The true cost to your business of a power outage
So, what does a power outage cost businesses?
Whilst it would be simple to ‘pin’ a generic cost of what a power outage means to large national companies (and there’s lots of shocking figures to be found on the internet), not every business can relate their own circumstances to that of a high profile blue-chip company. To make things easier, there are essentially five components to calculating the cost of a power outage.
1 – Wages (lost hours)
2 – Direct revenue
3 – Repairs and other related overheads
4 – Liabilities
5 – Reputation
To help understand the impact, here’s a fictitious company:
ABC Data Centres employs 30 full time members of staff. It is a 24/7 business and has around £5m p/a of customer value across its network. A power outage strikes and the UPS/back up generators fail, meaning the company loses all network capability. An engineer is called out and has the power back on in just over 3 hours.
1 – Lost Hours
Find the average hourly rate of your workforce and multiply by 3 (ABC Data Centres £83 per hour x 30, then x 3 = £7,470)
2 – Direct Revenue
Known to you, of course, take your yearly revenue and work out an hourly figure (in this case x3) to get a better understanding of the impact on your revenue. With £5m p/a, find the cost per hour. (ABC Data Centres £1,715)
not every business can relate their own circumstances to that of a high profile blue-chip company reported in the media
3 – Repairs
How long is a piece of string? Maybe you’ve had experience of repair costs and you can factor that in, but it’s not too complicated to make an educated estimation of what you’d be likely to pay. We’ve assumed a reasonable figure of £10,000 for our fictional company.
4 – Liabilities
Here we look at guarantees of service (SLA) and other legal liabilities you may have. Some companies may have a fine imposed for such events. It’s always best to talk to your legal team to ascertain if there are any possible penalties. In the case of our Data Centre company, we picked up a fine of £400 from the regulators.
5 – Customer Confidence
Not a cost that can be easily added in pounds – in fact it’s most possibly priceless. A tarnished reputation can even see the big players stumble, fall and go out of business. But let’s not focus on the high dramatics of these media events; customer confidence is a crucial element to get right and a power outage isn’t the best way to prove your business’s capabilities.
We’ve taken a simplistic view of this for ease of reading, but in total the outage cost our fictional company was a modest £19,585 and attracted a tranche of bad press on the internet forums. So, was it really worth almost £20k for 3 hours -simply because the generator/UPS wasn’t tested properly? We would certainly encourage you to do your own calculations and see what a power outage would cost you.
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