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How much does downtime really cost your business?

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Warren Oliver
Warren Olivier, Regional Manager for Southern Africa at Veeam Software.

With Load Shedding being implemented daily… Unplanned IT system downtime could be costing businesses as much as 2% of their annual profits, highlighting the urgent need to reduce recovery time and recovery point objectives.

Globally, according to the most recent Data Centre Availability Survey, enterprises have unplanned downtime an average of 13 times a year, for up to 51 hours of downtime. Depending on whether the downtime affects mission-critical apps or not, that adds up over a year to an average cost of between $1.4m and $2.2m in lost revenue, decreased productivity and missed opportunities.

Similar figures apply in South Africa. It’s not hard to calculate the impact of downtime on your business, and it’s an exercise every company should do. Let’s say you’re a medium-sized business with a turnover of R100m per year, making a decent profit of R20m a year. Assuming operations run 16 hours a day, 365 days a year, every hour that you can’t operate because your systems are down cuts your profits by nearly R3,500.

Costs don’t stop there. Direct revenue loss to downtime is one thing; but there is also the cost of lost data. Let’s say you manage to get your systems up and running within two hours – that’s a two hour recovery time objective (RTO). But when was the last backup made that you can restore your data from? Many companies accept a recovery point objective (RPO) of up to 24 hours — in other words, you’ll lose a day’s worth of data. Lost data means lost orders you can’t bill for, which means lost revenue. That dramatically multiplies the cost of those two hours of downtime.

This difference between what the business needs and what IT systems are able to provide is what we call the availability gap. Assuming just five failures a year the cost of that gap for our hypothetical business rapidly climbs to nearly half a million rand per annum, or 2% of their total profits. That’s not a loss any business can afford to take lightly.

To protect themselves businesses need to take advantage of data availability solutions that can bring recovery time and point objectives down to as little as 15 minutes. If you know you can recover in 15 minutes, and that the last backup will never have been more than 15 minutes ago, you’ll never lose more than half an hour’s data. For our example business, that takes the annual cost of downtime down from half a million rand to around R20,000. That’s a dramatic difference.

In the age of the always-on business,  having your systems and data always available is a protection you can’t afford to neglect. In highly competitive global markets, one day of lost productivity could mean the difference between surviving and sinking.

By Warren Olivier, Regional Manager for Southern Africa at Veeam Software

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