The Long Term Affects of Down-Time

Whilst your company may have a good idea of the immediate costs of downtime you may not realise the lasting consequences and costs it may have.

Time-Dependent Costs

The cost-per-hour of downtime does not only depend on the type of downtime (such as planned maintenance work or a natural disaster), but also on the time at which the downtime occurs.

For example, an online UK-based company with a clientele based mainly in Western-Europe has its website go offline at 0200 GMT. Common sense would suggest that this kind of downtime is significantly less damaging than if it were to happen at, say, 1300 GMT. This is because, not only are fewer customers likely to be browsing at 2 A.M, but fewer employees are likely to have their work interrupted by the downtime. In contrast, downtime during the middle of the working day is likely to have a widespread impact on the company.

It is important to consider how the timing of any downtime will influence its impact on your company. These changes in timing can be difficult, for example, if your company has overseas clientele, experiencing downtime during the middle of the night may have little impact on domestic employees but may mean they are unable to help with customer assistance or getting systems up and running again. Similar considerations must also be made for downtime occurring outside of the typical working week such as on weekends and holidays.

Factoring Time-Dependent Costs into Loss Estimates

Based on the potential for downtime costs to vary based on their timing and the fact that unplanned downtime is liable to happen at any time it can be difficult to provide an estimate for potential losses. A simple method is to take the average cost across an entire 7-day week, ensuring that the average is weighted based on when unplanned downtime is most likely to occur.
Whilst the cost of planned downtime is normally lower due to the ability to schedule it during non-peak hours, it is important that additional costs such as overtime payments are factored into the calculations.

Impact on Reputation and Customer Loyalty

Whilst these consequences may seem obvious, they are important enough to warrant repeating as the lasting costs from a damaged reputation and customer loyalty can be the mist detrimental to a business. Whilst some business may be able to be reclaimed once systems are back up and running other customers may be permanently lost. This loss must be considered when assessing total lost sales by increasing the impact percentage. If much of your business is generated by repeat customers and their recommendations then this impact will be far greater.

Unfortunately, the costs of an injured reputation are difficult to quantify and determining a value can require a lengthy history of data, however an educated estimate will suffice.

Time-Dependent Downtime Costs

• Overtime costs
• Labour productivity
• Employee working hours
• Location of clients
• Customer service capabilities
• Ability to recover systems based on time of day
• Low and peak times for business

Reputation and Customer Loyalty

• Banks
• Suppliers
• Financial markets
• Business Partners
• Business that can be regained
• Business which may be lost