Business owners try to avoid downtime like the plague, but it’s often a challenge to do so. The impact of downtime can be devastating for even the most stable business, and this is even more so the case when you bring profits and bottom lines into view. We’ll take a look at how you can calculate the cost of a downtime event.
It’s critical to keep in mind that downtime can have various impacts on your business, all of which are exclusively bad for your organization. In terms of customer relationships, there are two major ones:
- Customer dissatisfaction and displeasure
- Decreased loyalty to your business and brand
You need revenue to make your business work. Downtime affects your ability to make revenue. Period. Unfortunately, it doesn’t end there. Your business will also experience the following directly rather than through your customer base:
- Cost of recovering, repairing, and/or replacing IT solutions
- Lost or wasted materials
- Compliance and regulatory issues
- Repercussions to your supply chain
- Overtime costs to make up for lost time so deadlines can be met
- Decreased employee morale and increased stress
- Lost internal productivity and the costs of still reimbursing your employees
How to Successfully Calculate Downtime
Calculating downtime can be a bit tricky, as it requires you to estimate the utilization percentage of each employee and the amount they use the technology that is affected by an outage. You then need to multiply this number by each of the employees’ salaries per hour. Multiple employees with the same salary grade and utilization percentage can then be used by multiplying this by the number of employees affected by downtime. This gives you your total lost productivity per hour.
Thankfully, calculating recovery costs and intangible costs (or the costs associated with damage to your reputation) is much more simple. All it takes is some simple addition. If you combine all of the costs detailed above, you can easily calculate the total hourly cost of the incident.
This number will shock you and should immediately serve to reinforce any thoughts you have about the amount of lost revenue and opportunity that results from downtime.
Net It On, LLC can help your business reduce downtime through our bevy of proactive IT services. We know how to keep your technology up and running. To learn more, give us a call today at (732) 360-2999.