BigPanda has published a new report created with Enterprise Management Associates (EMA), titled “The Modern IT Outage: Costs, Causes and Cures.” The report investigates how much it costs organisations when their IT systems are no longer available. It found that the iconic $5,600 is no longer valid with organisations digitising rapidly.
The average real cost of an IT outage it found was $12,913 per minute. For the smallest sampled organisations, the figure was $1,850 per minute. However, for larger organisations with more than 20,000 employees, this rises to $25,402 per minute, over $1.5 million per hour. However, these figures are derived from a survey of only 300 global managers, directors, VPs, and executives, which seems a small sample set.
Assaf Resnick, co-founder and CEO at BigPanda, commented, “For years there has been a largely unchallenged urban legend that the cost of an IT outage is $5,600 per minute, but our research shows it’s actually more than double that amount.
“Ultimately, this underscores the importance of minimizing IT outages on the front end and acting quickly to remediate them if and when they do occur. Particularly in the face of economic uncertainty and an IT talent shortage, the numbers validate how imperative it is for today’s organizations to adopt AIOps to lower the risk of frequent, lengthy, and costly outages.”
What About the Modern IT Outage
The report is eighteen pages in length, begins with a research overview and is then divided into three main sections:
- Anatomy of the modern IT Outage
- The significant IT outage
- What comes next
Each section contains a mix of data graphics and commentary, leading the reader through to the conclusion by EMA that is balanced. EMA believes that AIOps, such as that provided by BigPanda, have a role in preventing the frequency and severity of IT outages but are not solely responsible for eliminating them.
Anatomy of the modern IT Outage
This section looks at IT outages from different angles. It looks at how and when outage costs are calculated by businesses, which perhaps confirms the costs are indicative rather than actual. There is also a concern that the C Suite believes that their outage costs are calculated. However, those providing those calculations believe they are estimated.
The important elements that contribute to outage costs are not a surprise. The top five are:
- Business disruption -55%
- Impact on employee productivity – 54.7%
- Data breach/governance regulatory exposure – 43.7%
- Lost revenue -43.3%
- Reputation – 43%
The authors do not dive into this deeply, though understanding how IT outages impact reputation would probably be a whitepaper in its own right.
The report also looks at the most common outages, with a power outage (36.4%) being the most common issue. However, hardware failure is still surprisingly high at 33.6%, and internet provider failure nearly as important (32.7%).
The significant IT outage
The survey also asked respondents to define a significant IT Outage. There was no definitive answer to this question. However, the authors then looked at the duration and cost to the business of such outages, specifically at the most recent outage. They were generally between 1.4 and 2.9 hours. However, some historic outages last much longer and 62% of significant outages last less than an hour.
While the report also looks at the frequency of outages, it did not reveal whether outages have reduced over time. With digitisation and the shift to the cloud, it would have been interesting to see whether outages are reducing in frequency and duration. This may also change over the coming winter, with power outages looking more likely. In some countries, the impact of hybrid working means that some employees will have unplanned IT outages that IT teams cannot resolve.
What comes next
The final section looks at the reasons behind IT outages, with the authors drawing on other research, such as the EMA report on Network Management Megatrends 2022 (registration required). It examines whether organisations see IT outage costs rising (36%) or avoidable (35%). Many see avoidance using AIOps and automation as an option. The report highlights how AIOps has helped businesses from the recent State of AIOps report (paywall). 38% of respondents have seen AIOps reduce IT Outages.
Reducing IT outages is not their only benefit, with the report highlighting three more
- It improves the quality of IT service delivery
- Performance, availability, and user experience all get better when outages decrease
- Automation and AI increase operational effectiveness and decrease costs
Enterprise Times: What does this mean
The report contains some indicative findings about the cost of an IT outage, not only because of the sample size but also because of the lack of consistency in calculating those costs. It does what BigPanda expected to hear that AIOps can help reduce the impact of outages.
However, digitisation and flexible working are changing the impact of IT outages on business. This report highlights a point in time, and it will be interesting to see what trends emerge if the report is followed up in a year.
