sell cost of downtimeIn today’s internet-enabled and computer driven society, there are few business issues as critical as a network outage or system failure. Just take a look around any office and watch how employees respond when their ISP connection slows to a snail’s pace or goes down completely. Productivity drops just as quickly, with employees more focused on what they can’t do with their systems out of operation—rather than the tasks they are still able to complete.

If your business clients’ computer systems went down at this very moment, how long would it take before their operations came to a screeching halt? If they aren’t contracting with you or another provider for proactive managed services, it probably wouldn’t take long. From the loss of email and internet applications to a potential interruption in communications (i.e. phone, instant messaging and teleconferencing), a single system failure could be extremely disruptive to their customers and their overall operations—racking up significant costs from lost revenue and sales opportunities.

While mobile service connections may provide a short-term solution to internet availability, especially for companies with a comprehensive BYOD strategy, it won’t alleviate the potential workday disruption for most employees. When the main systems go down, many onsite services could go down with it, including company-hosted cloud solutions. That’s why their management team must be committed to a proactive technology plan, with contingencies built in to ensure the organization remains operational (and productive) at all times.

The most successful MSPs are often those who know how to emphasize the “cost of downtime” with clients and prospects. They educate their customers on how a proactive technology plan can keep their systems on line and increase efficiencies across the board, including employee productivity and resource utilization. With a well-tuned managed services program in place, the company’s directors can focus more of their attention on their other parts of their operations to grow revenue and profits.

Calculate the Cost of Downtime  

One of the best ways to emphasize the cost of a poorly managed network (and lack of backup systems) is to make it personal. Build a monthly expense model using figures that would be similar to their business, estimating the cost of all the resources used to run their operation for an hour. If a client or prospect is willing and able to provide their actual monthly payroll (including the cost of all benefits) and other expenses, the exercise is much more enlightening. Otherwise, estimate the monthly rate for each category listed in the following example:

Acme Business Expenses (per month)
Employee wages/salary per month $25,000
Business Taxes $12,000
Rent/mortgage/property taxes $3,000
Utilities $1,000
Other Business Expenses $4,000
Total $3,000

 

After tabulating those figures, divide the number by the company’s hours of operation each month. In this example, the organization was open 50 hours a week, meaning the hourly cost of running the business is approximately $165.00 ($33,000/200 hours per month). That number represents just the lost expense side of the ledger, not accounting for lost sales and other opportunities the organization may forgo during a network failure or similar outage.

If the critical business systems were lost for an entire ten-hour day, in the example company the expense associated with that downtime would be $1,650.00! This is an important concept to convey to clients and prospects, helping them determine the value of each solution in relation to the time and productivity benefits it can provide to their organization.

The hourly operational cost figure gives an MSP the ability to emphasize the expense incurred any time their client is forced to shut down or their systems are inactive, while employee are still on the clock. Even though complete closures are rare, typically associated with catastrophes or freak storms, virtually any computer system failure could lead to similar losses in productivity. The calculated hourly operations rate is leveraging point when selling not only the value of proactive IT management, but disaster recovery and backup programs, cloud solutions and mobility.

When MSPs are able to provide real world examples of how their proposed services can significantly reduce their prospective clients’ productivity costs, their chances for securing a contract are apt to rise accordingly. The investment in new technologies and solutions can be hard for many businesses to justify unless they’ve experienced a severe outage in the past, but when they understand the potential dollar liability of such a disruption.

Even if a computer or network issue doesn’t force a business to close for a significant amount of time, consider the cost of lost productivity if it results in a 50% reduction in network speed. In the example company— if this issue persisted for an entire workday—it would lose $2,075.00! Whether a company experiences considerable problems with its business infrastructure or is looking to minimize the potential for them to occur, it’s essential for the management team to understand the costs associated with these types of disruptions. It will help them understand their return on investment (if any) for prospective new technologies and solutions, to be factored into the non-monetary benefits of those acquisitions—such as improved customer and employee satisfaction. Either way, MSPs who can effectively communicate these costs (and potential savings) to their business customers are more likely to engage a deeper conversation …and obtain potentially greater revenue.

 

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