Downtime Costs

What does your downtime really cost? The cost of downtime for a critical business system such as a network breaks down into a number of components.

  • Lost revenue
  • Wasted or ruined materials
  • Lost information or data
  • Loss of reputation as a reliable business partner
  • Cost of inefficient or idle staff
  • Cost of staff to handle repairs
  • Cost of unused facilities
  • Repair costs
  • Insurance premium increases

These add up differently for different businesses and for different systems. Here is a table whose values we have averaged and estimated from various sources for illustration purposes only.

System Estimated lost revenue per hour
Airline reservation system $80,000
Bank ATM $15,000
Catalog Sales $90,000
Credit Card Authorization $2,600,000
Dell (see below) $700,000
F100 Network Connection $30,000
Package Shipping Service $28,000
Stock Brokerage Firm – large $3,000,000

Dell’s number was computed by taking their 2002 estimate revenue of $31B dividing by 8766 and estimating that 20% of the sales expected in an hour of downtime would not occur at a later time. It does not account for any of the other factors above. Dell does not report the amount of annual expected downtime of their systems, but it is estimated to be in the order of a few minutes per year. Dell’s systems handle 15,000 simultaneous users at peak times; thus an outage at such a time would be very expensive even on a per minute basis.

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