On the surface, it would be easy to think that system downtime really doesn't cost anything. No one ever gets a bill for downtime, after all. In some cases, when a service level agreement (SLA) has been violated, it can even prompt taking something off the bill.
However, downtime can have many costs that users don't consider. The real costs of downtime aren't always measured in dollars and cents, but many of them can have an
affect
on the bottom line all the same.
What Might Have Been
A familiar concept to economists--though not always so familiar everywhere else--is
opportunity
cost. Opportunity costs are costs incurred by not pursuing an opportunity, either by inaction or deliberate choice. When a business doesn't pursue a million-dollar line of business because of perceived lack of potential, the opportunity cost is that million dollars. If a company holds cash, for one reason or another, without placing it in an interest-bearing vehicle, the lost interest is an opportunity cost.
Downtime creates huge opportunity costs. When employees can't work thanks to a down network or application or anything else that experiences downtime, that business's employees are incurring
opportunity
cost. Not only can the employees not produce, which means that potential gain is lost, but the employees must still be paid, which turns into
real
cost as well.
Reputation Lost
Another less quantifiable but still important cost of downtime is reputation. It's well known that more people will tell others about bad service than about good. A 2014
American Express study found that the number of people talking about bad service
beat
those talking about good by a factor of almost three to one.
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Topics:
Customer Service,
Downtime,
Customer Experience,
SLA (Service Level Agreement)
