Dive Brief:
- Every minute an IT outage causes an operational shutdown costs businesses a median of $33,333, according to a study published Wednesday by New Relic, makers of a tech stack observability platform. New Relic, which polled 1,700 IT and engineering executives, said outages cost businesses a median of $76 million annually.
- IT downtime not only costs businesses money, it also costs them time. Roughly 41% of IT leaders report that IT service issues are reported through manual checks, customer complaints or incident tickets. Engineers are spending 33% of their time addressing IT disruptions, according to New Relic.
- The top three causes of IT outages include network failure, third-party or cloud provider services failure and deploying software changes internally. In distributed infrastructures, misconfigurations create a ripple effect across multiple systems resulting in costly outages. Additionally, the rise of enterprise AI adoption could create visibility challenges for IT leaders when an outage occurs, according to the company.
Dive Insight:
Lack of visibility into IT outages comes as enterprises race to adopt generative and agentic AI, which can cause issues to move silently through the tech stack.
The need for accurate and granular visibility is leading technology executives toward automated tools, said Parker Hathcock, research director at Enterprise Management Associates.
“As people are doing more complicated things with their IT, an outage can have a greater impact and it can have a greater cost,” Hathcock told CIO Dive. “Organizations now must be able to visualize, see what’s going on and track back problems in an effective way.”
CIOs are assessing proactive approaches for managing deployment of new technologies like AI agents that increasingly include observability tools, said Stephen Elliot, group vice president of IT operations and cloud operations at IDC.
The global AI push means CIOs will need to compete on making sure technology such as AI agents work properly and that services are available not only to mitigate IT outages, but drive business outcomes from what can be a costly investment, Elliot said.
While IT outages can cause direct financial losses for businesses, they can also have downstream effects, including regulatory fines, an average stock price drop of 2.5% with a 79-day recovery period according to a Splunk report released in 2024, and other consequences.
Notably, a faulty update to CrowdStrike’s software in July 2024 led to the crash of more than 8 million Windows-based systems, disrupted flights globally and cost Fortune 500 companies billions due to slowed financial transactions and operational downtime.
In another incident, Southwest Airlines faced an estimated $725 million revenue loss and additional $140 million in civil fines following an operational failure that grounded flights in December 2022.
“From the standpoint of people on the ground, it’s a huge issue and something they see eating into their productivity and service delivery,” Hathcock said of IT outages.
