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Lost Opportunity Cost: How Much Does a Computer Network Outage Cost Your Business?

June 23, 2017

Pretend for just a quick moment that your computer network experiences an outage.  It has happened before, but thankfully it has been quite a while.  In this example say the electricity goes out and obviously your system goes out as well.  Minutes later the power returns and the lights are on, but wait your server is non responsive. This time even though electricity returns your server does not boot. So the first thing to do is call your IT Company.  Guess what, if your power went out so did many of their other customers and you will most likely have to wait your turn. Waiting costs money.  In this instance there is a lost opportunity cost that you must endure while you and your staff cannot work.

 

In these sporadic and unplanned occurrences, when no one at your business can operate, you can have a good old fashioned panic attack (first response) but at some point you have to face facts that you are vulnerable and then you have to wait for service.  How much does it cost for you to wait?  What is your lost opportunity cost per hour?  Per day? The lost opportunity cost is how much money in revenue, productivity, and general livelihood that your business loses when your system is nonfunctional. It is the sum of your lost sales/revenue, the cost of your overhead to operate, and the cost to repair the outage. (By the way, most outages are preventable)

 

Recently a company experienced a server outage that lasted several hours.  Their staff was losing productivity for the entire day.  Their customers were not able to get any service and they were shut down with no way to effectively reach their data. The server repair ended up costing about $ 2700.00 in parts and labor. (In the final analysis this failure was the result of neglected maintenance) Their sales were nonexistent that day and they normally sale about $ 8500.00 worth of products and services. It possibly could have been quite a bit more.  Their sales staff ended up losing several hours’ worth of work on a proposal and had to work well into the night to meet their next day’s deadline for submittal. Incidentally they ended up not getting the $ 4500.00 sale.  In this example the lost opportunity cost amounts to a whopping $ 20,700.  ($ 2700.00 repair + $8500.00 lost sales + $ 4500.00 another lost sale + $ 5000.00 overhead)

 

After assessing the lost opportunity cost for the outage, the management team decided to reevaluate their options so that they could minimize the risk of future outages. At this point the goal is to learn from this bad experience and avoid the deathtrap of future outages. Clearly, it is evident that several outages of this nature could cause irreparable harm to the future of their business.

 

After conducting research, one consideration for the company is moving their system to a cloud provider. This takes the electrical power issue for the server out of the picture. It also takes the mechanical dependency on the server away (no more maintenance failures of the hardware). In the unlikely event that the cloud server fails then the cloud provider can simply move to another server. In the event described above, their workers could have worked from home and accessed their data from anywhere else with an internet connection.  Another option is to have a wireless hotspot for emergencies such as this.  They could have a disaster plan in place to be operational when the system goes down. They could simply activate their back up plan to be functional while an electrical or internet outage occurs. In any event minimizing the lost opportunity cost is certainly a worthwhile endeavor.

 

To learn more about the many advantages of moving your system to the cloud, contact your sales specialist at NthaCloud.com.

 

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kevin@nthacloud.com
303.565.7261
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