Dreadful numbers of downtime costs
- Date: 2007-02-22 - Word Count: 826
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Many people use the web to search for the best prices for plane tickets, hotels, car rentals, and other travel-related services. In addition, a growing number of on-line consumers use the web for on-line banking and to research automobiles, watch videos, and listen to music.
Website downtime leads to lost business and generates customer dissatisfaction; many studies have shown over the years. Downtime can be a minor inconvenience or a major cause for concern. For example, a person may be less upset about being unable to access an on-line store than about being unable to log into a bank or brokerage account to make a financial transaction.
Although downtime is quite common in IT. In fact the downtime is planned in up to 80% of all cases. The rest 20% of all downtimes is unplanned and causes the mentioned damages. The table below shows the proportion of factors which lead to planned and unplanned downtime.
Planned downtime
Backup 56%
Software upgrades 14%
Hardware upgrades 12%
System admin. 8%
Recovery 7%
Production test 2%
Other 1%
Unplanned Downtime
Employee error 43%
Application error 20%
Operations overrun 15%
System errors 11%
Hardware failures 8%
Utility failures 2%
Disasters 1%
Infonetics recently surveyed 230 companies (each with more than 1,000 employees) in five different verticals and found that some are affected more than others.
The finance and manufacturing verticals are suffering from downtime the most, it costs an average financial institution 16% of its annual revenue, or $222 million, and manufacturers are losing an average of 9% of their annual revenue.
On the other hand, companies in the health care and transportation/logistics verticals typically fare much better. These verticals have a fairly low percentage of the workforce connected to the network. The transportation and logistics market fares the best of the verticals studied, losing just 2 percent of annual revenue to downtime, but that's still an average of $32 million a year.
High availability is one area of IT where the cost of each "nine" can, and must be weighed against the costs of downtime. For some companies, a 10-minute outage may be acceptable; for others, it can be disastrous.
According to nextslm.org as well, downtime costs are higher in the finance industry. Finance had twice the percent of sites with downtime cost greater than $100,000 per hour than other industries (53.2% versus 26.3%). In addition, 16.7% of Finance sites had downtime cost greater than $400,000 per hour, compared to 4.6% for other businesses.
In the case of banks, especially those with on-line applications, system downtime can severely affect their business and competitive advantage. If the website is down or too slow, customers are unable access their bank accounts, pay bills, and other services commonly used on-line.
Website performance is a critical and underrated component of web marketing and e-commerce. It does not matter how well you design and market your site unless it delivers. Who has not abandoned a website because of slow page load? Yet, according to standard monitoring of availability, those incidents do not count. In 2001, Zona Research reported that 30% of surfers would abandon a website if it took more than eight seconds to load, creating the widely quoted "eight-second" standard. Four years have cut that safety margin in half. "The wait becomes frustrating for most Internet users after about four seconds," according to an article in InternetRetailer. Patience is waning as more shoppers become accustomed to quicker broadband connections.
Assuming that 30% of surfers abandon a site that takes more than 4 seconds to load we should add the percentage of those page loads to the downtime percentage. If we multiply this sum by average sales, we will get the real impact of site performance problems on revenues.
If customers become frustrated with a website's performance and leave without completing the transaction, the effect is the same as if the site went dark: the e-shop loses revenue and customers.
While the downtime cost for catalog sales and airline reservations may fall below $100.000 an hour, the downtime cost for some financial institutions is estimated between $60,000 and $250,000 a minute! The averaging of data from a number of analyst firms reveals downtime costs between $3.6 million and $15 million per hour across several industries. These are big numbers. Some analysts even estimate that US business lost over $9 billion dollars due to downtime in 2003.
The factors that count are website availability and page load performance. However the majority of the revenue impact comes not from website outages but from the prevalence of slow web pages and the impatience of web customers in a broadband world.
Here you could appreciate a service which would measure availability (uptime monitoring) and responsiveness (speed performance tracking). MON.ITOR.US can do it for you and even much more. As soon as you are sure, that your website is up and running, you could be interested in usage of your websites. MON.ITOR.US can also track the traffic of your website. All these features make MON.ITOR.US the first free Ajax-based service which provides complete all-in-one solution. The service is in the same time in a testing period, continuously adding new features and preparing a radical visual and also technical upgrade in the next months.
Website downtime leads to lost business and generates customer dissatisfaction; many studies have shown over the years. Downtime can be a minor inconvenience or a major cause for concern. For example, a person may be less upset about being unable to access an on-line store than about being unable to log into a bank or brokerage account to make a financial transaction.
Although downtime is quite common in IT. In fact the downtime is planned in up to 80% of all cases. The rest 20% of all downtimes is unplanned and causes the mentioned damages. The table below shows the proportion of factors which lead to planned and unplanned downtime.
Planned downtime
Backup 56%
Software upgrades 14%
Hardware upgrades 12%
System admin. 8%
Recovery 7%
Production test 2%
Other 1%
Unplanned Downtime
Employee error 43%
Application error 20%
Operations overrun 15%
System errors 11%
Hardware failures 8%
Utility failures 2%
Disasters 1%
Infonetics recently surveyed 230 companies (each with more than 1,000 employees) in five different verticals and found that some are affected more than others.
The finance and manufacturing verticals are suffering from downtime the most, it costs an average financial institution 16% of its annual revenue, or $222 million, and manufacturers are losing an average of 9% of their annual revenue.
On the other hand, companies in the health care and transportation/logistics verticals typically fare much better. These verticals have a fairly low percentage of the workforce connected to the network. The transportation and logistics market fares the best of the verticals studied, losing just 2 percent of annual revenue to downtime, but that's still an average of $32 million a year.
High availability is one area of IT where the cost of each "nine" can, and must be weighed against the costs of downtime. For some companies, a 10-minute outage may be acceptable; for others, it can be disastrous.
According to nextslm.org as well, downtime costs are higher in the finance industry. Finance had twice the percent of sites with downtime cost greater than $100,000 per hour than other industries (53.2% versus 26.3%). In addition, 16.7% of Finance sites had downtime cost greater than $400,000 per hour, compared to 4.6% for other businesses.
In the case of banks, especially those with on-line applications, system downtime can severely affect their business and competitive advantage. If the website is down or too slow, customers are unable access their bank accounts, pay bills, and other services commonly used on-line.
Website performance is a critical and underrated component of web marketing and e-commerce. It does not matter how well you design and market your site unless it delivers. Who has not abandoned a website because of slow page load? Yet, according to standard monitoring of availability, those incidents do not count. In 2001, Zona Research reported that 30% of surfers would abandon a website if it took more than eight seconds to load, creating the widely quoted "eight-second" standard. Four years have cut that safety margin in half. "The wait becomes frustrating for most Internet users after about four seconds," according to an article in InternetRetailer. Patience is waning as more shoppers become accustomed to quicker broadband connections.
Assuming that 30% of surfers abandon a site that takes more than 4 seconds to load we should add the percentage of those page loads to the downtime percentage. If we multiply this sum by average sales, we will get the real impact of site performance problems on revenues.
If customers become frustrated with a website's performance and leave without completing the transaction, the effect is the same as if the site went dark: the e-shop loses revenue and customers.
While the downtime cost for catalog sales and airline reservations may fall below $100.000 an hour, the downtime cost for some financial institutions is estimated between $60,000 and $250,000 a minute! The averaging of data from a number of analyst firms reveals downtime costs between $3.6 million and $15 million per hour across several industries. These are big numbers. Some analysts even estimate that US business lost over $9 billion dollars due to downtime in 2003.
The factors that count are website availability and page load performance. However the majority of the revenue impact comes not from website outages but from the prevalence of slow web pages and the impatience of web customers in a broadband world.
Here you could appreciate a service which would measure availability (uptime monitoring) and responsiveness (speed performance tracking). MON.ITOR.US can do it for you and even much more. As soon as you are sure, that your website is up and running, you could be interested in usage of your websites. MON.ITOR.US can also track the traffic of your website. All these features make MON.ITOR.US the first free Ajax-based service which provides complete all-in-one solution. The service is in the same time in a testing period, continuously adding new features and preparing a radical visual and also technical upgrade in the next months.
Related Tags: availability, monitor, uptime, traffic monitor, network monitor, web key performance indicators, website monitoring, downtime, page load
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