The cost and impact of system downtime is rapidly rising. This is primarily due to businesses' increasing dependence on data and technology. In the past, if a server went down, people simply reverted to manual methods. Or, because transactions weren't as fast and voluminous back then, they simply waited until the service would go back up again. Could you imagine dealing with network downtime now? Many large enterprises can't. Here are 5 reasons explaining the impact of system downtime.
1. Lost opportunities
A lot of B2C and B2B transactions - whether it's an online retail purchase, electronic funds transfer, Request for Quotation, Purchase Order, etc. - are now carried out over the network. Thus, if the underlying network service goes down, these transactions will be interrupted.
Worse, if the service stays down for an extended period, there's a good chance some of these transactions won't be consummated - ever. The other party might not be able to wait and simply move on to another online store or supplier. In the case of online buyers, some of them may decide to put off the purchase and then eventually forget about it.
A single online purchase might not hurt. But what if hundreds or thousands of online buyers are affected? Profits can take a big hit. In addition, several bad experiences can discourage customers from making repeat purchases. That's why the impact of system downtime can be disastrous for some companies (like most e-commerce websites) the moment it strikes.
2. Lost productivity
Some network services are needed by employees and third parties in order to do their work. When those services become unavailable, the affected parties won't be able complete certain tasks. This can have a domino effect that can bring down overall productivity.
What makes this really bad is that, even if your productivity suffers, the costs associated with these individuals or service providers are already fixed. You can't take away a fraction of salary, rent, or third party fees, just because no work was done during system downtimes.
The impact of system downtime can easily multiply if the service in question is part of a supply chain, especially in highly competitive industries where time to market is crucial to the success of a product.
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3. Eroded confidence
Even trading partners with long established business relationships with you can lose their patience if your downtimes start affecting them significantly as well. Any delay at your end due to an unavailable service can also cause delays to other companies along the supply chain. They too can suffer the same consequences outlined in this article.
While trading partners might not back out of a business relationship so easily compared to say, online shoppers, several failed transactions (or a few lengthy ones) might slowly erode their confidence. This might eventually force them to start looking for other options. At this day and age, your competitors won't be too hard to find, and the impact of system downtime may become more severe.
4. SLA penalties
In the past, Service Level Agreements (SLA) - especially those with provisions covering downtime - were not very common. But with the increasing dependency to data, IT, and network services, more and more companies are demanding a formal assurance from service providers that services would be delivered at the level they expect.
One very common metric used in SLAs is uptime or availability. Failure to deliver on the guaranteed uptime would result in financial penalties. The thing is, providing consistent uptimes has become more challenging.
Since many providers are now offering similar services, guaranteed uptimes are getting higher. If one provider is promising 99.9% availability, a competing provider bent on grabbing market share might promise something higher, say 99.99% plus a higher penalty. With ever growing assurances on uptimes, it's now almost impossible for providers to keep their promises.
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5. Damaged reputation
To make things worse, broken promises can now have serious repercussions, other than the financial type. Many disgruntled customers or employees of trading partners are quick to vent their frustrations on social media. In just a few minutes, word about your "lengthy" downtime can reach across the globe.
But it wouldn't have to get far to reach your competitors, who would be quick to take advantage of your misfortunes. They can, in turn, help spread the word and pounce on your unhappy customers.
Still, that won't be the end of it. Your inability to meet expectations and SLAs can turn potential customers away and drive your stock down.
One way to minimize network service downtime is by setting up redundant systems and deploying high availability solutions. If you want to learn more about achieving high availability, click that link to view our nice collection of high availability-related articles.