Internet downtime has a direct impact on businesses of all sizes. In fact, a recent Forbes article cited that organizations can lose up to $100,000 for every hour of downtime that their business experiences.
It’s important to calculate the cost of Internet downtime for your business and be prepared to keep continuity so you can avoid downtime costs.
What’s at stake?
We live in a connectivity-driven economy where the efficiency and productivity of both large and small businesses require constant access to online applications and data.
For example, healthcare organizations rely on electronic health records to build comprehensive profiles and choose appropriate treatments for patients. Restaurants, vehicle repair shops, and beauty salons rely on their applications to track reservations, customer payments, supply inventories, and employee shift scheduling. Retail stores use applications to market directly to their customers and provide customer support.
From accounting and enterprise resource planning (ERP) systems to customer relationship management (CRM) and project software, many daily tools that businesses rely on are cloud-based. To access these tools and maintain important operations, businesses must have Internet failover services to maintain Internet connectivity.
Even a temporary Internet outage means major disruptions in business processes, productivity, and revenue opportunities. It’s important to be prepared for Internet downtime to ensure that the impact to your business is minimal.
Calculate the Cost of Internet Downtime for Your Business
Although industry experts estimate the impact downtime can have on a business, the cost of downtime varies from business to business. To get an understanding of the cost of downtime for your specific business, you can calculate basic revenue per working hour plus cost of staff per hour multiplied by the total hours of expected downtime:
(Revenue per hour + cost of staff per hour) * Expected annual hrs of downtime = Estimated cost of downtime annually
Revenue per working hour:
This indicates how much you could potentially lose per hour if you don’t have continuity in your business Internet services, preventing the processing of sales transactions. It is calculated by simply dividing annual revenue by the number of working hours in a year. For example, a business with an annual revenue of $100,000 generated over 100 working hours has a revenue per working hour of $1,000.
Cost of staff per hour
If downtime prevents employees from doing their job, their salaries would be considered a cost of downtime. To determine the cost of staff per hour, you can calculate annual salary costs by the number of working hours in a year. For example, a business with annual salary costs of $50,000 and 100 working hours, has a cost of staff per hour of $500.
Should the above company have 15 outages a year, each lasting for an average of one hour, their expected cost per year could be as high as $22,500.
While this cost is an approximate figure, it can provide organizations with a better understanding of the potential financial loss caused by an Internet outage.
The Forgotten Costs of Downtime
There can be other direct costs to your company as a result of downtime that are often not factored into other typical loss calculations, such as revenue and overtime salary. For example:
- Supplier penalties if downtime affects the business’s ability to deliver
- Extra salary costs if productivity is negatively impacted and requires overtime
- Customer compensation to help brand image recover, such as discount or gift vouchers
There are costs of downtime that may have a lasting impact on the company but are difficult to calculate.
How to Avoid the Costs of Downtime
You can make sure that you reduce the impact of Internet downtime by establishing an Internet failover solution. Satellite Internet can be a reliable and affordable option for backup Internet because it uses a different path than terrestrial Internet solutions. By combining a terrestrial primary Internet connection with a satellite Internet backup, business owners have the highest network availability possible to prevent almost all interruptions of business processes in case of a primary Internet outage.
By adding satellite Internet, you will ensure that your business stays online and keeps driving revenue even if your primary connection fails.