The Cost of Network Downtime

The Economic Impact of Network Downtime (And How to Prevent It)

While every business strives to minimize expenses, the majority overlook the true cost of network downtime. The cost of network downtime is calculated as the sum of lost productivity, revenue, recovery costs, and intangible costs.

With so many other costs and concerns vying for your attention, technology is all too easily pushed to the bottom of the priority list. Maintaining employees, property maintenance, or any of the countless other expenses that affect your business can feel more pressing—not to mention that you may have a better grasp on their solutions.

However, technology failures such as network downtime have a negative impact on both productivity and revenue, as well as incur additional costs. If you’re looking to cut business expenses, investing in high-quality technology and IT support will help you do so in the long run.

If you’re debating whether or not to invest in network technology, monitoring, and support for your business, you may want to consider the cost of network downtime when planning your annual budget. Continue reading to learn more about network downtime, its cost, the causes, and how to prevent it.

How Is Network Downtime Defined?

The computer network of your organization is what manages interactions between the numerous devices and digital platforms that assist in the operation of your business, such as desktops, laptops, phones, smart appliances, company websites or servers, and more. Your network enables communication between these devices and platforms, as well as access to the internet.

When a digital network goes down or becomes unavailable for use, this is referred to as network downtime. Downtime can be scheduled or unscheduled.

When your IT team needs to make critical technology updates, they may have to temporarily shut down your network. By planning ahead, your IT team can schedule the outage for a time that is most convenient for your business, such as after hours.

When we discuss the costs and consequences of network downtime, we are referring to unplanned network outages. Not only can unplanned network downtime be a financial drain on your business, but it can also indicate potentially serious IT issues, such as a cyberattack.

The Truth About the True Cost of Network Downtime

When your digital network slows or goes down, the ramifications for your business can be severe. Employees lack access to the tools and information necessary to complete their work. Your team, stakeholders, and customers cannot communicate with one another. You may be forced to close your entire office for the duration of the day, if not longer.

The bottom line is that in the digital age, if your network fails, your business fails as well.

According to Gartner data, the average cost of network downtime is $5,600 per minute for businesses. This varies significantly between businesses, but there are numerous formulas available to determine your unique cost of network downtime.

These calculations boil down to the total of your downtime-related losses and costs. To determine the total cost of network downtime, add productivity and revenue losses, as well as recovery and intangible costs.

Revenue and Productivity Losses

Revenue loss is frequently the largest cost of network downtime. When systems fail, they have an adverse effect on your business’s ability to provide services and earn money.

How much profit does your business make on an hourly basis? You forfeit that potential profit for every hour of downtime.

There are also intangible costs associated with profitability to consider, such as potential customer loss, loss of reputation and future sales, or stock price decline.

Your loss of revenue is inextricably linked to your loss of productivity. When a network fails, it frequently has an adverse effect on your personnel’s ability to perform their jobs. This results in not only a loss of profit during the downtime of your network, but also in the cost of compensating your employees during the time they are unable to work efficiently or at all.

Similarly, you must consider intangible costs associated with productivity. If employees are unable to work during a network outage, their work and project deadlines will have to be rescheduled. This can result in missed deadlines, project delays, customer dissatisfaction, and general confusion, all of which require additional time and energy on the part of your organization.

Intangible Costs and Recovery

Recovering from network downtime entails additional costs. To restore service to your network, you may be required to pay for replacement parts or repair services.

Once your network is operational, you may need to compensate employees for overtime in order to catch up on work and meet deadlines. If the outage resulted in data loss, additional costs for data recovery may apply. Additionally, an outage can result in supply chain delays and associated fees.

Additionally, when a network fails, a number of unexpected, intangible costs can occur. While they are more difficult to predict, they are critical to consider when weighing the potential cost of network downtime.

Intangible costs include revenue and productivity losses due to missed deadlines, project delays, customer loss, reputation and future sales loss, and stock price decline. Additionally, they may include public relations costs if your business must rehabilitate its reputation, as well as legal fees if your downtime resulted in a contract breach, compliance violation, or loss or theft of data.

The Top Three Reasons for Network Downtime

To avoid network downtime, you must first understand what causes it. There are three major causes of network downtime that your organization should be aware of.

  1. Human Error

Human error is a frequent cause of technological failures. It may result in network downtime, among other complications.

Numerous common errors can result in network downtime, including the following:

Failure to update software applications or server hardware on a regular basis.

On your business devices, improper software installation occurs.

Unplugging or detaching power plugs for critical network devices, such as routers or desktop computers, inadvertently.

2. Equipment Breakdown

Another frequent cause of network downtime is equipment failure. This can be a result of substandard technology or insufficient care and maintenance.

When server hardware—even recently upgraded server hardware—becomes too hot, it may shut down. Without constant air conditioning to cool the equipment, technology can become overheated. Disruptions caused by a power source can also cause network disruptions.

3. Inadequate Cybersecurity

Lack of cybersecurity is a concern not only for the network’s security, but also for the security of any information system or sensitive data that passes through your organization. Employee ignorance, out-of-date or non-existent security software, or the absence of a robust, proactive cybersecurity strategy could result in significant losses for your business—and this is in addition to the cost of network downtime.

Without adequate cybersecurity, your organization is vulnerable to phishing, viruses, malware, ransomware, and other serious security threats. It only takes one negligent employee to expose your network to a cybercriminal.

Without vigilant monitoring of your network and systems, a hacker could remain undetected in your network for days, if not weeks or months. The more time a criminal spends in your network, the more access and damage they can gain.

Once inside, a cybercriminal may be able to bring your network to a halt. However, downtime will be the smallest of your concerns. The hacker may be attempting to steal your sensitive information or even holding it hostage.

Solutions for Network Downtime and Proactive Prevention

Fortunately, network downtime can be avoided! You can take several proactive measures to avoid or minimize downtime.

  1. Professional Maintenance and Lifecycle Management of Equipment by a Reputable Managed Services Provider (such as Radiant Technology Solutions!)

The most effective way to avoid equipment failure is to exercise extreme caution when purchasing, handling, and replacing hardware and software. Purchase high-quality equipment and maintain it properly so that it performs optimally, and your organization can operate efficiently. Simultaneously, conduct regular inventory reviews of your equipment and replace older technology before it slows down or fails, resulting in unplanned downtime.

If upgrading specific equipment is not financially feasible, consider simply keeping your software up to date whenever possible. Maintaining current software updates can help optimize your technology’s performance and reduce the likelihood of network downtime.

Without an IT background, it can be difficult to determine the appropriate balance of quality and cost when purchasing equipment and determining when it should be replaced. A reputable managed services provider will have the most up-to-date industry knowledge and hands-on experience necessary to assist your business in selecting the best equipment for the long term—without overspending on unnecessary bells and whistles.

  •  Strengthening Cyber-Security

As a general rule in cybersecurity, there is always room for improvement! Whether you invest in security software or train your employees, cybersecurity is an ongoing investment that benefits your business.

There are numerous ways to enhance your security, allowing you to tailor your solution to your specific needs and budget. Antivirus and anti-malware software are excellent places to begin. Consider highly rated security programs that include the features you require. If you already have this software, ensure that protocols for maintaining it are in place.

Encrypting data is another critical security measure. It converts any attempt to view your sensitive information without the key to gibberish. Even if a hacker obtains access to your data, without the encryption key, it is useless.

 Along with preventative cybersecurity measures, it is critical to monitor for issues and prepare for the possibility of a successful attack. Continuous monitoring of your network and systems enables you to quickly identify potential problems. This can assist in preventing hackers from gaining access or removing them as quickly as possible. Additionally, you should back up your data and create a disaster recovery plan to ensure that you can respond quickly and effectively if your business is attacked.

If you’re unsure what’s best for your business, consult an IT expert to ensure that your cybersecurity budget is maximized.

  •  Due Diligence Evaluation

A due diligence assessment of your IT infrastructure will determine the effectiveness of your network and systems. Even if you have an IT department, their evaluations will be skewed by their inherent bias. Obtaining a third-party assessment can assist you in better understanding your business’s technology requirements.

A thorough due diligence examination should include a review of your information technology infrastructure, systems, personnel, and processes. It can identify areas for improvement within your organization and develop a strategy for implementing those improvements. A thorough due diligence assessment will reveal any redundancies or cost-cutting opportunities.

  •  Employee Education

Employees are your organization’s first line of cyber defense. Human error is a significant issue, but one that is solvable.

Invest in ongoing information technology and cybersecurity training for all employees. Every employee in your organization should be able to operate the technology necessary to do their jobs. Not only will this result in fewer equipment failures, but it should also result in an increase in productivity and efficiency.

Additionally, your employees should understand cybersecurity fundamentals, such as creating strong passwords, maintaining up-to-date antivirus and anti-malware software, and recognizing phishing, ransomware, and other cyberattacks. As more employees transition to remote work, they should also understand how to protect themselves while using public Wi-Fi and other cybersecurity best practices for travelers and remote workers.

When it comes to more serious IT and cybersecurity issues, ensure that your IT team or provider is available to address employee inquiries, concerns, and issues.

If you’re concerned about the cost of network downtime, contact Radiant Technology Solution’s highly trained professionals. With decades of combined cross-industry experience, a dedication to customer service, and a commitment to evolving technology, we are prepared to tackle your IT challenges head on.

We want to assist you in maximizing your current technology investments while also preparing you for the future. Technology should serve your needs and help you achieve your goals, not squander your time and resources. Our expert advice and responsive IT support transform technology into an ally rather than an adversary.

Contact Radiant Technology Solutions today to find out how we can assist you with your next IT project and help you meet all of your information technology and cybersecurity needs!


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