When a system goes down, the first question is usually: how long will the repair take. A far more important question is a different one: how much does every hour in which the company cannot work cost us. Without that figure it is hard to decide rationally how much is worth investing so the downtime does not happen again.
What makes up the cost of downtime
The cost of a failure is not only the bill for fixing the fault. It is the sum of several layers, most of which never reach any invoice.
- Lost productivity, meaning people who are at work but cannot work.
- Lost revenue, when you cannot sell, invoice or fulfil orders.
- The cost of catching up, often in overtime.
- Contractual costs and penalties for missing deadlines with customers.
- Loss of reputation, the hardest to price but real.
How to calculate the cost of an hour of downtime
You do not need a complex model. A simple calculation that gives you an order of magnitude is enough.
- Take the number of people who cannot work during the failure.
- Multiply by their average hourly cost to the company.
- Add the revenue lost from that hour, if sales are halted.
- Multiply the result by a realistic duration of the failure.
When a business owner sees for the first time that an hour of downtime costs them several thousand zloty, the discussion about a budget for monitoring and backup ends in five minutes.
Even a rough result usually comes as a surprise. For a company of thirty people, one day without systems can cost more than a year of infrastructure care.
Where downtime most often comes from
In my experience, most failures have banal causes that could have been prevented.
- No monitoring, so a problem grows in silence until something breaks for good.
- Full disks and overloaded servers that no one knew about.
- No updates and patches, which ends in a failure or an attack.
- No working backup, which turns a minor failure into a multi-day crisis.
How to reduce the risk of downtime
You cannot eliminate failures to zero, but you can drastically shorten their duration and effects.
See the problem before it grows
Proactive monitoring catches warnings, such as disk space running out or a rising number of errors, before they turn into a failure. It is the cheapest way to avoid most unplanned downtime.
Have a plan for the worst-case scenario
When a failure does happen, what counts is how quickly you recover. An agreed RTO and RPO plus a tested disaster recovery plan turn panic into a procedure. Instead of improvising, you follow steps someone thought through in advance.
Have someone who reacts at once
The difference between a three-hour failure and a three-day one is often a matter of whether someone answers the phone and starts acting within a dozen or so minutes. This is exactly where a clearly agreed response time matters.
Summary
IT downtime is a cost you bear whether or not you count it. It is worth calculating, because only then does it become clear that spending on monitoring and a sensible recovery plan is not a cost but insurance with a countable return.
If you want to reduce the risk of unplanned interruptions, see how our IT infrastructure monitoring works, and how we prepare companies for worst-case scenarios through disaster recovery. It is better to talk about this calmly than in the middle of a failure.