Let’s be honest, your business depends heavily on your IT infrastructure to maintain operations. From communicating internally and externally to accessing important information, if your IT doesn't work, your employees can’t work. 

IT downtime can strike unexpectedly, resulting in financial loss, damaged reputation, and decreased customer trust. 

Understanding the causes, costs, and preventative measures is critical for your business to mitigate the impact of downtime.

Main Causes Of IT Downtime

There are many different factors that can contribute to IT downtime –  from human errors to cyber breaches. Identifying the root cause of the downtime is the first step toward securing your business’s continuity. 

Server Failure

Server malfunctions due to hardware issues, software glitches, or improper configurations are a leading cause of IT downtime. 

Additionally, aging servers, lack of maintenance, and power surges can all lead to system crashes.

Faulty Software 

Unpatched or poorly optimized software, outdated solutions, or bugs in new system updates can lead to compatibility issues and service interruptions.

Network Outages

Unstable or disconnected networks disrupt communication, stopping business operations. Common causes include faulty equipment, ISP outages, or overloaded network traffic.

Cyberattacks

Cybercriminals use methods such as ransomware, phishing, and other attacks to infiltrate systems, rendering them inoperable until resolved. 

88% of cybersecurity breaches are caused by human error, which brings us to our next point. 

Human Error 

Mistakes made by employees, such as accidental deletion of critical files or improper software installation, can cause system crashes or data loss.

Natural Disasters

Events such as floods, hurricanes, and earthquakes can destroy physical hardware, resulting in extended downtime.

Plus, unexpected power failures, particularly in areas without backup generators, can leave businesses without access to their IT infrastructure.

Average Cost Of IT Downtime

Downtime doesn’t just halt business operations, it leads to significant financial and reputational losses. The average cost of downtime in 2024, was $9,000 per minute while higher-risk companies like legal firms, can hit up to $5 million an hour. 

How To Calculate Downtime Costs

Here are some formulas to help you estimate costs; however, remember that actual costs are often more complex.

1. Identify Lost Revenue

On a very basic level, use the following calculations to assess the potential financial impact of downtime on your company’s revenue:

Annual revenue/weeks = average weekly revenue

Average weekly revenue/ hours per week = average hourly revenue 

This formula provides a baseline to estimate how much revenue is lost per hour of downtime.

2. Calculate Lost Productivity

Employee productivity losses during IT downtime add to the overall costs.

Number of staff affected x hourly rate x percentage of lost productivity = lost productivity per hour

For example, if 100 employees earning $20/hour are operating at 60% efficiency due to downtime, the productivity loss per hour would be:

100 x $20 x 0.6 = $1,200/hour

3. Put it All Together

To calculate the total cost of downtime for a single day, combine revenue loss and productivity loss.

(Average hourly revenue + lost productivity per hour) x hours worked/day = lost productivity and revenue in one day

This comprehensive formula provides businesses with a clear understanding of the financial impact of downtime and underscores the importance of minimizing disruptions.

Additional Costs Associated With IT Downtime

Then depending on your company and how long you are down for, there are other additional costs to consider. 

Compliance Fines

If downtime results in the inability to meet regulatory requirements, businesses may face hefty fines for non-compliance, particularly in highly regulated industries like legal, finance, and healthcare.

Client Distrust

Clients expect seamless service, especially if the service comes with a hefty price tag. Repeated downtime can erode their trust and prompt them to seek more reliable competitors.

Bad Reputation

With downtime, you’re not only at risk of losing current clients but also potential clients, as well. Downtime, especially those widely publicized, damages a company’s brand image, making it harder to attract new business.

Legal Fees

If downtime results in data breaches or failure to meet contractual obligations, businesses may also face costly lawsuits.

11 Factors That Contribute To The Cost Of IT Downtime

The financial impact of IT downtime varies based on several factors.

1. Business Size

Larger businesses typically experience higher costs due to the scale of operations and the number of employees and systems affected.

2. Industry

Industries like legal, finance, and healthcare may face steeper losses due to the critical nature of their services.

3. Business Model

Companies with high dependency on IT, such as SaaS providers or online retailers, suffer greater losses during downtime.

4. Type Of Attack

The type of incident, whether it’s a minor software glitch or a major ransomware attack, significantly impacts recovery costs.

5. Severity Of Breach

The extent of data loss or system compromise will determine the complexity and cost of recovery.

6. BU/BC In Place

Companies with robust backup and business continuity plans are better equipped to minimize downtime and associated costs.

7. Maintenance Costs

Addressing and resolving downtime often requires IT staff to work overtime or outsource, adding to operational expenses.

8. Third-Party Delays

If your solutions or managed service provider fails to catch and respond to IT issues in a timely manner that can lead to extended downtime and more losses. 

9. Employees

If your employees are well-trained in responding to downtime and are given the necessary tools to respond quickly, you can minimize the impact of downtime. Additionally, employees who are passionate about their work will be more proactive than those who are burnt out.

10. Data Loss

Unrecoverable data loss or corrupted files during downtime can lead to expensive recovery efforts and legal penalties, depending on the nature of the data.

11. Recovery Costs

The recovery costs often vary depending on factors like the extent of the damage. These include the expenses associated with diagnosing the issue, restoring systems, and potentially replacing damaged hardware or software.

How To Avoid IT Downtime

Preventing IT downtime requires proactive measures and investments in reliable infrastructure. Here are some strategies to help your business. 

Applying Multi-Factor Authentication

Enhance your cybersecurity by requiring multi-factor authentication (MFA) for system access, reducing the risk of unauthorized entry.

24/7/365 Monitoring

Continuous system monitoring helps detect and resolve issues before they escalate, minimizing downtime.

Implementing Cloud Solutions

Cloud-based solutions offer greater reliability, scalability, and disaster recovery options, ensuring access even during hardware failures.

Hiring A Managed Service Provider

Partnering with the right managed IT service provider offers access to expert IT support, system monitoring, and rapid response to incidents.

Leverage Solutions To Reduce Downtime

IT downtime is a costly challenge that no business can afford to ignore. By understanding its causes, evaluating potential costs, and implementing preventative measures, businesses can ensure continuity and maintain their competitive edge. 

Investing in robust IT cloud solutions and partnering with a reliable managed service provider will pay dividends in safeguarding operations and building customer trust.

That’s where Tabush Group comes in. We simplify and secure your company’s IT so you can focus on your day-to-day operations. With our cloud solutions like Overture and Boxtop plus our managed IT services, we can help your team reduce IT downtime. Schedule a meeting today to get started.