How Much is your Time Worth?
Justin Moore is CEO of Axcient.
This year, as the lights went out in the New Orleans Superdome on Super Bowl Sunday, more than 108 million viewers waited 34 minutes for the game to resume. Even though the stadium’s power sources had been tested — and even upgraded — in the months previous to the big game, there was significant, unexpected and costly downtime. While no official numbers have been released to calculate the costs of Super Bowl downtime, the following numbers provide some perspective:
- $240 million: the average value of 30 minutes on screen at the Super Bowl ($4 million per 30 second ad).
- $400 million: the amount of money added to the local economy because of a Super Bowl, which could be at future risk for New Orleans if the power issue affects their bid for the 2018 Super Bowl.
- Incalculable: the loss of reputation for the NFL, which failed its viewers during the most important game of the year. Also, the loss of bragging rights for CBS, which may have had the most-watched TV event in history if news of the blackout hadn’t deterred potential second-half viewers from turning on the game. (PBS’ tweet reminding viewers that Downton Abbey was on air at the same time as the blackout brought a record 6.6 million viewers to its show, and Animal Planet’s Puppy Bowl IX drew a record 12.4 million viewers.)
What happened at the Super Bowl brings attention to the fact that downtime is an ongoing, often invisible challenge for businesses of every size.
The Super Bowl is just one famous example of downtime. There were also the hours of Christmas Eve downtime that irritated Netflix subscribers. And many sales organizations were unable to close their final deals of the year because of New Years’ Eve downtime from a major electronic signature provider.
This brings us to the question: If even the most prepared organizations can go down on their busiest days of the year, what does that mean for every other business?
The answer is that downtime can happen to any business, at any time. It’s not a matter of asking “if” but “when” downtime will happen. Thirty percent of all servers will fail each year, plus there are the constant, unpredictable hazards of human error and Mother Nature. Without a solid business continuity and recovery plan, any business can be put out of the game. These numbers from a 2011 study on downtime show how much downtime drains businesses:
- $26 billion: the amount IT downtime costs North American businesses each year.
- 127 million: the average number of person hours global businesses lose each year from IT downtime.
- 29 percent: the average percentage that revenue is reduced during periods of IT downtime.
Businesses Can Be More Resilient
Disaster preparation advice is abundant — especially after Hurricane Sandy — so there’s no excuse for not creating a disaster recovery plan. But a written plan isn’t enough to avoid downtime. Businesses also need the technology that will allow them to virtualize their entire IT infrastructure in the cloud so that even a power outage can’t stop the business’ ability to keep serving its customers.
Unfortunately, most businesses are so convinced that major downtime won’t happen to them that they’re willing to take the risk. Or they put false expectations in traditional backup solutions that can’t restore their systems in time to avoid significant losses. By evaluating their own potential costs of IT downtime, a business can start to see the benefits of taking steps to protect themselves from it. A rough estimate of downtime cost can be made with this calculation:
- Determine the value of your company time per hour. Start by calculating the total of your billable rates or revenue per hour, depending on which makes sense for your type of business.
- Multiply that value by the number of hours it could take your business to get fully back up and running after a business interruption or outage. Keep in mind that most backup solutions require anywhere from several hours to several days to restore.
- Add the soft costs of downtime, such as a percentage of revenue lost due to reputation damage (lost repeat business, fewer referrals, etc.).
Calculating the approximate cost of downtime gives a business a more personal sense of how much downtime can affect them. It also serves as a valuable tool to prove the need for business continuity technology and disaster preparation planning. By comparing the downtime cost with the monthly cost of a SaaS solution for instant system recovery, a business can more easily see the value of technology that will keep them up and running, no matter what. And that kind of always-on reliability is what modern customers expect.
Businesses can’t always prevent unexpected power outages or other interruptions from occurring. But they can diminish the effect of those interruptions. That’s what makes a business resilient and able to ultimately win the game.
The views expressed are those of the author and do not necessarily reflect the views of BusinessNewsDaily.