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Organisations have historically struggled to clarify and manage the costs of IT downtime, but UK firms are getting better at understanding this issue, with 81% claiming to be in the know, up from 65% in 2017.
This is one of the findings in the latest annual Data health check survey by UK business continuity and IT disaster recovery services provider Databarracks, which polled more than 400 IT decision-makers.
Peter Groucutt, managing director of Databarracks, said the latest survey indicates that companies are now thinking much more broadly about the financial impact of IT-related downtime.
“Having a complete picture of how much IT downtime costs your organisation enables you to make better-informed decisions on issues relating to IT resilience, supplier management and continuity planning,” he said.
While there are some obvious costs of IT downtime, such as wages, lost revenue and recovery, Groucutt said there were also several types of indirect costs that need to be considered when estimating the true financial impact of an IT outage.
“Hidden or intangible costs, such as damage to reputation, can often outweigh the more obvious, immediate costs,” he said, adding that the survey shows that reputational damage is second only to revenue loss as the biggest worry for organisations during a disaster.
Peter Groucutt, Databarracks
The survey report notes that reputational damage manifests as loss of future revenue. Fewer customers may choose a business after service disruptions, which is often immediately visible in a drop in the share price, as the market predicts a drop in future value.
“The problem with these intangible costs is they aren’t easy to estimate, and because they often take time to materialise, they can be excluded from calculations,” said Groucutt.
“It will always be difficult to secure budget for IT resilience if you can’t show the board a clear picture of the impact downtime will have. Presenting a complete downtime cost immediately puts the cost of investment into context and will help IT departments make the improvements they need.
“It’s encouraging to see organisations thinking more holistically and factoring these previously ignored costs into their budgeting,” he said.
As previously reported by Computer Weekly, although the survey says more needs to be done if businesses want to guard against data loss, it shows that organisations are generally improving in their data protection, continuity and cyber preparedness.
Where data loss from cyber attacks increased from 12% to 17% in the past year, the top causes of data loss remained hardware failure and human error. But the report shows improvements in both these areas, with data loss due to hardware failure decreasing from 27% to 23% and the proportion of data losses due to human error decreasing from 26% to 21%.
At the same time, while IT outages due to hardware failure, connectivity issues, upgrades and cloud outages either declined or remained static in the past year, IT outages due to cyber incidents increased from 10% to 12%.
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