The costs of IT downtime are causing major knock-on effects and high bills for some of the world’s largest companies, according to new research from Splunk.
The new report, ‘The Hidden Costs of Downtime’, estimates the annual cost of unplanned downtime for the ‘Global 2,000 companies’ (the largest companies today) at as much as $400 billion.
Global 2,000 companies could also lose about 9% of their profits through lost revenue, regulatory fines and missed SLA penalties, Splunk warned, highlighting the hidden costs of downtime, including reduced shareholder value, lower developer productivity, delayed time- to-market and damaged brand reputation.
IT downtime costs
Splunk’s report added that downtime results in an average annual loss of $49 million in revenue, $22 million in regulatory fines and $16 million in missed SLA penalties.
With such astonishingly high costs associated with downtime, companies must invest more resources in eliminating or at least reducing the impact of such events. The average recovery currently takes a maximum of 75 days, or about two and a half months.
Helpfully, Splunk’s report also highlights some key causes contributing to organizational downtime, and highlights some initial steps to consider. More than half (56%) are due to security breaches such as phishing attacks, and another 44% are due to application or infrastructure issues such as software bugs.
With two in five (41%) tech executives admitting that customers were among the first to discover downtime, Splunk’s analysis highlights the broader implications of network or software outages.
“Disruption in business is inevitable. When digital systems fail unexpectedly, companies not only lose substantial revenue and risk facing fines from regulators, they also lose customer trust and reputation,” said Gary Steele, President of Go-to-Market at Cisco and GM. Splunk.
Looking ahead, Splunk recommends that companies invest more carefully in cybersecurity and observability tools, including generative AI capabilities.