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How to plan for the cost of unplanned downtime

Unplanned downtime can lead to serious consequences, including reputational harm, revenue loss and extra IT costs. Use these tips to plan for the unexpected.

Downtime is costly for any organization. Just how costly depends on many factors, including how long the downtime lasts, when it occurs, and, perhaps most importantly, whether the downtime was planned or unplanned.

The key difference between planned and unplanned downtime is that businesses have additional options when the service interruption is planned. They can implement appropriate workarounds or defer tasks that are not time-sensitive, said Frank Trovato, an infrastructure research advisor at Info-Tech Research Group.

If the downtime is unplanned, an organization won't be prepared for these actions, and the costs won't strictly be financial. Unplanned downtime can result in lost revenue, decreased productivity and even have a reputational impact.

Estimate costs

Estimate the cost of planned downtime by understanding which services might be affected, both directly and indirectly. For example, if downtime is scheduled to upgrade the organization's cloud environment will it take customer databases offline? Is that a critical dependency for online sales or customer support that users expect to be available 24/7?

"The 'cost' is not only lost revenue but also reputational damage that can affect future sales or otherwise compromise the brand," Trovato said. "It's important to ensure that leadership understands the cost of planned downtime so they can decide whether to mitigate or accept that cost."

With the potential to cause even more disruption than planned downtime, unplanned downtime can lead to extra business and IT costs, Trovato said. On the IT side, costs can involve additional technology purchases, vendor support services and the staff overtime necessary to resolve the incident.

Organizations must treat both planned and unplanned downtime as potential business disruptions. For most organizations, even a weekend of planned downtime for maintenance has some impact.

"While weekends may seem like ideal opportunities for planned downtime, a wide range of services and stakeholders can still be affected, including users of online platforms, staff who are working after hours to meet a deadline, batch processing that is run after hours, and so on," Trovato said.

The key to effective budgeting is to ensure that leadership understands the cost of unplanned downtime so they can decide whether to mitigate or accept that cost.

"That understanding also helps define an appropriate level of investment in resilience," Trovato said. "Don't spend a million dollars to solve a $10,000 problem."

Similarly, if potential reputational impact is low, it may be unnecessary to deploy an expensive high-availability tool to reduce that risk.

"Instead, a warm standby solution that enables recovery within 24 hours might be just fine," Trovato said.

Mitigate downtime expenses

It's possible to minimize downtime costs by improving the resilience of an organization's most critical systems. "Building in resilience is expensive, so IT first needs to obtain insight from business leaders on which applications have the greatest impact on the organization," Trovato said.

Once priorities have been determined, there are several options available to improve technology resilience. Trovato said high-availability critical systems based on active-active clusters, migration to the cloud and disaster recovery services that expedite failover to a standby environment can help.

Organizations can also achieve resilience through business workarounds that enable critical services to continue to function while IT works to recover damaged systems.

"For example, hospitals will revert to paper-based patient processing," Trovato said. "It's not ideal, since that data will need to be manually shared, but it ensures patients can still be registered and treated."

Exact costs are not so exact

According to Trovato, attempts to place an exact dollar figure on downtime costs is a fool's errand.

"Revenue impact will vary based on when the incident occurred and the outage's duration. ... Meanwhile, soft costs, such as reputation impact, are even less precise."

On the other hand, it is possible to arrive at a rough estimate that enables planners to divide potential impacts into high, medium and low categories. "This is all we really need to start prioritizing where to invest first in resilience," Trovato said.

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