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The Costs and Consequences of Corporate Downtime

No matter how you look at it, the benefits of investing in power backup solutions to protect critical systems far outweigh the astonishing price tag related to downtime.  With the ability to cause irreparable damage and irretrievable loss of revenue in a matter of minutes, downtime has the power to unleash a hurricane of costs and consequences that are both direct and indirect, short-term and long-term.

 

Electrical power outages, surges and spikes are estimated to ring up more than $150 billion in annual damages to the U.S. economy. Downtime costs vary not only by industry, but by the scale of business operations. For a medium-size business, the exact hourly cost may be lower, yet the impact on the business can be proportionally much larger. Nailing down the cost of each hour of downtime varies widely on a number of factors, such as the nature of the business, the size of the company, and the criticality of its IT systems related to revenue generating processes. For instance, a global financial services organization may lose millions of dollars for every hour of downtime, whereas a small firm might lose only a margin of productivity.  

 

According to Dunn & Bradstreet, 59 percent of Fortune 500 companies experience a minimum of 1.6 hours of downtime per week. Assuming an average staff of 10,000 employees who are paid an average of $56 per hour (including benefits), the downtime loss in labor alone for a Fortune 500 firm would ring up at $896,000 per week — or more than $46 million annually.

 

It isn’t always easy to put an exact price tag on the consequences of downtime. Consider some of the tangible and intangible costs:

 

Tangible/Direct Costs 

 

· Lost transaction revenue

· Lost wages

· Lost inventory

· Remedial labor costs

· Marketing costs

· Bank fees

· Legal penalties from not delivering on service level agreements 

 

Intangible/Indirect Costs

 

· Lost business opportunities

· Loss of employees and/or employee morale

· Decrease in stock value

· Loss of customer/partner goodwill

· Brand damage

· Driving business to competitors

· Bad publicity/press

 

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