Study: Network Downtime Nibbles at Profits

A new study says medium businesses are losing an average of 1 percent of their annual revenue to network downtime.

Infonetics Research reports in its study entitled “The Costs of Downtime: North American Medium Businesses 2006” that companies of 101 to 1,000 employees end up losing an average of $867,000 per year to downtime.

The majority of network downtime, 56 percent, is caused by “pure outages.” The report notes that medium businesses often don’t have the proper network management tools to monitor service degradations.

Of all the sources of network downtime, applications are the biggest offender. According to Infonetics, they account for about one quarter of all downtime, or $213,000 per year. Application downtime splits 65/34 between outages and degradations.

The report also fingers service provider outages as a substantial problem, made all the more frustrating because they’re not something the company dealing with the downtime can fix.

“There isn’t a single problem area that organizations need to focus on, which would be a simpler fix,” said Jeff Wilson, principal analyst at Infonetics Research. “Every decision is critical, from hardware selection, to product setup and from employee training to SLAs with service providers. Human error is the most troubling, because fixes for human error are elusive and require process changes and retraining, which can take a long time and be very expensive.”

Infonetics’ study examined seven sources of downtime: network products, security products, cables/connectors, servers, applications, service providers, and e-commerce; and the four common causes: hardware problems, software problems, human error, and service provider error.

The company also developed a Downtime Cost Analyzer to assist companies selling downtime solutions in making sales to prospective customers.

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