When digital networks fail due to a security incident or other type of IT outage, the cost can be huge, the negative impact to a company’s reputation notwithstanding.
Splunk has calculated downtime for the Global 2000 companies at $400 billion annually, or 9% of their profits. Those findings come via “The Hidden Costs of Downtime” report that Splunk released during its .conf24 event held recently in Las Vegas, Nevada.
Produced in collaboration with Oxford Economics, the analysis revealed that the consequences of downtime go beyond immediate financial costs. There can also be a lasting toll on a company’s shareholder value, pace of innovation and customer trust.
The report surveyed 2,000 executives from the largest companies worldwide (Global 2000) and showed downtime causes both direct and hidden costs.
Lessening the Impact of Downtime
Examining the origins of downtime, the report found that 56% of downtime incidents are due to security incidents such as phishing attacks. Meanwhile, 44% of incidents stem from application or infrastructure issues like software failures. Human error is the top cause of downtime and the biggest offender for both scenarios, Splunk said.
The research revealed an elite group of companies — the top 10% — are more resilient than the majority of respondents. They experience less downtime, have lower total direct costs and experience minimal impacts from hidden costs. Splunk researchers believe that the shared strategies and traits of these “resilience leaders” provide a blueprint for bouncing back faster after a downtime issue.
Resilience leaders are also more mature in their adoption of generative AI. In fact, they are expanding their use of embedded GenAI features in existing tools more than at four times the rate of other organizations, Splunk reports.
“Disruption in business is unavoidable,” asserts Gary Steele, President of Go-to-Market, Cisco & GM, Splunk.
“When digital systems fail unexpectedly, companies not only lose substantial revenue and risk facing regulatory fines they also lose customer trust and reputation,” he said. “How an organization reacts, adapts and evolves to disruption is what sets it apart as a leader. A foundational building block for a resilient enterprise is a unified approach to security and observability to quickly detect and fix problems across their entire digital footprint.”
The Direct and Hidden Costs of Downtime
Splunk’s report emphasizes that he repercussions of downtime are not limited to a single department or cost category. To provide a multifaceted view, the report surveyed chief financial officers (CFOs) and chief marketing officers (CMOs), as well as security, IT operations and engineering professionals to quantify the cost of downtime across several dimensions.
Key findings on the impacts of downtime include:
Globally, the average cost of downtime per year is more costly for U.S. companies ($256 million) than their global counterparts due to various factors including regulatory policies and digital infrastructure. The cost of downtime in Europe reaches $198 million and $187M in the Asia-Pacific region (APAC).
Organizations in Europe — where workforce oversight and cyber regulation are stricter — pay more in overtime wages ($12 million) and to recover from backups ($9 million). Geography also shapes how quickly an organization recovers financially post-incident. Europe and APAC hold the longest recovery times, while companies in Africa and the Middle East recover the fastest.
Resilience Leaders Bounce Back Faster
Companies that recover faster from downtime share common traits and strategies that provide a blueprint for digital resilience. They also invest more strategically, rather than simply investing more. Splunk found that resilience leaders’ common strategies and traits include:
SURGe: Research for Rapid Response
Splunk’s research activities are supported by SURGe, a team of security experts dedicated to researching, responding to and educating about security threats that impact the world. SURGe alerts provide notifications when rapid response guides have been created for high-profile security incidents to help aid in detection, investigation and response workflows.
SURGe also produces longform security research with actionable guidance and recommendations on a variety of security topics to stay informed of security problems and ahead of attackers.
Mick Baccio, a member of the SURGe team, served as White House Threat Intelligence Branch Chief in both the Obama and Trump administrations. Speaking to MSSP Alert during .conf24, Baccio explained that the SURGe team offers information for all security practitioners.
“When we publish something, our white papers are all free, our research is all free,” he said. “Our goal is to try and help security get a little bit better than they are now, and if our research can do that, great.”
