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Is a lack of availability costing your business thousands or even hundreds of thousands of dollars? Assessing the true financial impact of unplanned downtime may surprise you. Placing a dollar amount on this issue is often the first step and biggest motivator to meeting your ongoing availability requirements. So how do you arrive at the magic number for your particular business and build a path to profit?
Defining the Problem
It's helpful to acknowledge that a 'lack of availability' means different things to different groups. It may be that the system i (iSeries) network is available as far as the IT department is concerned, after all, the system is up and running, but to a group of users who can't access their applications because a TCP port is no longer listening, or indeed, if poor response time is causing them problems, the systems are effectively unavailable to PC users and preventing them from carrying out their work. Similarly, if a company turns to a FM organization for an agreed level of service that falls short in delivery, heavy financial penalties could be imposed due to the lack of availability. Customer expectations could be compromised, accounts lost and revenue slippage could begin an ugly path of descent faster than you can say diminishing brand value and falling share prices. In short, the availability issue affects everyone in your organization and inherently carries an associated cost.
Calculating the Cost
Depending on the nature and scale of your business, pinning your lack of availability down to a dollar figure can be carried out by attributing the financial fallout experienced by some or all of the following factors:
- Cost of unproductive workforce- Cost of lost revenues- Financial penalties for downtime- Idle operational costs
- Diminished customer loyalty/Dissatisfied users
- Weakened brand reputation
- Damaged competitive differentiation
- Additional expense to restore lost customer/shareholder confidence and media perception- Unforeseen expenditure in restoring availability/data/communications- Falling share value
Case Study
To take a specific example, Company X is a large retail chain with annual revenues of $4billion and 20,000 employees. Last year they encountered a serious 4hr unplanned downtime event during their busiest period that impacted profits considerably and rendered half the workforce idle. The consequence of a lack of availability was far-reaching with the company now spending more on marketing loyalty programs to win back consumer confidence and regain their market share. A detailed look at the figures reveals the immediate financial impact of a lack of availability over the 4 hour period (not including subsequent costs for idle operational status, restoring availability and increase in future marketing expenditure).
If retail Company X was a bank that lost a network of ATMs as a result, how many times would their customers have to experience this inconvenience before switching their account? If Company X was a FM organization, how could they justify costing their customer over six million dollars in lost revenues and unproductive staff time? The implications for any company are more than they can afford to lose. So how do you protect profits and safeguard against a lack of availability?
The Common Goal
The increasingly complex environments required by today's larger organizations seek to protect their availability with specific solutions. Most common are software based solutions that switch to secondary servers in the event of either planned or unplanned outages. 'Global Mirroring' is an alternative to these software based solutions that utilizes disk unit replication as the basis of a hardware switch. Regardless of the method used, each serve the ultimate goal of protecting a continuous high availability status without loss or degradation of data. For smaller organizations, the need for a specific HA solution may not be justified but the desire for a highly available environment still exists. Understanding the system and finding a way to manage it given the particular demands of your environment is the foundation to reducing incidence of unplanned downtime. It is this foundation that will help your organization build a path to profit, regardless of its scale, revenue, existing solutions implemented and ongoing demands.
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