The hidden costs of weak IT infrastructure

Downtime no longer means just waiting for the IT guys to fix everything up. It comes with much more dread, since it can mean a significant amount of financial loss

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‘In worst-case scenarios, loss of customer trust can lead to a damaged brand in the long run’

 

The enterprise today depends heavily on the reliability of its IT infrastructure. For instance, collaborative applications and enterprise resource planning solutions will continue to grow in usage and sophistication. Likewise, maintaining a digital presence is already a standard for every modern-day business, regardless of size.

The trouble with maintaining this infrastructure is there are thousands of things that can go wrong at any moment for any number of reasons with any number of ramifications. Businesses lose an average of $140,000 per downtime incident.

This becomes complicated for businesses that are engaged in financial services, e-commerce or those that rely on connected point-of-sale systems. Even for businesses that rely on critical applications for everyday productivity, any work stoppage could mean big losses in the workplace.

>See also: 4 ways to minimise system downtime

However, there are also hidden costs for businesses that do not maintain a strong IT infrastructure. These may sometimes be intangible, but have the potential to adversely affect productivity and profitability.

Compliance and risk Issues

Governance, risk and compliance would often involve managing an organisation’s critical risks, applying industry best practices, and adhering to regulatory oversight, particularly in terms of finance and accounting. For any business, slip-ups in compliance could mean stiff fines and liabilities, especially when financial matters are involved.

What does this have to do with downtimes, then? For enterprises, business continuity management is a necessary part of their compliance responsibilities. In particular, they have to maintain a resilient business and infrastructure that can clearly identify and mitigate any potential threat to the business, be they legal, technical or operational. This also means they need to enforce clear business continuity and failover mechanisms, such that their infrastructure can get back up in the event of catastrophic incidents.

In this regard, maintaining backups is not enough – businesses need a robust solution that lets them bounce back into the game right after critical system failures. On a positive note, this also means being able to adhere service level agreements, such that they can satisfactorily provide services to customers at the defined availability.

The system should perform as promised and such that the product or service offering is available to customers at that given level. Maintaining an off-premises failover system will enable organisations to include high-availability planning, in which they can clearly define recovery time and recovery point objectives.

Loss of customer trust

Downtimes will often result in the product or service being inaccessible. If the organisation has already gained traction across a global audience, this means all of these customers will suddenly lose service for the duration of the downtime.

Downtime may come as a result of spikes in network traffic, damages to physical infrastructure, or even a malicious attack bent on bringing down your business. Such an event might even come with data theft or leakage of essential business data.

The year 2015, for instance, saw major organisations facing data leaks and hacks. No one was spared, as the list includes online services, financial services providers, healthcare providers, telecommunications companies, realty firms, and even the CIA.

Such incidents can sometimes be quantified, such as Ashley Madison’s loss of its entire subscription-driven business model. For the most part, these result in damages to the brand. Lost customer trust could lead to reduced market share and profitability in the long run.

Declining employee morale

Lastly, a weak infrastructure can potentially lead to reduced productivity, especially if employees have difficulty in collaborating and in achieving their goals simply because the business systems are prone to going offline.

>See also: Cost of application downtime grows to $16M per year

Research by CA Technologies found 44% of businesses consider downtime as damaging to employee morale. The effect is more pronounced in large enterprises rather than small companies, particularly since bigger businesses rely on collaboration solutions as mission-critical applications.

This is perhaps one reason that businesses are starting to turn to a mobile-first and cloud-first approach when it comes to productivity. With decentralised solutions like Google Apps for Business and Microsoft Office 365, employees are better assured they can accomplish their work even in remote environments, and without worrying about on-premises maintenance.

IT downtimes affect businesses in many ways. These can be quantified, such as through lost sales, lost partnerships and inefficiencies. These can also be in the form of opportunity costs. In worst-case scenarios, loss of customer trust can lead to a damaged brand in the long run. Thus, it will be important for any business – big or small – to bolster IT resources for reliability, resilience and compliance.