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Companies Lose 2%-16% of Revenue to Network Downtime; Finance/Mfg Bleeding the Most.

SAN JOSE, Calif., Feb. 1 /PRNewswire/ -- Whether you're a large shipping company, retail chain, hospital, food manufacturer, or bank, you're either losing tens of millions of dollars to network downtime every year, or hundreds of millions.

In Infonetics Research's latest study, "The Costs of Enterprise Downtime, North American Vertical Markets 2005," 230 companies with more than 1,000 employees each from five vertical markets -- finance, healthcare, transportation/logistics, manufacturing, and retail -- were surveyed about their network downtime.

"The finance and manufacturing verticals are bleeding the most, with the average financial institution experiencing 1,180 hours of downtime per year, costing them 16% of their annual revenue, or $222 million, and manufacturers are losing an average of 9% of their annual revenue," said Jeff Wilson, principal analyst of Infonetics Research and author of the study. "In contrast, healthcare, transportation/logistics, and retail fair much better, as these verticals have a fairly low percentage of the workforce connected to the network. The transportation and logistics market fares the best of the verticals we studied, losing just 2% of annual revenue to downtime, but that's still an average of $32 million a year. That's a number sure to keep more than a few IT managers up at night."

Sample Study Findings

-- Application problems are a big source of downtime for all verticals studied, making up 20% to 39% of the total annual cost of downtime, with logistics companies feeling it the least, and financial, health, and retail organizations feeling it the most

-- The more distributed the network is, the more companies are affected by service provider downtime; retailers are affected the most, with service providers being the source of 31% of their downtime costs

-- Human error is the cause of at least a fifth of the downtime costs for all five verticals, and almost a third for financial institutions; this can only be fixed by adding and improving IT processes

-- Server downtime should be a strong concern for all verticals, and it is one of the easiest problems to identify and tackle

-- Security downtime is not a major issue anywhere, though it reaches 8% of costs within financial organizations

Infonetics conducted the study to understand the causes and calculate the cost of outages and service degradations in terms of lost revenue and lost productivity at large organizations. They studied seven sources of downtime: network products, security products, cables and connectors, servers, applications, service providers, and e-commerce; as well as the four common causes: hardware problems, software problems, human error, and service provider error.

To help companies selling products and services that reduce downtime, Infonetics developed a Downtime Cost Analyzer in conjunction with the study that can calculate network downtime for prospective customers, and do cost modeling and cost scenarios.

For study excerpts and table of contents, please contact Larry Howard, vice president, at larry@infonetics.com or 916-933-3543, or download them from the Infonetics Research Information Portal at http://www.info.infonetics.com/.

Infonetics Research (http://www.infonetics.com/) is an international market research and consulting firm covering the data networking and telecommunications industries in North America, Europe, and Asia. Infonetics helps companies develop, market, and sell products and services by providing objective analysis of end-users, service providers, and product manufacturers. Infonetics has offices in Silicon Valley, the Boston Metro Area, and London.

CONTACT: Jeff Wilson, Principal Analyst of Infonetics Research, Inc., +1-408-298-7999, ext. 226, or jeff@infonetics.com

Web site: http://www.infonetics.com/
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Date:Feb 1, 2005
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