When a technology application or system goes down, it can be fairly easy to calculate the cost in terms of lost productivity, IT support, and the effects on the bottom line (missed service level agreements). But what about the hidden costs that don’t show up on the balance sheet? Most of us don’t even think about those because they don’t have a “real” line-item number associated with them, but they can actually be far more costly than the dollar figures associated with system failures. Let’s look at some of the short-term and long-term costs of application unavailability.
One of the major negative effects of technology problems is loyalty. These don’t show up in annual reports, but repeated failures – or even one catastrophic event – can erode confidence in a technology company’s brand. And while this is a “soft cost,” decreased loyalty can have a profound effect on a company’s health over time as disappointed users moved to other systems that are perceived as more reliable.
In addition to the physical costs of fixing a technology problem, there is also the human cost of employees not working and systems are down. Imagine a 50-person HR department in a large company not being able to access its payroll systems for two days. That adds up to 800 hours of lost productivity. That is sure to grab the attention of the leadership team of the organization even if they are not involved in the technology side. No CEO or CFO wants to learn that he or she has paid employees thousands of dollars to sit at their desks because their technology applications failed.
There are many other hidden costs associated with technology outages, including the human cost of troubleshooting, dealing with the backlash of determining root causes of system outages, and designing ways to eliminate problems. But the most important hidden cost is customer trust especially in the Internet world where customers expect 100% uptime. Simply put, organizations just want their technology to work without having to think about it. Frequent or prolonged outages can destroy trust and cause organizations to look for alternate solutions. That’s why it is critical for technology companies to design software that not only meets the customer need but also provides the reliability that they need to do their jobs.