What would happen if your company's computer and communications systems unexpectedly failed? What if these systems refused to function as you began your workday? What if they suddenly shut down during your workday? If any of these scenarios took place, immediately your world would be turned upside down, in a state of shock, and suffering breakdown. And it's even worse if you, the business owner, can't do anything to help.
The following excerpt from Charles Nault's book, "Risk Free Technology," is presented by bMighty courtesy of Global Professional Publishing. In this book, Nault speaks to non-technical managers, executives, and directors about how they can better understand and promote an IT infrastructure that will support business objectives.
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According to an article published in May 2007 by Paul Weinberg, only 22 percent of over 100 companies surveyed indicated that their Information Technology (IT) department functioned effectively. That is an incredible statistic! Suppose one out of five medical operations were successful. What if over 70 percent of the contracts your lawyer drew up for you were flawed? Or maybe your financial reports were only accurate say, 25 percent of the time. Would you not be outraged? "Well yes, but IT is a complicated business and the measure of effectiveness is subjective when it comes to my network and computer applications," you might argue. Hogwash I say, and research supports me on this.
The IT industry measures effectiveness in terms of uptime—the times when your users (be they employees or clients) have no problem getting to, and using, the critical applications that make the smooth operation of your business possible. The opposite of uptime is of course, downtime—the times when your users beat their keyboards, smack their screens, or slam down the phone in frustration and disgust. It is in those moments that everything about you and your business comes into question. The employee is asking questions like "How do they expect me to do my job when I can't get to the Web, or send an e-mail" or "What kind of two bit operation am I working for?" The client is asking "Why are we doing business with such a messed up operation?" or worse, "Who else can we get to fill this need?" As a business owner, I cringe at the very idea that any of these questions are being asked about my business at any moment of the day. There are times when it has kept me up at night. I worry about the effect on morale internally, and the possible loss of business externally. As bad as that is, it is only in the last few years that I have added to my worries because I've gained a clear understanding that the cost of downtime is measured not just in terms of reputation and lost business, but in terms of actual dollars of lost productivityand those costs are astounding.
The average company experiences 501 hours of network downtime every year, according to a study conducted by Infonetics Research. "Overall downtime costs an average 3.6% of annual revenue" says Jeff Wilson, principal analyst of Infonetics Research (www.infonetics.com) and author of the study, titled The Costs of Enterprise Downtime, North America 2004.
Let that sink in for a moment, especially if you're a business owner, or a senior manager responsible for profitability. You are bleeding money in lost productivity due to poor network performance. I know from personal experience that some companies in the survey don't need this book to tell them how serious this is. In fact, they have implemented the necessary systems to assure that they beat the odds. They have very little downtime but, keep in mind, they are included in the statistics. Chances are that if you are reading this book to get a better grip on your company's technology, your numbers are even worse. So let me ask you; How hard have you worked this past year to increase your company's revenues? I know how hard our management team has worked. To compensate for this downtime, if my company were to experience the industry average 501 hours, we would need to add over $1M in additional sales. To do so, we would have a few options. We could add a seasoned sales person to the team, carve out a portion of our territory for him/her to cultivate, provide a reasonable base salary, and probably a decent draw against future sales during an agreed ramp up period. Chances are this person would still take at least a year to ramp up.
We could design and implement a new service product for our existing customer base. Historically, the most effective new service product we ever introduced produced around $1M in gross revenue the first year. Most others took closer to three years to achieve that level of sales. We would need to come up with the idea, mold it into a saleable service, establish a pricing structure, implement all of the backend processes and procedures for delivery, accounting, and lifecycle management of the service, come up with a marketing plan, train our sales force, and roll it out to our existing customer base.
We could get real fortunate and discover a new product from either an existing or new vendor, that we think will not only be a tremendous benefit to our customers but would provide an additive revenue stream of $1M dollars in the first year we carry it. We still have to go through all of the back-end work, training, etc. Again, experience has proven that it is highly unlikely that the first year would produce anywhere near those results. Every one of these potential revenue enhancing strategies is expensive and carries no guarantee of success.
Courtesy of Global Professional Publishing, © Copyright Charles L. Nault 2009
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