As the main technology stakeholder in the business you will need buy in from your financial and operations stakeholders. This buy in is often best achieved by the application of the cost of downtime calculator in defining the financial and operational down time cost to the business.
To calculate the cost of downtime, use the cost of downtime calculator and refer to the below for guidance:
- Time of lost data = the time required by the end user to recreate the work that was lost. For example, if you run daily backups in the evening and you have a server failure the following day at 14:00, the end user would have lost those six hours of work and would have to spend roughly an additional six hours recreating the work that was lost.
- Time of outage or lost productivity = the time required to bring the server backup while employees sit idle. For example, after the server crashes at 14:00 it takes your team the remainder of the day to diagnose the problem, order the new parts required and the entire next day to rebuild the server. The business would have lost 12 hours in productivity.
- Total time impact of the server failure = time of lost data + lost productivity
- 6 + 9 = 15 hours
Your next step is to figure out, what these lost hours equate to Rands? There are two types of Rand per hour costs to think about: human costs and profitability.
The human cost is relevant because the business is essentially paying the employee for no benefit during IT failures. To be conservative you could argue that employees in an office could do other tasks during the IT outage and are in fact not entirely redundant. For example, end users might still be able to send mail or do admin around the office. To cater for this, you could half their hourly cost to the business.
When a team responsible for generating revenue is impacted by an IT failure the loss of hourly profitability can be measured. For example, a sales team who generates R90 000 a day in profit, would lose R10 000 for every hour of the IT failure.
To work out the total cost of the problem:
Add the hourly human cost per hour (for this example let’s use R140 an hour multiplied by 50 users divided by two to cater for the end users only being half idle)
Lost profitability per hour (for this example let’s use R10 000)
- = R140x 50 /2 + 10000
- = R13500 (Total Rand value lost per hour)
Total Rand value lost (human cost + profitability lost) x Total time lost (time of data lost + outage time)
- = R13500 x 15
- = R202500
The cost of the server going down halfway through a workday with one day to bring the services live again would cost this business of 50 employees of R202500.
And no business is ever the same, but you have got the first step right in that you can now communicate what a technology failure looks like in Rands and Cents.
The next step is to take your calculations to other stakeholders involved in the decision-making process to get the feedback.