Why is being proactive in technology important? First let me define reactive, waiting for failure to occur before action. “Run it until it dies” Proactive is taking planned predetermined steps to prevent failure. “Replacement schedule” Intentionally or not you are executing one of these action plans or a blend of both. Being reactive has its risks and most notably downtime. To calculate lost revenue due to downtime you can use this simple calculation.
Lost Revenue = (annual gross revenue / annual business hours) x hours of outage
$2,000.000 in gross revenue and 9 hours for 260 business days. $2,000,0000 / 2340 = $854.70 an hour in revenue.
Payroll Cost = (annual payroll expense / 2080) x hours of outage
$2,000,000 in payroll and 8 hours a day for 260 business days. $2,000,000 / 2080 = $961.53 an hour in payroll cost.
There are plenty of other factors that can be calculated in downtime but these are the top 2 contributors. This downtime is a major event like server loss, internet outage, or line of business application failure. You can add revenue per hour and payroll cost per hour together and divide by the number of people working to narrow the cost down even further. This will help to determine the cost of being without a workstation for an individual. You can even go a step further and calculate the percentage of time lost due to maintenance, out dated hardware, or configuration issues classified as unhealthy PC’s. If your business can help every user can gain 15 minutes per day of productivity by being proactive and maintaining current technology, that could save a significant expense and reduce overtime. I found a few studies that put the productivity loss due to inefficient technology at 8% annually. I encourage you to gather your 2012 numbers and go through this exercise. The knowledge you gain will be worth your effort.
I think it is important to note that being proactive in technology has a number of advantages but it isn’t technology euphoria. There is a balance of cost versus risk and you have to decide what is acceptable risk for your business. A planned risk is so much easier to control than an unplanned risk.