Cost of Downtime: the imperative of avoiding Lost Sales


Posted on: Aug 24, 2015 by Kees Kranenburg

According to recent research from IDC, among Fortune 1000 organizations the cost of ‘downtime’ – a critical business application failure – is $500,000 to $1,000,000. And the average hourly cost of infrastructure failure is $100,000.

Another survey, from Siemens Building Technologies, shows that 33% of organizations don’t even know the impact of one day’s downtime on their business, while 17% of the respondents estimate a cost of more than €1m per day.

Avoiding lost sales due to downtime of critical business applications and infrastructure must be high on any CIO’s task list. Often, ‘the IT team’ tackles this issues through the use of monitoring tools. Point solutions like database monitoring, network monitoring, or application performance monitoring. But, does this silo approach really work? Or does it promote a less joined-up viewpoint across the enterprise?

What’s more, all of these IT-centric point solutions focus on IT SLAs and KPIs. The result? The database is available, the network is performing, and critical business applications are up. But when failures arise and the consumer is not able to place his order, the finger pointing starts. It’s not the application; blame the database. It’s not the database; blame the network. Rinse and repeat.

Business Processes

Effective business requires effective business processes. And it’s hard to imagine a business process that doesn’t rely on IT. They rely on a smoothly collaborating set of applications, which we call the ‘business process chain’.

At its core, managing an end-to-end business process chain demands the management of all applications, infrastructure, and cloud-sourced services that enables a consumer or citizen to place their order or request a service in an interconnected manner.

Monitoring in Cohesion

That is why all applications, infrastructure, and cloud components must be monitored in cohesion. But monitoring is not enough. When events are occurring – for example, an unexpected increase of business volumes – organizations must behave proactively in order to prevent failures and mitigate the associated business impact.

Instead of managing applications and infrastructure in silos, teams must be formed around end-to-end business process chains or parts of the business process chain.

Skilled and integrated teams

Skilled and integrated teams are needed to manage the end-to-end business process chain and respond proactively to events. We introduce the role of the Business Process Chain Manager to steer these teams, which consist of all roles necessary to guarantee availability of the business chain: functional application management, technical application management, database management, OS/storage layers, and network connectivity.

Moreover, success must be measured by business-relevant KPIs in addition to the well-known (and world-weary) IT SLAs. For example, instead of ensuring that the database is available 99.99% of the time, success should be measured on whether consumer orders are provisioned within three minutes after order entry.

In this business-oriented way we make everyone aware of the impact of his or her impact on the business. And, naturally, avoid lost sales for the business.

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About Kees Kranenburg

Portfolio manager Application Transformation
Kees Kranenburg is Portfolio manager Application Transformation. His field of play is software development and application management and the organization, processes, methods and tools necessary to professionalize and industrialize them. He advises organizations regarding their application development and management strategy and their sourcing strategy.

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