Average Cost of Data Loss & Data Center Outages

September 20, 2021
By: Eric Tomah in the Infrastructure category.

Average Cost of Data Loss & Data Center Outages

Data integrity and accessibility are critical pieces of strategy and infrastructure for modern business. Every company employee relies on access to job-specific information available within seconds. When data centers fail or security breaches expose private information, the cost is astronomical and grows from year to year. Experts at Gartner assess the cost of downtime at an average of $5,600 per minute. While scale definitely impacts actual numbers, it’s a sobering figure for any sized business.

Facts, Stats, and Biggest Data Outages of 2021, So Far

Server downtime means an hourly cost of over $300,000, but that doesn’t directly translate into more money to invest in redundancy.  For small businesses, the cost of data loss drops to a much smaller, though still significant, $137-427 per minute. To successfully combat the risks of data outages, many small to mid-sized businesses rely on third-party providers with uptime guarantees. But, even with vendors that specialize in cloud computing and remote network management, unplanned downtime still happens. Some recent and costly examples include:

1. Microsoft Teams Delays and Service Outages – In February of 2021, Microsoft Teams handled two issues that interrupted service for some of the more than 115 million daily users of the service. The first incident prevented users from joining chat groups, while the second delayed sending, turning the real-time service into a glorified email service.
2. Statewide Outages in Texas – February was a hard month for IT infrastructure, with a once-in-a-century storm shutting down online access through huge swathes of the Lone Star state. While no single cloud computing business was responsible, it created a massive flow-on effect. Electricity outages were the root cause of much of the downtime, and it took days for power to reliably come back on for millions of homes throughout the state.
3. Verizon Service Outages – Verizon, a major supplier of internet connectivity through wireless plans, had issues supplying customers throughout the Northeast and Mid-Atlantic. With more than 5,000 service tickets put in about the same issue, Verizon fixed it within the day.
4. Global Microsoft Outage – While the Teams issue in February was inconvenient for those affected, Microsoft dealt with an even larger issue later in 2021 when Teams, Azure, Office 365, and a variety of other cloud computing solutions all went down, creating a global outage. And business customers weren’t the only ones affected. X-box Live also went down, though similar to the collaborative software, not all users were affected. Microsoft remediated this outage within four hours.
5. April Google Outage – As Alphabet has become an integral part of many users of the website search for its most famous product, Google, several other features have also grown to prominence, particularly for the ability to facilitate real-time collaboration. Google Docs with instant sharing of changes, automatic updating, and other features make it a successful tool for businesses. In April, Google Docs and Sheets were unavailable to users for approximately three hours.

The estimated costs of these outages ring up an astronomical total, though typically, the cost is measured in lost revenue and productivity rather than using direct dollars. Certainly, some customers may try back when services are once again working at peak efficiency. But, if that’s just the potential cost of surprise outages, what about deliberate data breaches? While a data breach often affects fewer users, it is more targeted and can be just as costly.

The Real Costs of a Data Breach

During an outage, all losses are due to missed opportunities. Customers can’t access a buying portal, or sales teams can’t interface with the public due to down CRM systems. In the event of a data breach, things are rarely that direct. While ransomware is becoming a more regular issue, data theft is still the most common type of attack on companies, even for small to mid-sized businesses. Hackers may grab thousands of individual user records, financial data, or inter-office communications. The type and scope of the data stolen can impact the total cost of its loss and long-term value. The total estimated cost of data breaches had been fairly stable or on the decline until 2021. IBM released its annual Cost of a Data Breach Report with a record-breaking statistic — the average cost of data breaches reached $4.24M.

Remember that an average cost is a per-breach number, not the total cost of all breaches from the year. Factors that likely led to the increase include more work-from-home professionals and slow adoption of some of the most effective mitigation strategies. According to the same study, compromised credentials were the culprit in the largest group of breaches. Per record stolen, the average cost is $150, which might seem a little low compared to downtime costs until the calculations for the number of records are added for comparison. Here is a quick look at some of the most expensive data breaches from the last couple of years.

1. Epsilon, 2011 – The Epsilon hack caused more than $4B in losses to the service provider and affected 75 clients, among which were some of the world’s largest retailers. When clients such as Best Buy, Target, and JPMorgan Chase are on the list, the value of the data lost is astronomical.
2. Target, 2013 – While this data breach affected only one retailer, the $202M price tag is eminently reasonable for the more than 110 million credit card numbers stolen while the hack was active on Black Friday of that year.
3. Anthem, 2015 – While not hit as often as other industries, healthcare is one of the most expensive areas for data breaches, with the average cost topping $7M per incident. The Anthem hack in 2015 blew that number away with a whopping $100M in damages estimated and more than 80M patients with exposed personally identifying information, including social security numbers.

Solutions for Data Loss and Outages

Thankfully, most of the issues have available mitigation options. While no vendor can guarantee 100% uptime, we can offer stable processes to get your business back up and running when unplanned downtime happens. Guaranteed timing to ensure your business is running as intended within a reasonable window is possible. Built-in redundancies on the vendor side help off-shore the costs of security.

Since exposed credentials and phishing are some of the most common methods hackers use to gain access to systems, the solutions for reducing risk are well-developed and cost-effective. Our technicians can provide your employees with the training needed to select stronger passwords and more quickly recognize phishing attempts. For susceptible systems, tokenization systems and authentication through a device are available to minimize the risk of an error. Mitigation strategies can be affordable and available to any sized business.