The Cost of Downtime

Cost Savings & Loss Avoidance through RNA methodologies

What IT Managers are saying …

"Troubleshooting hogs network managers' bandwidth Network World, March 28, 2008

Network Instruments State of the Network Global Study"

• A majority of network managers spend at least 25 days per year troubleshooting network and application performance problems.

• More than two-thirds (70%) of some 600 CIOs, network managers and IT managers polled, spend 25 days per year, on average, troubleshooting performance problems.

• The State of the Network Global Study annual survey also revealed that 75% of network professionals continue to cite "identifying the source of the problem" as their primary troubleshooting concern.

IT Investment Justification

Some of the questions asked concerning proposed IT investments include:

Will it help the organization achieve cost savings? Will it enable the organization to mitigate the risk of lost

profits? Will it enable the organization to reduce operating

expenses and increase staff productivity? What is the risk of not making the proposed investment?

The answers to these questions provide: Greater organizational insight and an understanding of how

IT impacts the business. Economic quantification of the proposed investments

expected results.

Key Findings revealing significant operational improvement areas among the critical dimensions analyzed

There are economic costs associated with the loss of a core business application, business process or department

There is an economic productivity cost when IT staff are redirected to isolate and resolve downtime issues

Downtime represents a direct impact on the profitability of the organization and these risks must be identified and forecast.

DIMENSIONS OPERATIONAL IMPROVEMENT AREAS

End-user Productivity Impact Business Profitability Impact

IT Staff Productivity ID Cost of Downtime Involvement

Downtime Risk Mitigation Strategy

ID Risks Forecast Probability Quantify Profitability Impact

Cost of Downtime - Productivity

The loss of a core business application, business process or department results in an End-user cost to the organization due to their lost productivity

• Employees whose access to business critical resources is hindered, cannot deliver maximum value to their organization and there is a real cost associated with their overhead when productivity is impaired

• Calculation = Number of users affected multiplied by the percent effect on productivity multiplied by the average burdened salary per hour multiplied by the duration of downtime equals downtime impact.

25,000

25%

$25.00

40.00$6,250,000.00

% Effect on Productivity

Average Burdened Salary per Hour

Avg Downtime/yearProductivity Cost

Productivity LossesNumber of Users

Affected

Cost of Downtime – Business Profitability

The loss of a core business application, business process or department results in an End-user business profit cost to the organization.

• Each user who needs access to business critical resources has an associated profit that they contribute to the business that is lost to the extent of their impaired productivity

• Calculation = Number of users affected multiplied by the percent effect on productivity multiplied by the average

profit per employee hour multiplied by the duration of downtime equals business downtime impact.

25000

25%

$0.48

40.00

$119,417.13

Number of Users Affected

Business Profit Losses

Annual Employee Profit Loss

% Effect on Productivity

Average Profit per Employee Hour

Avg Downtime/year 06' Financial Data

# Employees 59,643

Net Income $54,700,000.00

Cost of Downtime – IT Staff Productivity

There is an economic productivity cost when IT staff are redirected to isolate and resolve downtime issues

Downtime is an abnormal event and therefore the cost to deploy IT staff to isolate intermittent performance problems represents a value decreasing cost to the organization

Calculation = Avg Downtime (Hours/year) multiplied by # IT Staff Involved multiplied by the Avg Hourly Cost of IT Staff(loaded)

2080 hrs/yr10 Federal Holidays per year 80 hrs/yr2 weeks of vacation 80 hrs/yrTotal Work Hours/year 1920

52 weeks per year

Calculation Assumptions

Avg Downtime - Hours per year 40

Number of IT Staff Involved 10

Avg Annual Salaries of IT Staff $65,000

$81,900

Avg Hourly Cost of IT Staff(loaded) $42.66

$17,062.50

Avg Annual Salaries of IT Staff(loaded)

Annual IT Staff Productivity Cost

Economic Downtime Costs per year

Cost of Downtime – Profit Loss vs. Risk

Downtime represents a direct impact on the profitability of the organization and these risks must be identified and forecast.

• Downtime risks that directly impact the availability of business critical applications must 1st be identified

• The probability of these downtime risks taking place and their duration must also be factored into the analysis

• The profitability at risk is based upon the organizational focus and there is an associated downtime cost per minute

Cost of Downtime – Risk Assessment

• Downtime risks that directly impact the availability of business critical applications must be identified

• The probability of these downtime risks taking place and their duration must also be factored into the analysis

Risks that Affect Availability%

ProbabilityDuration

min.

Scenario#1- Loss of Internet Access 

Scenario#2 - Impaired VoIP Call Quality    

Scenario#3 - Highly Degraded Business Critical Application Performance

Scenario#4 - WAN / MPLS down

Scenario#5 - Security Breach leading to loss of critical data

Scenario#6 - Virus or Worm Outbreak

Scenario#7- Excessive Traffic Levels Impairing User Performance

Cost of Downtime – Profit Loss

Profit-draining potential

Business application Estimated outage cost-per-min

Supply chain management $11,000

E-commerce $10,000

Customer service $3,700

ATM/POS/EFT $3,500

Financial management $1,500

Human capital management

$1,000

Messaging $1,000

Infrastructure $700

• The profitability at risk can now be calculated based upon the organizational focus, the associated downtime cost per minute with a correlation to the risk assessment model

• Predicted downtime costs equal probability of event (percent) multiplied by the estimated duration in hours, if the event occurs, multiplied by the cost per downtime hour.

Risks that Affect Availability%

ProbabilityDuration

min.

Scenario#1- Loss of Internet Access10% 480.0

Scenario#2 - Impaired VoIP Call Quality

Scenario#3 - Highly Degraded Business Critical Application Performance 10% 480.0Scenario#4 - WAN / MPLS down 5% 30.0Scenario#5 - Security Breach leading to loss of critical data 5% 60.0

Scenario#6 - Virus or Worm Outbreak 25% 240.0Scenario#7- Excessive Traffic Levels Impairing User Performance 10%

Predicted Annual Downtime Cost $8,385,000.00

Total Downtime Economic Impact

Annual Employee Productivity Cost

$6,250,000

Annual Employee Profit Loss

$119,417.13

Annual IT Staff Productivity Cost

$17,062.50

There are economic costs associated with the loss of a core business application, business process or department

There is an economic productivity cost when IT staff are redirected to isolate and resolve downtime issues

Downtime represents a direct impact on the profitability of the organization and these risks must be identified and forecast.

• The areas for operational improvement have been identified and the impact of IT on the business has now been quantified

• Now we must consider how the proposed IT investment from Network Instruments can impact these costs and minimize the risk of profit loss.

Predicted Annual Downtime Loss

$8,385,000.00

Where does the time go?

• Without Retrospective Network Analysis (RNA), reactive methods are employed which are primarily dependent upon IT staff members abilities for capture, analysis, and interpretation.

• This is time-consuming, prone to error, and extends downtime for increased costs

1. User reports problem

2. IT Staff begins to investigate the issue

3. Start reactive packet captures

4. Try and recreate the issue

5. Start monitoring captured data

6. Begin analysis on captured data

7. Resolve issue, if captured data is relevant

TRADITIONAL TIME-CONSUMING APPROACH TO NETWORK ANALYSIS Before

RNA

$avings Measured in Time Eliminated

1. User reports problem

6. Select timeframe and begin analysis on continuously recorded data

7. Resolve issue with actual data associated with performance problem

NEW APPROACH TO SOLVING NETWORK ISSUES

After RNA

• The RNA method enables a 57% reduction in the number of time consuming steps required to recreate, identify, and resolve intermittent network downtime performance problems.

• Combine this highly efficient methodology with automated analytics and expert intelligence for dramatic reductions in problem identification and resolution times.

RNA Value

Immediate access to what has happened on the network in the past,

not just the present Troubleshoot the problem when it occurred, not when it is reported after the

fact Saves days, weeks (sometimes even months) of root-cause resolution time

rather than waiting for the symptoms to go away along with user complaints Drill down to ns resolution analysis windows in order to capture critical

intermittent root-cause events affecting performance that are hard to detect in real time

Enables investigative forensics analysis Allows for continual capture and tracking of critical network based data from

multiple high-speed aggregation points (up to 10Gbps) with up to 220TB’s of capacity - you can't see what you haven't recorded

Rapid problem solving with full Application layer intelligence that clearly resolves network and application performance with back-in-time visibility

Drill down to specific errors for your business critical applications, while seeing the impact of client-side and server-side activity on the transaction

Tight integration between performance reporting and deep packet inspection environments for comprehensive visibility

Reconstruct and replay e-mail, instant message, web and VoIP sessions for instant user experience insight

RNA Value

Return on investment using RNA Methodologies Significantly reduce the costs associated with the impairment of business end-

user productivity due to the loss of a core business application or process. Significantly reduce business profitability impact associated with impaired end-

user productivity due to the loss of a core business application or process. Significantly reduce costs associated with downtime and the associated

profitability risk for identified IT events Reduce operating expenses and increase IT staff productivity through

automation of manual network analysis process' When using traditional network traffic analysis techniques; Network

Instruments can eliminate up to 60% of these time-consuming steps, through automated capture and intelligent analytics of this network data

Ensures that you can solve your complex problems quickly and efficiently with visibility into root-cause events that have already occurred, while eliminating the large blocks of time that are spent trying to recreate the problem(s).

Offers additional value with other IT projects across numerous departments Compliancy (SOX, HIPAA, etc) Internal HR acceptable use policy enforcement  Monitoring web usage Tracking security breaches and documents methods used with IDS-like

correlation  Plan Voice, Video and critical application rollouts Document before and after impact of changes on application performance

The Network Instruments Solution

GigaStor™ - TiVo for your network

Retrospective Network Analysis Intelligent Forensics Up to 48 TB storage capacity Line-rate capture Local processing and analysis Supports Gigabit, 10Gbe, WAN and Fiber channel

Five Models 2TB 4 Drive Unit 4TB 8 Drive Unit 8TB 16 Drive Unit 12TB 16 Drive Unit 16-48TB Expandable System

The End Result: End-to-End Network Intelligence

Software Probe

GigaStor for gigabit, 10 Gb, FC, and WAN

10/100/1000 Probe Appliance

WAN, Gigabit, FC, and 10 Gb

Probe Appliances

Gigabit, WAN, FC, and 10 GbPortable System

Observer Console Interface