How Much Does Network Downtime REALLY Cost Your Business?

How many hours of network downtime did your business experience this past year? The average business suffers from about 14 hours of IT downtime per year. Regardless of whether you experienced more or less, I’m positive that there was a negative financial impact associated with each downtime event.

According to a survey by CA Technologies, small enterprises lost, on average, more than $55,000 in revenue due to IT failures each year, while midsize companies lost more than $91,000 and large companies lost more than $1,000,000.

Those numbers may shock you, but let’s think this through. How much are you paying idle employees? Did you pay overtime to make up for lost productivity? How much revenue did you lose that could have been generated? Did you incur late delivery surcharges? Did a loss of customer goodwill erode your ongoing revenue stream? Did you need to plan and execute campaigns to explain and apologize for the outage?Costs incurred from network downtime

Here’s a complete list to help you work through what downtime costs your business:All internal business processes will cease; inventory tracking/ERP, billing, HR, intranet, etc.

-Lost sales revenue; sales will have no access to customer or product data
-Lost employee productivity; no systems to keep them working
-No communication; no email
-Cost to restore IT systems
-Materials lost/disposal and cleanup costs
-Financial impact of customer dissatisfaction
-Contract penalties
-Compliance violations, if applicable
-Upstream and downstream supply-chain ripple effects
-IT and employee recovery costs
-Potential litigation/loss of stock value
-Missed deadlines that result in employee overtime
-Priority shipping charges

How to calculate the average labor cost of a downtime event:
LABOR COST = P x E x R x H

P = number of people affected

E = average percentage that are affected

R = average employee cost per hour

H = number of hours of outage

How to calculate potential revenue losses during a downtime event
It is difficult to calculate this, especially the more intangible costs like customer dissatisfaction and loyalty. To keep things simple, we suggest the following calculation:


GR = gross yearly revenue

TH = total yearly business hours

I = percentage impact (A high percentage would mean you can’t complete any transactions, will loose clients, and have a PR nightmare)

H = number of hours of outage

Finally, to calculate the expected annual cost, multiply this number by the number of expected annual hours of outage.

Business Continuity Price VS Downtime Cost
Despite the fact that business downtime events are becoming more and more expensive, over half of business’s still don’t have a disaster and recovery plan. Many put it off until a downtime event occurs, which tends to be more costly than investing in a solution now.

Think you have the connectivity challenge covered?  Got network diversity and redundancy?  Both of your Internet access connections physically in the ground?  

BelWave provides businesses a Fixed Wireless Option.  If your connections are broken by the gas company, or a flood, what happens? 

If you have BelWave enterprise fixed wireless technology you are still running and business continues.

Written by

Dan has been in the telecommunications and data communications industry to over 20 years. He holds a CISSP, CNA, AND CEH.