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Data centre outages costing businesses 41% more per minute than in 2010, new survey reveals


The average IT outage businesses experience at their data centres lasts less time than three years ago but costs 41% more per minute, according to a new survey.

The Ponemon Institute asked 450 US-based data centre professionals for their experiences of outages at data centres. According to the survey report (19-page / 1.71MB PDF), 91% of respondents said there had been at least a partial outage at their data centre in the past year. The survey was sponsored by Emerson Network Power.

According to the report, the average partial or complete outage at data centres lasted 86 minutes and was estimated to cost $690,200. In 2010 the average outage last 97 minutes and cost $505,500. The average cost per minute of data centre downtime is now approximately $7,900 compared with $5,600 in 2010, it said – a rise of 41%.

However, the Ponemon Institute said it had seen "evidence that IT leaders are underestimating the economic impact unplanned outages have on their operations". The largest costs incurred by businesses when their data centres experience an outage are in the disruption to their business, including damage to their reputation, lost customers and lost opportunity, as well as lost sales, the report said.

"Suppliers commonly seek to limit their responsibility for the types of loss which a customer might incur as a result of an outage," IT contracts expert Iain Monaghan of Pinsent Masons, the law firm behind Out-Law.com, said. "Generally suppliers will seek to exclude liability for loss of profits, business and reputation but this study indicates that business disruption, lost revenues, and interruption to end-user activity and IT productivity, all of which arguably could be described as loss of profits, business and reputation, are the main categories of loss that arise from systems not being accessible."

"The aggregate value of those four categories of loss, according to the study, amounts on average to more than eight times the value of the other categories of loss that businesses suffer in an outage. This shows that the common limitation of liability clause included in supplier contracts can have a significant impact on the losses a customer is able to recover from their supplier," Monaghan said.

"The findings should prompt businesses to consider whether they would be better off trying to pre-agree a fixed level of compensation for an outage with their supplier. The precise level of compensation payable can be linked to the duration of time that systems are unavailable. This route may only be open to businesses with reasonable bargaining power but, if achievable, it provides a guaranteed level of financial redress without the need to argue about the type of loss that has been suffered," he added.

Cyber crime accounted for 18% of all unplanned data centre outages in the past year, up from 2% in 2010, according to the report. The two most common causes of outages were, however, failures to UPS systems (24%) and human or accidental failures (22%). IT equipment failures were responsible for 4% of outages but were the most expensive for businesses at $959,000 per incident on average, a fact that may be of interest to businesses reliant on legacy systems, Monaghan said.

"The results underscore the importance of minimising the risk of downtime that can potentially cost thousands of dollars per minute," the report said. "The expectation that uptime is now a baseline assumption and there is an urgency to deliver it in order to save on costs, reverberates through the findings of the study."

In a statement Emerson Network Power said: "Those organizations with revenue models that depend on the data centre’s ability to deliver IT and networking services to customers – such as telecommunications service providers and e-commerce companies – and those that deal with a large amount of secure data – such as defence contractors and financial institutions – continue to incur the most significant costs associated with downtime; with the highest cost of a single event more than $1.7 million."

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