Companies Lose Revenue Due to Network Downtime

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Companies participating in a new study by Infonetics Research experience an average of 501 hours of network downtime every year, and as a result are losing millions of dollars in annual productivity and revenue losses, study results show.

"Overall downtime costs average 3.6% of annual revenue, a significant number, and one likely to surprise many large organizations," said Jeff Wilson, principal analyst of Infonetics Research and author of the study, titled The Costs of Enterprise Downtime, North America 2004. "We've been doing this study for years, and what we found this year is that there isn't any one problem area that organizations need to focus on; there's no simple fix. Every decision is critical, from hardware selection to product setup, from employee training to SLAs with service providers."

Sample Study Findings

  • Downtime hours are evenly split between outages and service degradations, but outages cost more (an average of 58% of downtime costs come from outages, 42% from degradations)
  • Application problems are the single largest source of downtime, causing 30% of annual downtime hours and 32% of downtime cost, on average
  • The leading cause of application downtime is software failure (36% of cost on average), followed by human error (22%)
  • Other sources of downtime include network products, security products, servers, service providers, cables and connectors, and e-commerce

The Costs of Enterprise Downtime, North America 2004 is based on surveys of 80 large organizations, taking an in-depth look at the many types of downtime costs, from the easy-to-quantify lost sales on disrupted e-commerce sites to the more difficult-to-quantify lost employee productivity due to clogged WAN connections or misconfigured firewalls.

Specifically, the study examines the annual costs of lost revenue and productivity due to downtime caused by network products, security products, servers, applications, service providers, cables and connectors, and e-commerce.

The causes of outages and degradations in all categories of
downtime tracked are also reviewed, including hardware failure, software failure, and human error.

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