companies suffering the most.

An independent study released Thursday reports that North American businesses "are collectively losing $26.5 billion in revenue each year as a result of slow recovery from IT system downtime," with an average loss of around $160,000. The average company suffers 10 hours of IT downtime a year -- which translates to more than 1.6 million hours across North America.

During these periods of downtime, "Respondents estimate that their ability to generate revenue is reduced by nearly a third (29%). Even after service is restored to critical systems, businesses experience an additional 7.5 hours of compromised operation because of the time it takes to recover lost data."

The study, commissioned by IT management software and solutions provider CA Technologies, surveyed in November 200 small, medium, and large companies in the retail, finance, manufacturing, and public-sector segments.

The study, said Steve Fairbanks, vice president of product management for data management at CA, "looked at the cost of outages or downtime to business-critical systems -- typically that would interfere with productivity or sales." According to report, "Small companies suffer the most during periods of downtime, showing the least ability to generate revenue -- 39% compared to 19% for medium-sized companies and 28% for large companies. A similar pattern emerged during recovery time -- 23% for small companies, 11% for medium, and 18% for large."

Charles King, principal analyst at Pund-IT, Inc., commented, "It's a good size sample group, and I like that they spread their survey across different industries and business sizes. The basic lesson is that IT reliability continues to be an issue that businesses need to be concerned about, especially for smaller businesses, where there's a smaller margin of error to deal with problems."

"IT outages reduce companies' ability to generate revenue by 29% -- for small businesses, close to 40%," said Fairbanks. "And even after the outage, while data is being restored, there's a 17% reduction (23% for small businesses) in reduced capacity to generate revenue while data is being restored and systems being reconfigured. So small businesses tend to be impacted even more by outages."

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