The £366 Million Incident: What Downtime Really Costs
John Sansbury
2 min read
In 2018, TSB moved its customers off the Lloyds Banking Group systems and onto a new platform of its own. On switchover, the new system promptly crashed. By the time the dust settled, the bill had reached £366 million. That included around £130 million in customer compensation, £49 million in fraud and operational losses, £122 million spent fixing the technology, and £34 million in lost income from waived fees. Some 80,000 customers switched their accounts away, against 50,000 the year before.
TSB is not an outlier. It is simply one of the best documented examples of a pattern most enterprises never bother to measure.
In The Journey to Service Excellence, John Sansbury sets out four layers of incident cost, each usually larger than the last.
The first is internal rework, the time your own teams spend fixing things that should not have broken. Second and third line teams commonly report spending as much as 80 per cent of their time on incidents. Seventy people spending half their time on incidents at £35,000 each is over £1.2 million a year, before anything else goes wrong.
The second is lost user time. An incident affecting 1,000 users for 90 minutes costs around £30,000 in salaries alone. One site of a global enterprise put its annual figure at more than 10 million euros.
The third is lost business. One logistics company faced a fine of a million euros per hour for late delivery on a just-in-time contract to a vehicle manufacturer.
The fourth, and the most severe, is reputational damage. When a single expired software certificate took down the O2 network in 2018, the compensation Ericsson was believed to have paid O2 was in the order of £100 million. When Facebook disconnected itself from the internet for several hours in 2021, the lost advertising revenue was estimated at more than 60 million dollars, and the market reaction wiped an estimated six billion dollars from its founder's personal wealth. BlackBerry's four-day outage in 2011 cost an official 54 million dollars, with external estimates running to 350 million. The company never fully recovered its reputation for reliability.
Here is the uncomfortable question. Do you know what an hour of downtime costs your enterprise?
Very few leaders do. Yet this single number is the most effective business case for investing in prevention. A competent problem manager costs perhaps £40,000 to £50,000 a year. At a downtime cost of £5,000 per minute, they only need to prevent one one-hour outage to repay their cost six times over.
You cannot manage a cost you have never measured. Start there.
Earn 0.5 hrs CPD for reading this
On the Exchange, reading counts. Join free to log CPD automatically and unlock the full library.
First 12 months free, then £99.00 per year
More from John Sansbury
5 of these are available to members.