What Does a Network Outage Really Cost?

If the network represents the lifeblood of an enterprise, an outage equates to a very real, and very costly killer.

The corporate WAN underpins nearly every critical enterprise process today. From email, video conferencing and VoIP to cloud platform and database access, the WAN makes it possible for employees to complete important tasks and keep operations up and running.

But what happens when there is a network outage? And more specifically, what does this cost a business in terms of not only dollars, but other losses as well?

Dollars to downtime

As is often the case in the enterprise community, many decision-makers appreciate looking at things in terms of monetary value. When it comes to network downtime, there are numerous figures floating around the industry:

  • Gartner analyst Andrew Lerner noted in a report that downtime cost is usually cited as $5,600 for each minute. That means that a network outage lasting only a single hour can cost a business more than $300,000.
  • A separate report from IHS found that midsize to large companies typically experience five minutes of downtime every month, which translates to a cost of about $1 million annually for midsize firms and $60 million a year for large enterprises.
  • Infonetics found in its ICT downtime survey that businesses lose nearly $4 million a  year to network downtime, which equates to 0.5 percent of a company’s total revenue.

While these figures are surely telling, even more so are the components behind these costs. Although the IT team’s efforts in identifying and repairing a downtime-causing network problem are part of the equation, they’re only a small portion.

A network outage isn't just frustrating for your employees - it can be incredibly costly for your business as well.
A network outage isn’t just frustrating for your employees – it can be incredibly costly for your business as well.

Deconstructing the price of an outage

There are a range of items to factor into the cost of downtime, not the least of which is the loss that comes as a result of employees not being able to access mission-critical, network-dependent assets.

“Fixing the downtime issue is the smallest cost component,” noted Matthias Machowinski, Infonetics Research enterprise networks directing analyst. “The real cost is the toll downtime takes on employee productivity and company revenue, illustrating the criticality of [information and communication technology] infrastructure in the day-to-day operations of an organization.”

Other less quantifiable costs can come into play here as well. For instance, it’s important to consider the impact a WAN outage can have on a company’s overall brand reputation, especially in the eyes of both existing and potential customers. An organization that isn’t able to serve its clients due to a network outage may cause consumers to seek out the company’s competitors.

What’s more, there could be additional costs involved if an outage takes place at a branch location. Oftentimes, IT doesn’t have a staff member on the ground at every location, and may have to travel to the individual branch experiencing connectivity issues to repair the issue. This results in travel expenses and could even lead to extended downtime as branch employees wait on IT team members’ arrival.

Preventing network outages with SD-WAN

“An outage equates to a very real and very costly killer.”

There are a few strategies enterprises can harness to prevent network outages. One of the best is putting in place the monitoring capabilities and visibility needed to effectively arm the IT team. This, in conjunction with enabling the network to proactively respond to changing real-time conditions, can make network outages a thing of the past. Overall, it’s important to make sure that any issues or problems can be identified and corrected before downtime ever takes place.

“You don’t want the user to be your early-warning system,” Machowinski told Network Computing.

SD-WAN technology is ideal for these needs. These solutions proactively measure key network metrics and route traffic according to what’s occurring within the WAN in real time. This way, if one network link is degraded by packet loss, latency or jitter, the SD-WAN solution can direct traffic to other, higher quality paths. An SD-WAN ensures that every part of the corporate infrastructure has the proper visibility – from the company’s headquarters to each branch location to the data center and every cloud environment. Best of all, this all takes place without the need for human interaction, ensuring that employees’ activities are always supported.

To find out more, contact Talari Networks for a custom demonstration of our industry-leading SD-WAN solution today.

Categories: Software Defined WAN (SD-WAN), Application Performance/Application Quality, IT Challenges, Network Reliability, Business Agility, Business Continuity