A wake-up call for businesses – assessing the true cost of major network or application failures

Just two weeks after a major global IT failure rendered millions of computer systems inaccessible, another ten-hour outage, this time as the result of a distributed denial of service (DDoS) attack, recently affected users of the same global organisation across multiple regions. Once again, this incident impacted businesses within many sectors, including retail, financial services and utilities, amongst others.

Earlier in July, Africa felt the repercussions of the initial outage, albeit to a lesser degree than in the UK, Europe and the USA. Air travel was disrupted with the cancellation and delay of flights across the continent, leaving planes in many local countries, like Kenya and Nigeria, grounded. The financial sector felt the strain too, with banking platforms inaccessible, credit card and ATM transactions halted, and several stock exchanges, including those in South Africa, Morocco, and Ghana, left unable to transact. African healthcare organisations were also affected, as were telecommunications companies and internet infrastructure providers.

This latest DDoS-attack driven outage once again highlights the severe consequences that the breakdown of a mission-critical application can have on a business, as thousands of outage reports and complaints were logged within a short space of time. But is it possible to actually calculate the cost impact of this type of failure?

Quantifying the potential financial impact of major incidents

NETSCOUT recently released the results of a survey of IT leaders that looked specifically at incidents related to unified communications as a service (UCaaS) platforms, a cloud delivery model that offers a number of communication and collaboration applications and services, such as enterprise messaging, online meetings, team collaboration, video conferencing and telephony.

The survey found that 97 percent of enterprise-level organisations suffered at least one major UCaaS-related outage or incident in 2023. Additionally, most enterprises surveyed (51 percent) had been subjected to at least four incidents, each lasting several hours and negatively affecting 4,000 employees on average. And in 24 percent of cases, resolution took several days.

Beyond the immediate revenue loss, outages in critical communication and collaboration tools can lead to employee downtime, productivity declines and customer service disruptions, causing dissatisfaction and potential churn. Negative publicity related to these incidents can further harm a company’s brand and erode stakeholder trust.

In the type of worst-case scenario outlined above, NETSCOUT’s survey noted that 64 percent of respondents estimated associated losses of at least $10,000 in sales and productivity. For larger enterprises (with an annual revenue of more than $10 billion), 47 percent gauged losses of at least $100,000, with 18 out of 300 respondents reporting losses of at least $1 million.

While large-scale incidents affecting thousands of employees at once may draw more attention, the cumulative impact of day-to-day performance issues – like dropped calls, meeting delays and poor audio/video quality – on productivity and support costs cannot be overlooked.

Proactive risk mitigation strategies

To tackle the challenges posed by network and application failures, organisations must be proactive in carrying out preventive maintenance and routine upgrades to ensure services can operate at optimal efficiency. Regular maintenance checks and updates will help to mitigate the risk of unexpected downtime and its accompanying chaos and performance disruption, in turn, preventing fiscal and reputational losses.

This means that organisations’ IT teams need complete end-to-end visibility into the threats against their network, which would allow them to monitor networks and applications, regardless of where they are hosted or where users access them. Proactive synthetic tests too are essential, ensuring application functionality and simulating real user traffic respectively. These tests help measure the quality of the user experience and get ahead of performance issues before users themselves encounter negative impacts.

Looking ahead, as a way of learning from these recent global IT outages, businesses should consider the use of visibility tools, like NETSCOUT’s ‘Visibility without Borders’ platform, which will allow them to build a detailed repository of information based on previous issues encountered, helping them to deal with future challenges more effectively and efficiently.

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 company ever plans for these things to happen. However, by implementing proactive measures to mitigate risks, organisations can strengthen their operational resilience and position themselves to bounce back quickly when disaster strikes.

By Bryan Hamman, regional director for Africa at NETSCOUT