Assessing the Financial Impact of Downtime
Calculating the cost of financial downtime for your organization
Fiduciary responsibility. Due diligence. Such are the key watchwords for businesses everywhere. Indeed, these simple phrases are in fact the core concepts underlying regulations that cover stockholder rights, contracts for merger and acquisition, and many other areas of business conduct.
With the ever-increasing reliance of businesses upon their IT systems and electronically stored business data comes an equivalent increase in management’s duty to ensure due diligence and fiduciary responsibility with respect to protecting them against all causes of loss or damage. The potential costs of failing to do so can be enormous.
Hidden Financial Risk in Financial Downtime
According to Dunn & Bradstreet, 59% of Fortune 500 companies experience a minimum of 1.6 hours of downtime per week. To put this in perspective, assume that an average Fortune 500 company has 10,000 employees who are paid an average of $56 per hour, including benefits ($40 per hour salary + $16 per hour in benefits). Just the labor component of downtime costs for such a company would be $896,000 weekly, which translates into more than $46 million per year.
Of course, this assumes that everyone in the company would be forced to stop all work in a downtime scenario, and that may not be so. But, since the operations of many companies are increasingly knit together by their information technology, system downtime now hampers the productivity of almost
everyone in the organization, and completely sidelines a significant and growing percentage of them.
While some insurance providers offer coverage to reimburse companies for sales revenue lost during unplanned server outages, typically, these policies do not cover any other expense besides lost sales. Facilities Management operations often hold these types of policies to lessen their exposure.
This white paper will address the assessment of threats to your IT operations, inclusive of systems, applications, and data, and will guide you through the process of developing solid numbers around the potential costs they represent.