Light Reading

What's the Real Cost of Network Downtime?

Charlie Ashton
9/3/2014
50%
50%

When networks go down, even for a brief moment, thousands of dollars are in jeopardy. Can service providers afford sacrificing carrier-grade reliability and risk facing downtime?

I've been examining the technical requirements for carrier-grade reliability in telecom networks quite a bit in recent weeks. One recent blog post discussed the differences between "high availability" and "carrier grade," while a subsequent post outlined some of the key challenges that make it so hard to implement true six-nines (99.9999%) reliability in a telecom platform.

Given both the technical challenges and also the licensing costs associated with delivering carrier-grade reliability, sooner or later a smart finance person is going to ask whether the benefits actually outweigh the expense. Isn't high availablity good enough? Why go to the additional expense of carrier-grade reliability? So it's interesting to look at some numbers that unequivocally tell us the real question is not "Can you afford to implement carrier-grade reliability?" but rather "How could you possibly afford not to?"

Let's start with the numbers that no one can dispute. The traditional standard for telecom network reliability, measured at the service level, is six-nines or 99.9999%, which translates to an average 32 seconds of downtime per year, per service.

As service providers plan for the progressive deployment of NFV in their networks, they inevitably consider the use of standard enterprise-class virtualization software for use in their NFV infrastructure. The standard reliability guarantee for such enterprise solutions is three-nines (99.9%), which implies 526 minutes of downtime per year.

So as a service provider, what will 526 minutes actually cost you, compared to 32 seconds?

One report estimates the cost of downtime as $11,000 per minute, per server. This represents the revenue that's lost as a result of service level agreements (SLAs) with customers (mostly high-value, enterprise users). If each server is down for 526 minutes per year, that's an annual cost of $5,780,000 per server. We'll call that $6 million per server to keep the math easy.

Now, how many servers do you have in your data centers, delivering the services that your customers depend on? If you have 1,000 servers then your total annual cost of downtime is 1,000 x $6 million, or $6 billion.

And just to make it worse, that $6 billion represents only the revenue that's lost as a result of customer SLAs. It doesn't include the long-term revenue impact caused by some of those customers switching to other service providers who are promising them the service uptime that they need.


Find out more about key developments related to the systems and technologies deployed in data centers on Light Reading's data center infrastructure channel


To complete the analysis, the corresponding revenue loss for service outages in a network with true six-nines carrier-grade infrastructure will be $5,780 per server, or total of $6 million, if we again assume 1,000 servers in the data center. That's not negligible, but it's only one-thousandth the cost of the first scenario and customers are much less likely to switch providers if they experience such low average downtime.

So, putting ourselves in a service provider's shoes and assuming our hypothetical 1,000-server installation, the trade-off is clear. We can base our NFV infrastructure on enterprise-class software designed for IT applications, incurring $6 billion in lost revenue because of our SLAs, while risking customer defections because they can't tolerate the downtime. Or we can implement carrier-grade infrastructure that delivers the reliability that customers have been conditioned to expect, in which case downtime should only cost us $6 million and we can expect to retain our high-value customers.

What do you think? Are these numbers realistic? We’d be delighted to hear from readers with more visibility into the true cost of downtime.

Charlie Ashton is director of business development at Wind River.

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
varun.dit@gmail.com
50%
50%
varun.dit@gmail.com,
User Rank: Light Beer
9/23/2014 | 6:44:47 AM
NFV fraction
NFV based network availabity is not upto the standards of Tier-1 Operators, but it definately meets requirement of small operators as there business model is different. Moreover studies shows that software clustering will improve the availability factor for NFV based networks.

Another things which is very important if you are looking to create NFV solutions for Tier-1, who are six 9 based, you have to identify correct Network Functions which can be replaced and your Network Management Systems can support.
More Blogs from Column
There is an impressive array of technology that is planned for the transition to 5G that will enable many new possible services.
5G could shape up to be a stunningly expensive fiasco.
The Swedish vendor has undergone a significant transformation during the past few years, adjusting to the demands of next-generation communications companies.
Wi-Fi Alliance members have created Wi-Fi Aware technology to bring local experiences to life -- without requiring access to the Internet or GPS.
Bamboozled by the flood of abbreviations and acronyms that SDN and NFV have inspired? Here's a guide to some of the key standards bodies whose initials you will need to know.
Flash Poll
From The Founder
Ericsson's Hyperscale Datacenter System (HDS) 8000, featuring Intel's Rack Scale Architecture, caused a stir when it was announced at MWC 2015. For more on this revolutionary product, join me on Thursday, April 30 at 12:00 p.m. EST for a Super Webinar event, A New Hardware Paradigm for the Telco Data Center.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Comcast Formally Ends Its Bid for TWC
Mari Silbey, Independent Technology Editor, 4/24/2015
What if the Comcast Merger Fails?
Mari Silbey, Independent Technology Editor, 4/20/2015
Google's WiFi-First Mobile Service 'Fi' Is Here
Dan Jones, Mobile Editor, 4/22/2015
Comcast Merger May Hinge on Hulu
Mari Silbey, Independent Technology Editor, 4/22/2015
Google Ready to Release Thousands of Loons
Sarah Thomas, Editorial Operations Director, 4/20/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
Cats with Phones
Learning Curve Click Here
Pierre could never remember how to use Excel.
Latest Comment