The True Cost of a Major Network or Application Failure

When a mission-critical application breaks down, interrupting the operations of hundreds or even thousands of employees, is it possible to quantify the cost of that failure?

To consider, let’s paint a picture. It’s 10 o’clock in the morning, and support tickets suddenly start pouring into your IT help desk. Employees from all over the world are reporting issues logging into Zoom meetings. Meanwhile, the head of sales is calling your boss. A critical customer meeting needs to be rescheduled, and they want to know how long it will be before the issue is resolved.

The trouble is, no one knows because it’s unclear what caused the issue in the first place. Was it a problem with the network? A misconfiguration of the platform? Unfortunately, it could be hours or even days before it’s resolved.

Major incidents or outages like this are not uncommon for most enterprises. In fact, according to our recent survey of IT leaders, 97% of enterprise-level organizations suffered at least one major outage or incident with a unified communications as a service (UCaaS) platform in 2023. Additionally, a majority of enterprises (51%) experienced at least four incidents, impacting 4,000 employees on average. In 24% of cases, resolution took at least a few days.

Related:Internet Resilience Report: Outages Cost Companies Over $10 Million a Month

Understanding the Financial Impact of Major Incidents

When critical communication and collaboration tools falter, the consequences extend far beyond immediate revenue loss. Employees experience downtime, productivity declines, and customers may face disruptions in service, leading to dissatisfaction and potential churn. The negative publicity surrounding major outages can further damage a company's brand reputation, eroding stakeholder trust. Finally, let’s not forget that enterprises may be spending millions each year in subscriptions or licensing costs for these platforms, and 75% of companies with $10 billion in annual revenue or more say that user experience issues have a significant impact on their UCaaS platforms’ value.

In the worst-case scenario outlined above, 47% of these very large enterprises estimated losses of at least $100,000 in sales and productivity. Furthermore, 18 out of 300 respondents we surveyed said their organizations lost at least $1 million. These were also the types of organizations most likely to report managing more than 50 remote sites, such as regional branch offices, factories, warehouses, and other locations where IT may not have local staff and/or as much visibility, underscoring the critical need for proactive strategies to mitigate risks. However, major outages or incidents are not the only types of issues that IT help desks need to consider.

The Hidden Costs of Day-to-Day Performance Issues

While major incidents affecting thousands of employees at once may require the most attention, the cumulative impact of day-to-day performance issues on productivity and support costs must not be overlooked.

Common issues like dropped calls, delays in joining meetings, and poor audio/video quality issues affecting only a handful of users may seem minor when viewed individually, but their collective toll can be significant. These issues strain IT resources, create a backlog of tickets, and decrease employee morale and job satisfaction.

The good news is that issues with UC&C and UCaaS platforms – or at least those reported to help desks – appear to be going down year over year. However, these issues still represent a majority of help desk or trouble tickets in about one in three organizations. Meanwhile, only about a quarter of enterprises (27%) say that they can resolve UCaaS-related help desk issues within a few minutes on average, pointing to significant opportunities for improvement.

Proactive Strategies for Mitigating Risks

To address the challenges posed by network and application failures, it’s clear organizations must be more proactive in setting up monitoring and incident response strategies. After all, receiving real-time insights into the health and performance of UCaaS and SaaS platforms more generally can enable IT teams to identify and address issues before they escalate. Further, implementing robust incident management protocols and conducting regular performance assessments are crucial to minimizing downtime and maximizing operational efficiency.

Likewise, independent third-party monitoring solutions are vital in ensuring operational resilience and business continuity. By leveraging advanced monitoring tools and practices, organizations can gain deeper insights into the performance of their network and application infrastructure. These solutions provide unbiased assessments, enabling proactive identification of potential issues and timely intervention to prevent major incidents.

Ultimately, the true cost of a major network incident or application failure extends beyond financial losses to encompass many factors, including productivity, customer satisfaction, and brand reputation. No organization ever plans for these things to happen. Outages can happen quickly, and at some enterprises, too frequently for comfort. However, by implementing proactive measures to mitigate risks, organizations can strengthen their operational resilience and position themselves to bounce back quickly when disaster strikes.

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