It’s half past eight in the morning, and suddenly everything in the office comes to a standstill. Emails aren’t working, the enterprise resource planning system is down, and the warehouse can’t process orders. The initial reaction is almost always the same: „It’s probably just a matter of a few minutes; let’s hope it’s back up and running soon.” Then half an hour passes, then an hour, and slowly everyone realises that this isn’t going to be a mere few minutes’ inconvenience.
At times like this, most business leaders instinctively think of the most tangible loss: lost orders. Yet the cost of a shutdown comprises many more factors than that, and is far greater than one might initially think.
What do the international figures show?
Major market research and technology firms have been regularly examining this topic for years, and the figures are surprisingly consistent. According to a widely cited estimate by Gartner, which has since been used as a benchmark, an average network outage costs a company roughly $5,600 per minute, amounting to hundreds of thousands of dollars per hour. Research by the Ponemon Institute found an even higher figure among medium-sized enterprises, with an average of $9,000 per minute. According to the ITIC’s 2024 survey, more than 90 per cent of medium-sized and large companies report losses of over $300,000 per hour in the event of a single major outage.
It is important to note, however, that these figures typically relate to large corporations or the US market; for a domestic SME, the figures are, of course, much smaller. But the underlying ratios apply just as much to a Hungarian company with 10–50 employees.
What do the domestic figures show?
According to surveys carried out amongst domestic SMEs, a critical IT outage at a company with 30 employees causes an average loss of around 420,000 forints per hour. This figure may seem high at first glance, but if we break it down to see exactly what it consists of, it becomes clear.
Labour costs continue to accrue even when nobody is able to work. In a team of 10 people, a single lost working day easily amounts to 8–10 wasted working hours, regardless of whether any tasks were actually completed during that time. Salaries still have to be paid at the end of the month, but the time worked has produced nothing.
The loss of turnover is the most obvious item, but it is not the only one. As long as the system isn’t working, orders aren’t being dispatched, invoices aren’t being issued, and customers can’t get in touch with the company. This is the part that everyone notices straight away.
Restoration costs money too. An emergency call-out, an urgent fault-finding session, or a data recovery operation all incur extra charges, plus extra working hours and extra stress for the team.
Reputational damage takes the longest to become apparent, but is often the most costly. A customer who is unable to reach the company on time just once may well turn to someone else next time. It is very difficult to quantify this loss in forints after the event, but its impact is greatest in the long term.
One important point worth highlighting is that the smaller a company is, the greater the impact of any downtime. In a large corporation, the impact of downtime is spread across many people and many systems; in a company with 5–10 employees, however, a single lost day can easily account for 20–25 per cent of monthly capacity.
Why don’t we perceive this in real time?
The cost of downtime is a tricky issue because it almost never appears as a single item in the accounts. There is no line item labelled „loss due to IT downtime”. Instead, the costs are spread across staff costs, lost revenue, invoices from emergency service providers and subsequent customer complaints. This is precisely why many people underestimate this risk, as we never see the full picture in real time.
How to assess your own risk
You don’t need a complicated formula to get a rough idea of just how much is at stake for you. Here’s a simple, rough estimate:
- Calculate your team’s total hourly labour costs (based on gross pay plus social security contributions).
- Estimate how many people’s work would come to a complete standstill in the event of a typical outage.
- Add any revenue typically lost during the period in question (e.g. if you have an online shop or a customer service operation that is suspended).
- Don’t forget to add an estimated „restoration surcharge”. Experience shows that this often increases the above amount by 20–40 per cent.
The final figure is usually surprisingly high: once you’ve worked it out, it’s much easier to get a realistic idea of how much it’s worth spending on prevention.
What can be done about it?
The good news is that the vast majority of downtime is not a matter of „bad luck”, but rather a foreseeable and preventable event. The most common causes include, for example, outdated hardware, unmaintained background processes, a lack of redundancy, faults detected too late… and so on. These are all issues that a proactive, continuously monitoring IT operations team can identify well before a problem arises.
In the longer term, of course, it’s almost impossible to expect that nothing will ever go wrong, but it is a realistic goal to ensure that, should an unexpected outage do occur, that it results in half an hour’s inconvenience rather than six months’ frustration: there should be a redundant system, a tested backup, and a team that knows immediately what to do, rather than an emergency situation where it takes hours to track down the source of the fault.
If you’d like to assess exactly how much of a risk a potential system outage poses to your organisation, we’d be happy to help you identify the biggest risk areas in your IT systems by carrying out a risk assessment.
