According to Compuware's 'Measuring the Business Impact of Technology Performance' report (26-page / 5.92MB PDF), 79% of businesses have experienced a "significant technology failure" within the past year. Three quarters of those surveyed said that the same fault has occurred more than once.
Technology failures impact most on customer service, then staff time and resources, sales, customer traffic and production time, according to the survey. In more than half of cases (51%) the problems can be traced to failures by software or hardware providers, with utility failure and unforeseen security threat present in 22% and 16% of cases respectively.
On average, it takes three weeks for businesses to return to normal after a technology failure, according to the report.
As well as short-term costs incurred in product recalls, product waste and sales and marketing, businesses can also be negatively impacted on in the longer term as a result of IT outages.
"In addition to the calculable and trackable short-term costs associated with technology performance failure, surveyed executives indicated substantial long-term impacts to the financial health of their companies," the report said. "For instance, 45% of the respondents experienced a loss in market share or brand equity as the result of a technology performance issue."
The report was based on a survey of 304 corporate executives and senior managers from companies in the US, Europe, Asia and Australia. Those surveyed operate in either the retail, manufacturing, banking/financial services or healthcare/pharmaceutical industries and work for companies that employ more than 1,000 people.
IT dispute resolution expert David Barker of Pinsent Masons, the law firm behind Out-Law.com, said that the 'always on' culture, driven by consumers' demand for 24/7 service accessibility, means that businesses cannot afford to ignore tech performance issues and problems.
"Suppliers, such as software providers, need a bit of flexibility within a contract to introduce updates to their technology and improvement to their processes - things IT buyers can benefit from - but those buyers need to be wary that suppliers are not acting unilaterally outside of agreed processes," Barker said. "Ensuring this will help businesses to retain control of the risks associated with updating systems, such as potential outages."
"Much comes back to proper governance and defining the boundaries between supplier and customer and between the multiple suppliers where there is more than one. Governance of IT contracts is sometimes regarded purely as a relationship issue, i.e. are the parties communicating well, do they understand each other, and so on. That’s great but there’s also a need for hard graft: who is working out how processes have been documented, and where the boundaries lie in terms of responsibility for particular components of the system? Those issues come to the fore when things go wrong," he said.
