It is 10:17 in the morning. The ERP system stops responding. The finance team cannot issue invoices, the sales team cannot check orders, and the warehouse starts working with manual notes while someone calls the IT department.
By 10:45, after several attempts to restore the service, a question comes up that few companies can answer accurately: how much is this outage actually costing us?
The cost of an IT outage is not limited to the salaries of employees who cannot work. It can also include delayed or lost sales, overtime, technical intervention, customer issues, processes that need to be repeated and accumulated tasks that will affect the business for the rest of the day.
Calculating the cost of IT downtime helps companies make better decisions about maintenance, redundancy, monitoring, backups and technical support. After all, it is difficult to decide how much to invest in business continuity if you do not first know how much it costs when operations stop.
An IT outage costs much more than a few hours of lost work
When a critical system stops working, the impact can quickly spread across different areas of the organisation. The greater the company’s dependence on technology, the greater the potential effect on daily operations.
A company may still have electricity, employees at their desks and customers waiting for an answer, yet remain almost completely paralysed because certain digital services are unavailable.
Common examples include:
- ERP or business management applications becoming unavailable.
- Servers or virtual machines stopping.
- Connectivity problems or an Internet outage.
- Email becoming unavailable.
- IP telephony going offline.
- VPN and remote access services failing.
- Production or logistics systems stopping.
- Cloud applications becoming inaccessible.
- Databases or storage systems becoming unavailable.
The real cost will depend on which service has failed, how many users are affected and how long it takes the organisation to restore an acceptable level of operations.
How to calculate the cost of IT downtime
There is no universal figure. One hour without systems may have a relatively small impact on one organisation and become a critical business problem for another.
A practical way to estimate the impact is to divide it into four main areas:
Downtime cost = lost productivity + affected business activity + technical and operational recovery + subsequent impact
You do not need an extremely complex financial model. Even a conservative estimate can help the organisation understand the scale of the risk.
1. Lost productivity
The first element is usually the easiest to calculate: how many people are unable to work normally because of the incident.
A basic formula can be used:
Number of affected employees × average hourly cost × duration of the incident
However, there is an important consideration. An IT outage does not always mean that an employee is completely unable to work.
They may still be able to make phone calls, organise documents or continue with other tasks. For that reason, a productivity loss percentage of 50%, 70% or 100% can be applied depending on the department.
2. Business activity that stops being processed
The second part is more difficult to identify, but in some organisations it represents the largest financial impact.
During an outage, companies may be unable to process:
- Orders.
- Invoices.
- Shipments.
- Bookings.
- Payments.
- Production operations.
- Customer requests.
Not all of this activity should automatically be considered lost. Many operations will simply be delayed and recovered later.
However, delays also have a cost: accumulated work, changes to logistics routes, missed deadlines or customers deciding to use another supplier.
3. Technical recovery and overtime
When systems are restored, the incident is not always over. Another phase begins, and many companies fail to include it when calculating the total impact.
Additional resources may be required to:
- Recover services or data.
- Verify that systems are working correctly.
- Re-enter operations that were carried out manually.
- Review orders or transactions.
- Resolve secondary incidents.
- Work overtime.
- Analyse the root cause of the failure.
A two-hour outage can generate additional work for the rest of the day.
4. Customer and reputational impact
This is probably the most difficult component to quantify. However, it should not be ignored.
If customers cannot purchase, contact the company, receive an order or access a service during an outage, the problem is no longer purely technical.
It becomes a customer experience issue.
In some businesses, a short disruption may go almost unnoticed. In others, particularly e-commerce, manufacturing, logistics, healthcare or professional services, the consequences can be much greater.
An example: a company with 80 employees
Consider a simple scenario. The aim is not to establish a universal benchmark, but to show how a company can make its own calculation.
Imagine an organisation with 80 employees that experiences an ERP outage lasting two and a half hours.
The incident directly affects 35 employees in administration, sales, purchasing and logistics.
- 35 affected employees.
- Estimated average labour cost: €28 per hour.
- Duration: 2.5 hours.
- Direct productivity cost: €2,450.
We can then add other estimated impacts:
- Delays in orders and commercial operations: €1,800.
- Technical intervention and recovery: €600.
- Overtime and subsequent reprocessing: €850.
The estimated impact of this incident would therefore be approximately €5,700.
This does not include potential contractual penalties, customer losses or reputational consequences.
If a similar incident occurs several times a year, the accumulated cost can easily exceed certain investments specifically intended to prevent these disruptions.
Recovery time is just as important as preventing the outage
No technology infrastructure can guarantee that an incident will never occur. Hardware, software, communications, cloud providers and people can all fail.
For this reason, a good business continuity strategy is not based solely on trying to prevent every possible problem.
It must also answer another question:
If something fails, how long will it really take us to get back to work?
Two companies can experience exactly the same technical failure and achieve completely different outcomes.
One may detect the problem automatically, have up-to-date documentation and restore the service within 30 minutes.
Another may only discover the issue when users start calling, spend an hour identifying the cause and several more searching for credentials, backups or configurations.
The difference is not necessarily the failure itself. It is the level of preparation beforehand.
Which systems in your company are genuinely critical?
Not every system requires the same level of availability. Identifying which ones directly affect the business allows resources to be invested much more effectively.
A simple classification can divide services into three levels:
Critical systems
These are systems whose failure stops a significant part of the organisation or causes immediate financial losses.
Examples include:
- ERP systems.
- Production systems.
- Main databases.
- Connectivity between offices.
- E-commerce platforms.
- Telephony in certain businesses.
Important systems
Their unavailability makes work more difficult, but temporary alternatives exist or they can remain offline for several hours without stopping the entire organisation.
This category could include certain departmental applications, internal tools or services that do not directly affect the whole company.
Non-critical systems
These systems can remain temporarily unavailable without causing a significant impact on business activity.
This classification is important because applying the same level of redundancy, monitoring and support to every element of the infrastructure would not make sense.
The difference between repairing an incident and being prepared for one
Many companies have technical support, but that does not necessarily mean they have a business continuity strategy.
Repairing an incident once it has already happened is only one part of the problem.
Preparation should also include:
- Monitoring of servers, services and communications.
- Alerts for failures or performance degradation.
- Properly sized and tested backups.
- Redundancy for critical components.
- Up-to-date documentation.
- Recovery procedures.
- Clearly defined responsibilities and escalation paths.
- An SLA adapted to the real criticality of the business.
At Inmove IT Solutions, we work precisely on this combination of prevention, monitoring and response capabilities through our 24×7 IT maintenance services for businesses.
Monitoring can prevent a small incident from becoming a major outage
A significant number of technology problems do not appear completely without warning. There are often signs before the outage occurs.
Low disk space, storage errors, performance degradation, services restarting unexpectedly, backup failures, saturated network links or hardware alerts can all indicate that a larger incident may be developing.
A monitoring strategy makes it possible to detect these symptoms before users are the first to report that something has stopped working.
This does not mean that every failure can be prevented. It means that certain problems can be resolved during a controlled maintenance window instead of becoming an emergency at ten o’clock in the morning.
Backup does not automatically mean business continuity
Having a backup is essential, but it does not guarantee that the company can quickly resume operations.
You also need to know how long a restoration takes, which systems must be recovered first and what would happen if the primary infrastructure were unavailable.
This is why concepts such as RPO and RTO are important even for non-technical business managers.
In our article on 3-2-1 backup, RPO, RTO and immutable backups, we explain how to define how much data a company can afford to lose and how long it can remain offline.
An Internet outage must also be included in the calculation
For many organisations today, a connectivity failure can be almost equivalent to a server outage.
Microsoft 365, SaaS applications, VPNs, IP telephony, cloud ERP systems, inter-office connections and collaboration tools all depend directly on Internet access.
For this reason, a business continuity strategy should also consider what would happen if the primary connection failed.
Measures such as a secondary Internet line, 4G/5G backup connectivity or automatic firewall failover can significantly reduce this risk. We explain this in more detail in our guide on how to prepare a contingency plan for an Internet outage.
Your SLA should be defined according to the cost of downtime
Once you know how much an outage costs, it becomes easier to decide what level of support the organisation really needs.
Not every company requires 24×7 support for every single system.
However, if one hour of downtime costs thousands of euros, waiting until the next business day to begin troubleshooting may not make financial sense.
The decision should be based on business criticality rather than solely on the price of the support contract.
It is important to distinguish between response times, restoration times and priorities depending on the type of incident. In our article comparing 24×7 support vs 13×5 support and how to define an SLA, we look specifically at how this coverage should be structured.
5 questions every company should be able to answer
You do not have to wait for an outage before evaluating the risk. These five questions provide a useful starting point for any organisation.
- Which system would cause the biggest problem if it stopped working tomorrow?
- Approximately how much does each hour of downtime cost us?
- How long would it currently take us to detect the issue?
- How long would it actually take us to recover the service?
- Have we tested the recovery procedure?
If any of these questions does not have a clear answer, there is probably an area of your technology continuity strategy that should be reviewed.
NIST specifically includes business impact analysis, identification of preventive controls and development of recovery strategies among the key steps involved in effective contingency planning. You can consult its official guide to information system contingency planning.
Frequently asked questions about the cost of IT downtime
These are some of the most common questions companies ask when they begin to analyse the financial impact of system availability.
How much does one hour of IT downtime cost?
There is no standard figure. It depends on the number of affected employees, the processes that stop, the sales or orders involved and the cost of recovery. The best reference is to calculate the impact using real data from your own organisation.
How can I calculate the cost of a server outage?
A simple approach is to add lost productivity, affected business activity, technical recovery costs and subsequent work. Contractual penalties or customer impact should also be included when relevant.
Do all systems need high availability?
No. High availability should be prioritised for services whose failure would have a significant impact on the business. Applying it indiscriminately can unnecessarily increase infrastructure complexity and cost.
Does having a backup prevent downtime?
No. A backup allows information to be recovered, but it does not necessarily prevent an interruption. Recovery strategies, monitoring, redundancy and properly documented procedures are also required to reduce downtime.
When does 24×7 support make sense?
When certain systems must remain available outside normal business hours or when delaying intervention for several hours could cause a significant financial impact. Coverage can be limited to critical systems and incidents in order to optimise costs.
Business continuity starts by understanding the cost of stopping
Many technology investments seem expensive until they are compared with the real cost of an outage.
A secondary Internet connection, monitoring platform, redundant infrastructure, backup strategy or 24×7 support service should not be evaluated solely on price.
They should also be compared with the risk they reduce.
Knowing how much one hour without systems costs helps define which services need greater protection, what recovery times are reasonable and where investment makes the most sense.
At Inmove IT Solutions, we can help you analyse the critical points in your infrastructure and design a maintenance, monitoring and business continuity strategy adapted to the real operational needs of your company.
Discover our IT maintenance and support solutions for businesses to learn how we approach incident prevention and response.
Would you like to reduce the impact of a technology outage on your business? Contact us and we will help you identify your critical systems and the measures that can improve their availability.
