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IT Systems Failure Costs Quantified in New Survey

Sure, we all know that downtime harms meeting our service-level agreements, but how do you quantify downtime's costs? CA Technologies sponsored a survey of CIOs, IT directors and managers, COOs, and operations directors in North American and European enterprises to understand and measure the consequences of downtime.

According to CA’s Avoidable Cost of Downtime report, “Businesses collectively lose more than 127 million person-hours annually -- or an average of 545 person-hours per company -- in employee productivity due to IT downtime.” Put another way -- it’s the equivalent of 63,500 people sitting idle, unable to perform their job duties, for an entire year.

The retail industry took the biggest hit in terms of person-hours lost, followed by the public sector. Small businesses (those with 50-499 employees) far and away suffered the most, followed by large enterprises (over 1000 employees) and midsize firms (500-999 employees).

Not all downtime results in complete work stoppages; the respondents averaged 14 hours of downtime per year; during this time, employees were “only able to work at 63 percent of their usual productivity.” Employees suffer during recovery as well. “[O]rganizations lose an average of nine additional hours per year to the time it takes to recover data. During these times, employee productivity only climbs to 70%.” Public-sector employees are the least productive during IT outages (working at just 58 percent of capacity when systems are down and 67 percent of capacity during the recovery). Small companies were the least productive (employees work at 56 percent during downtime and 62 percent during recovery).

How well is IT prepared for such outages? Not very: over half of respondent firms (56 percent of North American enterprises and 30 percent of those in Europe) lack a “formal and comprehensive disaster recovery policy.” Fortunately, a fifth says they are developing such policy, but 13 percent have no plans to make such plans. (Let's hope you don’t work for one of them.)

Organizations take a hit to their reputation, say half of those surveyed; nearly a fifth (18 percent) categorize the impact as “very damaging.” More than four in 10 respondents say downtime harms staff morale, and over a third (35 percent) claim IT downtime can adversely impact customer loyalty.  In my many years in corporate IT, downtime equals long, long coffee breaks for business users; employees often don't go looking for alternative tasks they can complete in the meantime. They're poised waiting for the system to "come back up any second."

The survey found that “87 percent of businesses indicated that failure to recover data would be damaging to the business; 23 percent said this would be ‘disastrous.’” Imagine losing or improperly completing an order when a system crashes; now imagine the number of people that person will tell via Facebook or Twitter. To me, the 23 percent figure seems low.

“There are a variety of practical and affordable steps organizations can take to protect themselves against the adverse business impact of IT outages,” said Steve Fairbanks, vice president of product management, Data Management, CA Technologies, in a company release announcing the survey results. “Given that these outages are a fact of life -- and that some of the consequences of outages can be irreversible -- investments in improved business continuity are extremely worthwhile.”

The survey was conducted in November 2010 by independent research firm Coleman Parkes. Respondents were evenly split among small, midsize, and large enterprises. The survey was conducted among 200 enterprises in North America and 1,808 companies in EMEA (spread across the UK, France, Germany, Spain, Italy, Belgium, the Netherlands, Norway, Sweden, Finland, and Denmark).

-- James E. Powell
Editorial Director, ESJ

Posted by Jim Powell on 06/02/2011

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