Small businesses grapple with global tech outages created by CrowdStrike

NEW YORK — The owner of a consumer insights firm couldn’t pay her employees, meet a Friday deadline to sign a contract with a new business or send critical research to a major client. A psychiatrist who runs a virtual mental health practice in Maryland saw his business limp as some of his virtual assistants and therapists couldn’t make phone calls or log into their computers. And a restaurant owner in New York City worried about how he would pay his vendors and employees.

Businesses from airlines to hospitals are struggling with a flawed software update that left technological chaos worldwide on Friday, and the effects continued throughout the weekend. The extent of the disruptions emphasized the vulnerability of a digitalized world dependent on a few providers for essential computer services.

But the problem appeared to divide those affected into the haves and have-nots. Major Microsoft and CrowdStrike customers are getting IT support to fix the problems, but many smaller businesses whose Windows PCs may have received the problematic update are still struggling.

Take Tsvetta Kaleynska, owner and founder of Manhattan-based consumer insights firm RILA Global Consulting, which has Fortune 500 clients. By Saturday, she had resolved the payroll issue and gotten an extension until Monday for the research project. But the potential client is not moving forward with the new contract, cutting her annual revenue by nearly 25 percent, she estimated. The problem: She couldn’t sign the contract because Docusign, which runs on Microsoft software affected by the faulty update, was down.

“If I were part of a big company, I could delegate and get support from computer science or security services,” Kaleynska said. “But as a small business owner, I’m only dependent on myself. It’s pretty devastating.”

In addition to Kaleynska’s business problems, she also had to take her sick daughter to a local hospital on Friday because the hospital’s phone lines were down.

Kaleynska, an immigrant from Bulgaria who became a US citizen in 2023, says she learned a hard lesson: “Our lives are very fragile because they are based on technology, and we are dependent on technology.”

CrowdStrike is one of the largest cybersecurity companies in the US, with a customer base that includes more than half of the Fortune 500, as well as small and medium-sized businesses.

After the outage, the company offered an initial fix via a software update. But many computers are expected to require hands-on work that could take days, if not longer.

For many small businesses affected by the crisis, this could mean working around the clock this weekend to ensure their systems are up and running, said Wedbush technical analyst Dan Ives.

“Small businesses rely on third parties to prevent this and instead we had a ‘code red’ situation,” Ives said.

In general, Ives noted that technical issues are easier to solve for large companies with a significant number of experts on the payroll, as opposed to small companies that may face a greater “uphill battle” because they have fewer technical resources.

“The ripple effects of this could be felt for days and weeks to come,” Ives said. “It’s not just a black eye moment for CrowdStrike, it’s a black eye moment for the entire industry. You can’t let one big finger update take down a global ecosystem.”

Ari Lightman, a professor of digital media at Carnegie Mellon University’s Heinz College, agreed, noting that the amount of money large companies are spending on Microsoft and CrowdStrike is likely a large portion of their IT budgets. Small businesses, on the other hand, can find information online about how to fix the outage. CrowdStrike has step-by-step manual fixes for its blogbut it can be intimidating for those who are less tech savvy.

Lightman said these companies can sue for the loss of their customers, but smaller companies can file class action lawsuits to sue CrowdStrike for damages.

The problem has a different impact on small businesses.

Heather Garlich, a spokeswoman for the food industry group FMI in Arlington, Virginia, said the outages were “somewhat intermittent and inconsistent, depending on how companies use certain Microsoft tools.” She said she knew of one that had a problem with a human resources system, another that had problems with its distribution routing system. Yet another had problems with its cash registers.

Chris Seabrook, owner of a Melbourne, Australia, locksmith business called Asguard Locksmiths, told The Associated Press in an email Friday that the IT outage had “significantly disrupted” his daily work. He couldn’t send and receive emails, access important files, manage his schedule or create invoices.

“My Microsoft PC is essential to many important functions in my business,” he wrote. “As a sole proprietor, every minute counts and this disruption has forced me to adapt quickly to ensure my services remain as uninterrupted as possible.”

To minimize the disruption, Seabrook borrowed a non-Microsoft device from a friend that allowed him to log into his accounts and access some of his critical tools and information. He also uses his smartphone to check important messages and organize his schedule. And he has reached out to clients to alert them to the situation. Seabrook did not immediately respond to a follow-up email sent to The Associated Press on Saturday.

Some small business owners improvised to get their work done.

Dr. Ozan Toy, a psychiatrist and medical director at Telapsychiatry in Maryland, which has 25 employees in the U.S., said some employees with Microsoft phone lines switched to the Ring Central System instead, while others switched from Microsoft Teams to Zoom.

Toy said his firm was fortunate to have multiple backups of its electronic medical records system, allowing them to resume communication with each other and their patients. As of Sunday, the practice’s cloud-based services were up and running, he said. Toy noted that the financial losses were “minimal” because it has an outside answering service that takes patient calls.

Chris Delmond, co-owner of Handcraft Hospitality, which operates three restaurants in Manhattan and one in Mt. Pleasant, South Carolina, said his restaurants remained open. But the outage left him without access to his cloud-based accounting software app on the Microsoft platform. As a result, he couldn’t see receipts and invoices and was less able to quickly process checks for employees and vendors. He had to call his bank to see if deposits had been made and to check balances.

“I’m a small business owner. I have two other partners and we do everything,” he said. “So it’s up to us to figure out what the problems are. I don’t have any big platforms to help me track.”

But by late Friday afternoon, all of the issues with his company’s cloud systems were back to normal, Delmond said. He noted that he had not suffered any financial losses, but added: “It’s frustrating, but as a small business owner, you have ups and downs.”