Almost eight out of 10 large businesses have had a major technology failure in the past year, costing them £6.9m in the short term, according to a survey of IT professionals and business line managers.
The research, from software maker Compuware, questioned executives at over 300 companies in multiple countries and business sectors. The research revealed that, in the short term, loss of sales, delayed or incorrect order fulfilment and delayed or incorrect shipping accounted for heavy losses as a result of technology failure.
It also revealed that, in the longer term, 45% of businesses have suffered losses to market share and brand equity as a result of technology failures.
There was disagreement between IT workers and line of business heads on how long it takes a business to recover from a technology failure. Line of business said it takes 24 days while IT said 11 days.
Survey respondents said customer service is the most technology-dependent area of the business, followed by finance and sales and marketing.
“This demonstrates our reliance on IT and the direct impact on revenues, relationships and reputations when technology does not work as it should,” said Michael Allen, director application performance management at Compuware.
“The figures really are eye watering - especially when you consider the fact that these are not isolated events.”
Allen said businesses are dealing with problems on a daily and weekly basis. “Despite this, companies are still not taking performance management seriously, as shown by the fact that three quarters are failing to reduce the number of incidents that are occurring," he said.
"Companies should be taking a proactive approach to performance management so they can identify and remedy potential problems before they have time to impact on the business.”
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Despite the business impact of technology, two thirds of businesses do not always quantify the cost of business failures, according to the research findings.
Only a third of respondents said they always collect and quantify the impact of technology failures, while 26% said they report rarely or never or that they don’t know.
Just over half of respondents said hardware or software failure was responsible for technology failure.
When looking at the key factors that should be driving technology investment, line of business were focused on increasing the speed of manufacturing and production, whereas IT were primarily concentrated on product/service quality.
“Given the lack of visibility into the impact of technology failures, our earlier estimates as to the cost to the business could be woefully under-estimated,” said Allen.
“What is clear is that IT is no longer just an operational expense. Technology is critical to a business’ financial health and integral to all lines of business; from finance to marketing; customer service to supply chain and distribution.”
See Compuware CTO Paul Czarnik responding to the study here.
18 Sep 2013