& cplSiteName &

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.
Educational Resources
sponsor supplied content
Educational Resources Archive
More Blogs from Column
'WiFi offload' became something of a dirty term for a while, but Devicescape CEO Dave Fraser thinks 4G service providers are having to re-think their position.
How cable operators and other pay-TV providers can differentiate themselves by helping customers find needles in haystacks. More is not always better.
A new way of thinking as well as new technologies and procedures are needed for those devising network security strategies, argues Fortinet's Matthew Pley.
High-frequency is on the 5G agenda after the FCC mmWave decision.
With the Summer Olympics now halfway over in Brazil, CSPs and other tech providers are competing fiercely for their own gold, silver and bronze medals.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
Burt Klein, DevOps Strategist, Tech Mahindra
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Huawei Video Resource Center
Are You Ready for Huawei Connect 2016?

8|31|16   |     |   (0) comments


Join us for an exclusive sneak peak of Huawei Connect, an integrated conference for the global ICT ecosystem taking place in Shanghai.
Between the CEOs
CEO Chat: UXP's Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
WiCipedia: Should Men Be Included? & Olympians Face Discrimination
Eryn Leavens, Special Features & Copy Editor, 8/26/2016
Is There No Stopping Huawei?
Iain Morris, News Editor, 8/26/2016
600MHz Auction Climbs Over $22B
Dan Jones, Mobile Editor, 8/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.