Hello everyone and welcome back to the Cognixia podcast. Every week, we get together to talk about the latest happenings, bust some myths, discuss new concepts, and much more about emerging digital technologies. From cloud computing to DevOps, containers to ChatGPT, and Project management to IT service management, we cover a little bit of everything weekly to inspire our listeners to learn something new, sharpen their skills, and move ahead in their careers.
At some point, we all have tried to open a website or an app and were unable to do so. Either we got some error message like maybe the network too long to respond, or something similar. Maybe you were trying to buy something from the latest sale on your favorite online shop, or you wanted to buy a gift for someone, or you were trying to track a parcel. Happens to all of us, doesn’t it?
Most times we would drop trying and tell ourselves that we will do this later, right? But how many times do we really go back? Sometimes we do, sometimes we don’t, right? That is the cost the company paid for the downtime it faced, and usually, it is more than just a lost business.
A recent Splunk Report has shared that downtime costs the world’s largest companies about $400 billion every year – approximately 9% of their profits! This is the equivalent of about $9,000 lost for every minute of system failure or service degradation. Direct revenue loss is the biggest drain from downtime, but other hidden costs include diminished shareholder value, stagnant productivity, and reputational damage. The Report also goes on to share that a Forbes Global 2000 company would take about 75 days for its revenues to recover to where it stood financially before the downtime incident.
Downtime can hit companies very hard. Not only does it mean lost sales right now, but it can also lead to fines from regulators if they’re not careful. And that’s not all – fixing the problem might require extra staff hours, which adds up. But the real kicker? The damage can linger. Shareholder confidence can dive, developers might get stuck in neutral, and your reputation takes a beating. Ouch, right?
Big companies seem to be downtime ninjas, but not in a good way! According to a recent report, these outages typically fall into two camps: security breaches (think sneaky phishing attacks) and glitches with applications or infrastructure (software hiccups or hardware failures). The numbers are pretty eye-opening – the average giant corporation experiences a whopping 466 hours of downtime due to security woes, and another 456 hours thanks to application or infrastructure issues. That’s a whole lot of lost time and productivity!
The report revealed some surprising culprits behind downtime for big companies. Believe it or not, the top finger-pointer lands squarely on human error in the cybersecurity realm – think folks falling victim to those tricky phishing scams. Right behind that are IT operations blunders, like misconfigured systems, overloaded servers, or even buggy code. And the bad news doesn’t stop there – it takes an average of 18 hours to even notice the slowdown or outage caused by these human mistakes, followed by another grueling 67 to 76 hours to get things back up and running smoothly. Now, that’s a long time to be offline, isn’t it?
Coming in third place for causing downtime is good old-fashioned software failure, and this risk gets bigger as businesses embrace more complex development and deployment methods. Fourth place goes to those pesky malware attacks.
But here’s the kicker: the report also found that over half of the higher-ups know what’s causing these outages at their companies, but they just…don’t fix them! Maybe they’re worried about adding to the technical debt burden of their old systems, or maybe they have plans to ditch the problematic applications altogether. Whatever the reason, it’s a gamble. Even fewer tech leaders (only 42%) take the time to do a postmortem after a downtime incident, which involves dissecting the cause of the problem and figuring out how to prevent it from happening again. Sounds like a pain, sure, but avoiding future outages might be worth the effort!
While lost revenue is the biggest direct financial loss for companies facing downtime woes, regulatory fines come in a close second at $22 million annually. Turns out, many regions have strict downtime regulations, like the Digital Operational Resilience Act for the EU’s financial sector. Mess with those rules, and you could face hefty penalties.
But the financial woes don’t stop there. Repairing a tarnished reputation can be a real budget-buster too. According to marketing chiefs (CMOs), rebuilding trust through brand campaigns typically costs an average of $14 million. On top of that, another $13 million is usually needed to mend public image, investor confidence, and government relations. And like we mentioned before, it takes a whole two months for a company’s reputation to fully recover!
Here’s another eye-opening finding: despite expert advice from cybersecurity professionals, a surprising 67% of CFOs recommend paying ransoms to escape ransomware attacks. These payouts, made directly to attackers, through insurance, or via third-party facilitators, cost Global 2000 companies a combined $19 million annually. That’s a hefty price tag for giving in to cybercriminals!
The Report also points out the impact in terms of a decrease in shareholder value after a downtime event, with the average stock price dropping about 2.5%! That 2.5% sting isn’t exactly pleasant, and it takes an average of 79 days for a company’s stock to recover from that dip.
But the financial woes extend beyond the stock market. Downtime can also cause delays in getting new products or features out the door. This happens because developers get pulled away from their innovative work to focus on applying patches and figuring out what went wrong, those dreaded postmortems, you know! Marketing teams face similar challenges – downtime often means scrambling into crisis management mode, diverting resources and budgets away from other initiatives.
Let’s not forget the unhappy customers! Everyone can understand the downtime’s negative impact on customer experience and loyalty. After all, who wants to deal with a company that’s constantly offline? In fact, a whopping 29% of surveyed companies admitted to losing customers directly due to downtime incidents. Yikes! So next time your systems go down, remember – the damage might be more widespread than you think.
Didn’t think just a website not loading could lead to such huge losses and far-fetched issues, did you?
And, this is why sharpening your cybersecurity skills is super important in the current climate. So, visit www.cognixia.com and get started on your journey to the latest certifications!
With that, we come to the end of this week’s episode of the Cognixia podcast. Hope you found the episode interesting and insightful. We will be back next week with another exciting, new episode.
Until then, happy learning!
