The Real Cost of Downtime

How do you justify an investment in IT Support? How do you make sure that your investment was a good one?

The issue with measuring ROI with IT Support is that it seems almost impossible to do. Unlike a farmer investing in say, a tractor, an executive cannot see the increased production generated from implementing effective IT Support.

The Psychology of IT Investments

What is the best case scenario for your IT setup?

The most perfect, brilliant IT support setup in the world, to a lay person, can be most fully described as, “functioning”.

A good investment in IT Support aims to have minimum, or even zero down-time, which is an important goal for a lot of businesses. However, the best case scenario, is not tangible. If everything goes right, then nothing goes wrong. That’s the best return for an IT Support investment.

How can you justify a large investment in IT Support, where your ROI is measured by “nothing going wrong”?

“If everything goes right, then nothing goes wrong. That’s the best return for an IT support investment.”

The Issue

When people think of their business productivity, they do not automatically account for downtime, which is something that everyone can and will experience if they do not invest well in IT Support.

Honestly, it’s a natural response. Unless clients have experienced a system failure, or network downtime in the past, they probably feel like it’s a large cash outlay that effectively makes their business do no more than what they expect it to do.

The Cost of Downtime

Downtime graph

This graph, from a Coleman Parkes 2010 study, shows the average revenue loss in terms of Euros for different sized companies. It should be noted, that ‘small’ in this example is 50-499 employees.

Further, the study provides no data about the quality of the existing IT setups in their sample, so these numbers could be inflated, or deflated depending on whether their setups were poor, or fantastic, respectively.

See For Yourself

If your business has experienced downtime, you can attest to the importance of business continuity. If not, here’s a way to calculate the loss for your own business:

Let’s use an example of 1 hour of downtime. How many employees are affected? Let’s say, 15. How much is each employee’s time worth? Let’s say, they’re all in the same department, and one hour’s pay is $20 SGD. By having one hour of downtime, you effectively lose 15 man-hours of productivity, and therefore $300 SGD per hour.

This is a simplistic calculation, admittedly, but it helps put the concept of downtime in numerical terms.

Do this calculation for your own business. How many man-hours did you lose last year? How many do you expect to lose in the coming year? Perhaps your business could function fine regardless of downtime. Or perhaps, like most businesses, you would stand to lose some money and need to think about whether this loss warrants an investment in IT.

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