25 November 2016 might not be quite such a memorable date as some others in recent times, but for those working in and around London’s West End, and, in particular, for the thriving film, television and post-production industry (not to mention the wider media industry) based in Soho, the major power cut that plunged the area into almost total darkness for several hours on that day will not be forgotten in a hurry. Theatres closed for the evening, as did many restaurants, bars and shops. For the media industry, the power outage was a very real test of the resilience of their data centre and IT infrastructure. While hindsight allows us to enjoy the irony that the power cut happened on Black Friday – that discount shopping day designed to boost sales in the run up to Christmas – at the time, for the many affected businesses and individuals, there was little to laugh about.
Calculating the cost of a power outage that causes significant downtime is a notoriously complicated and individual process (no two companies are the same). This doesn’t stop folks trying and, even allowing for an element of hype, the figures that are bandied around make for arresting viewing. To offer some random samples: back in 2003, it was estimated that an actual power black-out in New York cost businesses $36 million an hour. Move to the present day, and the average cost per year of application downtime to Fortune 1000 companies is estimated at anything between $1.25 and $2.5 billion, while it would appear that, for the vast majority of organisations, the figure of $100,000 is agreed upon as the cost of an hour’s downtime.
In practical terms, there are four main areas of cost to a business that suffers a power outage and the attendant downtime. First up comes wasted salaries – the money an organisation is paying its staff to sit at their desks and do nothing. Okay, so there might be some tasks that can be continued minus power, but the likelihood is that no power equals no work.
Next up comes lost revenue. That’s the sales you won’t be making during the power outage/downtime, possible, time-sensitive missed business opportunities, loss of reputation leading to a loss of customers and the hit your revenue stream might take owing to the delay in projects being finished on time. Some intangibles here, maybe, but it’s not difficult to see that even a small period of downtime can have a massive impact on the business. For example, multiple post-production tasks are 80 per cent complete, and not yet backed up, when the power outage arrives…Or your promise to deliver a completed games demo to a client by 9.00am tomorrow morning goes out of the window as you lose power for a couple of hours…Or your website which generates, say, £50,000 an hour in sales, doesn’t generate any sales for three hours.
And then there’s the remedial action required. Everything from paying your staff overtime to catch up on all the ‘lost work’, the money spent reassuring your customers that you do actually know what you’re doing and can promise them that you won’t let them down again and, from a technology perspective, maybe you have backed up all your work, which is a relatively inexpensive thing to do, and very good value for money, but when you ask your backup supplier to retrieve your files and data, you suddenly realise why the backup bit is so cheap - you feel like you’re being held to ransom when it comes to paying for the recovery bit of the contract!
Finally (although this list does not pretend to be exhaustive), there’s the very real possibility of damages and penalties to be considered. You may well have broken a contract with a client, thanks to the power outage delaying your work; you may well have contravened an SLA in terms of the uptime guarantee you offered on a client’s video streaming service; and then you yourself may feel the need to seek compensation from the organisation(s) who you believe let you down when it came to supplying power to your business. And if anyone has seen an impoverished lawyer, please do let me know!
If there was a silver lining to the November 2016 power outage in Soho, I suspect it involved many of the media organisations in the area overhauling and improving their business continuity and, critically, their disaster recovery plans, to ensure that they minimised the impact of any future power-related downtime. Unfortunately, for many companies, it is only when disaster strikes that the (inadequate) data centre and IT infrastructure comes under scrutiny. Far better to examine the likely impact on your business of a significant period of downtime before it does actually happen. Understand how you can mitigate any likely downtime, understand the costs of a BC/DR solution as compared to the cost of, say, a three hour shut down, and understand the pros and cons of trying to do everything yourself, as opposed to involving a colo, and looking at the potential of Cloud and managed services.
In the UK at least, the jury seems out as to the likelihood of power supply volatility increasing or not into the future. The optimists suggest that there are plenty of alternative energy sources being developed and we’ll soon be living in a golden age where power is cheap and plentiful. The pessimists are rather less convinced, believing that the lack of power stations being built, linked to the eventual exhaustion of the earth’s natural energy resources, is sending us back towards the dark ages. Even if the reality lies somewhere between the two, it would be foolish to ignore the potential damage that a power outage could cause your business.