IT Basics: How To Calculate The Cost Of Downtime
Downtime is the amount of time that a computer system or network is unavailable for use. Downtime can occur for many different reasons, including hardware failures, software updates, or power outages. The cost of downtime can be calculated by taking into account lost productivity and potential lost customers due to inaccessibility of services. In this article, we’ll look at how to calculate the cost of downtime so you can better understand what areas need improvements and prioritize investments in IT infrastructure and services.
Calculating Lost Productivity:
The first step when calculating the cost of downtime is calculating lost productivity. To do this, start with the total number of employees affected by the downtime, then multiply it by the average hourly wage of those employees. This gives you an estimate of how money was lost due to the downtime in terms of labor costs.
Calculating Potential Lost Customers:
The second step in calculating the cost of downtime is estimating potential lost customers due to unavailability. To do this, start by looking at your historical sales data and seeing what percentage of website traffic originates from new visitors, or first-time buyers. Next, multiply that percentage by the total number of visitors that would have accessed your website during the time period where your service was down. This will give you a rough estimate for how many potential customers were potentially lost due to unavailability.
By taking into account both lost productivity and potential lost customers, you can get a better understanding of the cost of downtime. This information can then be used to prioritize investments in IT infrastructure and services that ensure your computer systems and networks are reliable, secure, and available when needed.
By calculating the cost of downtime, businesses can quickly identify areas for improvement and take corrective action accordingly. Additionally, having this data readily available allows businesses to make more informed decisions about their IT investments and create a stronger business case for those investments.
We hope this article has been helpful in showing you how to calculate the cost of downtime. For additional information or assistance with implementing these strategies within your organization, contact an IT professional today!