The immediate effects of system downtime take the spotlight moments after an outage. Like the human body redirects its resources to fight infection after an injury, an organization’s IT staff springs into action to restore functionality. While the networks and data are unavailable, customers cannot log in to their accounts, orders are not processed, and networks and services can neither access nor transmit essential information.
Furthermore, even after the dust clears and the system is back online, complications of the outage may still linger. As your reading explains in some detail, the company may face legal, regulatory, social, and productivity concerns, not to mention the loss of consumer confidence and reputation.
The two case studies below represent two different system outages for vastly different companies. Each company is considering upgrading their systems to ensure higher availability. As you read each, consider the following factors:
The cost of downtime for the company
The length of downtime the company could tolerate financially in a year
The return on investment to increase availability
Assume that each of the companies has contacted you, as an independent consultant, and asked you to advise them whether or not they should upgrade their systems. Construct a report of 1–2 pages in length for each company in which you address each of the bulleted points above and make a recommendation either for or against an upgrade to increase availability.
The text contains a number of complex formulas on this matter, but you are not required to utilize them. However, some straightforward arithmetic calculations are likely necessary. Make sure to reference any sources you cite in your report. Keep in mind that there is no one correct answer to this Application, but any conclusions you draw should be supported by this week’s resources.
Case Study A
An online retailer sells specialty shoes for men, women, and children. It markets worldwide through its website, which is its only sales outlet. North America accounts for 40 percent of its sales, Europe accounts for 30 percent, Australia and New Zealand contribute 15 percent, and the remaining 15 percent originate in Asia and Africa.
The company averages 10 sales per hour, distributed fairly evenly throughout the day. The average sale is $200, on which it makes a profit of $50. The company is housed in South Carolina and employs 40 people at an average salary of $20 per hour. Half of the jobs are in the fulfillment department, which processes and ships orders.
The company uses a large, $35,000 Linux server to host its website. The server is down about twice per year for an average of four hours during each failure. During system outages, the fulfillment staff usually works overtime, for which it is paid 150% of the normal rate. To increase availability, the company would like to purchase a second server at approximately the same price as its existing server.
Case Study B
A major securities trading firm that serves primarily wealthy investors is based in Philadelphia, and it has branch offices in London, Paris, Singapore, and Australia. The firm’s trading activity is managed by a massive million-dollar redundant system housed at headquarters. It executes trades on all stock exchanges worldwide, so the system is active 24 hours per day, seven days a week.
The firm averages 100 trades per minute. An average trade is $50,000, on which it makes a 2% commission. Half of the commission is paid to the trader and half is paid to the brokerage firm. The trading system fails an average of two times per year, but the backup system can be brought into service in approximately five minutes. An upgraded system would eliminate one yearly outage. The system is expensive, and an upgrade may cost as much as $2,000,000.