Storagepipe, the same company behind the informative video of how data protection has changed, has an intriguing webapp utility called the Downtime Cost Calculator. The calculator can be useful for monetizing the financial costs of unplanned downtime and that information can help when developing a budget for IT. The calculated information is also helpful in disaster recovery and business continuity planning and justifying costs of backups.
For a quick summary of what the Downtime Calculator can do, watch this introduction video:
Now let’s play around with the calculator to see how it works. We’ll find that it can actually have a use for both the large, the small and in between.
The Large Case
For a high-end case, let’s speculate we operate Wal-Mart’s US stores and one of the data warehouses that inventory connects to goes down. It has a significant failure, and its US stores are only able to process non-computerized transactions at 25% capacity until that system comes back online. That gives us:
- $255.7 billion of yearly revenue (Source: Wal-Mart 2009 Annual Report for Investors)
- 8,760 business hours in a year (24 hour Wal-Mart stores)
- 75% of sales affected
- 9140 employees affected (914 stores affected * ~10 employees per store)
- $13 average employee cost
- Employees affected 75% (they can do some other stuff)
(I’m making educated guesses on a lot of these numbers based on the annual report since I can’t really know them as an outsider but I bet I’m on the the low side.)
Plugging those into the downtime calculator:
Yikes! In just one minute of downtime, Wal-Mart has lost $122,287 in revenue and productivity. In one hour, they’d lose $7.3 million. It would definitely be worthwhile for Wal-Mart to have some load balancing and hot backup sites at the ready.
Even if you’re not as big as Wal-Mart, you can still use the downtime calculator to figure out the damage an amount of downtime could mean for your business and why it would be important to have a business continuity service in place.
The Small Case
Although a bit of an aside as to what the Downtime Cost Calculator is intended to do. Let’s say you and 7 other individuals got invited to an hour-long meeting without an agenda and the entire time is wasted because it is poorly organized. That gives us:
- 8 employees affected
- $25 average employee cost for an hour
- 100% affected because they’re not able to do other, more productive things.
Let’s plug those numbers into the calculator (we won’t worry about revenue in this case):
For every minute, the company loses $3.32 in productivity of these middle managers. Multiplying by 60 (or letting the calculator run for an hour), this unproductive meeting cost the organization $199.20 for these 8 people to sit around a table and accomplish nothing.
You can see the Downtime Cost Calculator for yourself at downtimecost.com
After you figure out what your downtime could mean in lost revenue and productivity, check out if outsourcing your data backups to Storagepipe could be the right step for your organization to prepare for the worst.