IT Downtime Costs $26.5 Billion In Lost Revenue

Still, 56% of enterprises in North America and 30% in Europe don't have a good disaster recovery plan, says a CA Technologies survey of 200 companies.

Chandler Harris, Contributor

May 24, 2011

3 Min Read

Analytics Slideshow: 2010 Data Center Operational Trends Report

Analytics Slideshow: 2010 Data Center Operational Trends Report

Analytics Slideshow: 2010 Data Center Operational Trends Report(click for larger image and for full slideshow)

It can be difficult to measure the cost of IT failures. For example, how do you measure outages such as those that recently hit Amazon Web Services or Sony's Playstation Network?

CA Technologies is the latest to attempt to calculate IT downtime, with a survey of 200 companies across North America and Europe intended to calculate the losses incurred from an IT outage. What it found was more than $26.5 billion in revenue is lost each year from IT downtime, which translates to roughly $150,000 is lost annually for each business.

The survey also found that IT outages are frequent and lengthy, and they cause substantial damage to a company's' reputations, staff morale, and customer loyalty. And they can rattle the confidence in new technologies such as cloud computing.

On average, the businesses surveyed said they suffered 14 hours of IT downtime per year. Half of those said IT outages damage their reputation and 18% described the impact on their reputation as "very damaging."

Headlines about IT failures certainly don't help. Northrop Grumman, for example, experienced a public relations nightmare when it had to pay nearly $5 million to the Commonwealth of Virginia for a network outage last summer that lasted a week and affected multiple state agencies.

Despite those costs and risks, it is still surprising that 56% of enterprises in North America and 30% in Europe don't have a formal and comprehensive disaster recovery policy. Yet 87% of businesses indicated that failure to recover data would be damaging to the business and 23% said it would be "disastrous."

One of the primary obstacles that is preventing organizations from investing in a disaster recovery policy is cost, Steve Fairbanks, vice president of product management at CA Technologies, said in an interview. The other issue is the daunting complexity of implementing a comprehensive IT preparedness and recovery plan, which CA Technology provides.

"A lot of times companies don't fully understand the cost of not preparing, so as a result they are not willing to spend dollars to ensure disaster doesn't occur or they can recover quickly from a disaster," he said. "Some smaller companies traditionally don't fully understand the breadth of technology and how to implement it to the spectrum of data loss issues that may come across their organization, because of cost and complexity."

Of the 200 companies surveyed, small enterprises lost, on average, more than $55,000 in revenue due to IT failures each year, while midsize companies lost more than $91,000 and large companies lost more than $1,000,000. A data center outage by itself can cost an average of $5,600 per minute.

Businesses should diversify their data and IT for better security, much like a diversified personal financial portfolio, Fairbanks suggested. A recent example is Amazon's cloud failure, where companies that relied solely on the cloud for their IT infrastructure were hurt the most. Instead, companies should utilize a hybrid solution that uses a combination of local and remote components of their IT infrastructure, such as in-house storage and cloud-based services.

"It speaks to a hybrid data protection need, and at CA we strongly believe our customers should consider not only local protection for fast granular recovery with Exchange SQL and other applications, but also protecting data offsite in the cloud or even tape to ensure that in the event of complete site disaster they can recover," Fairbanks said.

Security concerns give many companies pause as they consider migrating portions of their IT operations to cloud-based services. But you can stay safe in the cloud, as this Tech Center report explains. Download it now. (Free registration required.)

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