Understanding the cost of computer failure to your business

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Understanding the cost of computer failure to your business

As a business owner, you must prepare your business for IT outages. They can come in many different forms: a malware attack, a power outage, natural disasters and even those caused by your people, or in the case we are focusing on here today; computer failure.

You will have backups to protect your data. You’ll also have business continuity and disaster recovery plans in place if the disaster is business-wide. However, this article concentrates on the individual. We wanted to know what the cost to the business is when one of your employees’ laptops dies. What does it cost you if a single person is unable to work?

  • Before we get to the numbers, an employee not having access to their computer could be caused by a few different events. The more common ones:
  • Stolen laptop. A common cause that we’ve seen multiple times.
  • Dropped laptop. Ever kicked the cord while it was charging? Ouch
  • Spilt water on your computer. Another one we’ve seen, even in this office
  • Faulty part. Sometimes the hardware just dies in computers
  • Computer age. The laptop simply is too old and is prone to failure.

Four of these five could happen at any given time. And there are many “old” computers across every business in Australia. So what is the cost to your business when an employee can’t work?

What’s the productivity cost of an employee who can’t work?

OK, let’s start with the average salary in Australia today. According to data released by the ABS in May 2021, the average Aussie professional earns $1,737.10 a week or $90,329.20 annually.

The average work year consists of 2,080 hours. So if we divide that salary by the number of hours, we get the average hourly rate of your office staff $44.95.

So every day, if your employee works 7.6 hours, the cost is $341.62. That’s ok, though, because they will be making you money – as long as they have a computer to work…

So if an employee is without a computer, they can’t make any money for you, so if something happens to their computer, how long to get them back up and running?

Assuming that you don’t have a spare computer you can provide them then here are the average times to get a working computer to them is made up from the following:

  • To order a new computer, the best case to get it shipped will be the following day. So if the computer fails Monday morning, its replacement can be ordered the same day.
  • But shipping won’t happen until Tuesday morning. So expect the computer midday Tuesday
  • Once the computer is shipped, it still needs to be prepared before it can be used. Again, the best case is that the laptop is sent directly to your employee. Due to automation processes, the computer will have software installed and their profile made available. The speed of this depends on the employee’s internet connection or, if they are in the office, your business’ internet connection.

All in all, they might start working Tuesday afternoon, but in reality, it will be Wednesday morning.

So for two days of lost productivity, the salaried productivity loss to your business is $683.24.

How much income is lost when a computer is not available?

Well, that’s for each business owner to work out themselves, but it would be a 100% margin at the low end. Some businesses will be less while some would be far more. Taking this crude calculation into consideration, at a minimum, the total loss would be $1,366.48.

So for each laptop that fails you, it will cost, at a minimum, $1,366.48.

We do recommend that each business performs this calculation so you have an accurate estimate.

That’s a high cost, that your business wasn’t prepared for. What else could you do with that money?

Warranty and Hardware replacement

If your computer is less than three years old, make sure it has a “next business day” warranty. A “next business day” warranty means that in the event of a failure, your manufacturer will send out a technician and replace the faulty part free of charge. A 3 year, “next business day” warranty will cost approximately $150 ex GST.

If you had such a warranty in place, there would still be lost productivity. Still, your expected downtime would reduce by half with a next business day call out.

So including the warranty cost and using the same assumption above, your total loss would be reduced to $533.24.

So what happens if you spill water on the laptop?

Well, that’s not covered under warranty, but your downtime would still be the same. Unless, of course, you purchase a spare laptop. If your downtime will cost you $1,366.48, a new business-grade laptop starts at approximately $1,500 ex GST. You could buy 1 – 3 spares and distribute them to cover all your employees across your geographic areas. Doing so would reduce your total loss to a minimum of a couple of hours of lost productivity.

We have old computers.

Well, these machines should be replaced asap. Not only will your replacement computer come with a warranty but your employees will also get further productivity gains by using a newer, faster computer. We also recommend you upgrade that warranty to 3 years.

If more than 10% of your fleet is out of warranty, this is a cause of concern. If it’s more than 20%, it’s something you should remediate immediately.

In summary, there is no reason why you should have aging hardware and out of warranty computers. Ultimately, you just cost your business time and money.