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The real cost of an IT breakdown in a warehouse

Today’s warehouses depend on business-critical IT systems to keep goods moving through the facility. With tight deadlines and challenging targets to meet, every second really does count. So when IT breaks down, it’s a serious problem. But the cost is much more than just a broken device.


It takes time to recover

There’s an anecdote of a conversation between a speaker and an audience member at a tech conference about the time it takes to recover from an IT breakdown. Initially the audience member said it only took a minute to fix an IT problem but when pushed on how long it took for the operation to recover, he reflected and said, days.

Downtime is expensive. Device failures remain a critical issue and often approach 30% according to VDC Research, and the impact on a warehouse operation can be significant. Roughly 45% of failures will require a device to be replaced and most incidents also involve more than one person.

And this is where we start to see the true extent of an IT break down. It’s not just the problem itself that incurs cost, but the knock-on effects, which can make it expensive.

Numbers involved snowball

For example, when a device goes wrong or the connection is lost in a warehouse the employee has to stop what they’re doing and try to fix it. They cease fulfilling orders and instead they’re wiggling wires, rebooting devices or moving around to get back on the network.

And when they don’t succeed in getting the device working, they involve their supervisor. So now there’s two people absorbed by the problem and the clock ticks on. The supervisor repeats the same actions – wiggles wires, reboots, moves around to find connectivity, but he or she can’t get the device up and running either.

So, the supervisor calls the IT helpdesk. Now there’s three people involved. The IT helpdesk goes through the same measures, but the device still doesn’t work. They decide that you need a replacement unit. This involves another member of staff from another department to organize, and don’t forget you need to get the old one fixed too, so add yet another employee to the small team now engaged in one broken device.

Operational impact

You can see what’s happening here. An IT breakdown easily escalates and before you know it a number of staff are working on fixing a single device instead of getting on with their jobs. Research by VDC shows that the average computer breakdown takes IT 53 minutes to remedy, loses 78 minutes of productivity and takes more than one person to fix.

And here we’re just talking about a single occurrence. If a device continually breaks down, you can multiply these impacts many times over.

Total cost of ownership

It’s hard to put an actual price tag on an IT breakdown as each incident is different and the cost of operational down time plus impact on customer service can be hard to measure. But there is a way to get a good idea of the figure – do a total cost of ownership calculation.

When companies purchase new hardware, they often just consider the cost of acquisition, forgetting about the other direct and indirect costs involved. In fact, according to VDC, the acquisition price often equates to just 30 percent of the total costs.

You need to factor in any maintenance and servicing, warranties, how long the device lasts, reliability, premature replacement costs and impacts on productivity to get a true picture of costs. And this equation is useful to work out the impact of an IT breakdown.

Cheaper over the lifetime

At JLT we work with companies to compare the total cost of ownership of different devices and find the best one, not only in terms of cost, but also in terms of their business needs and priorities. Our customers are often surprised that what seems like an expensive device when you look at the price tag, can turn out to be cheaper over the lifetime of a product.

If you want to find out more about the total cost of ownership for your business, get in contact.

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Hanna Proohf

Hanna Proohf

Corporate Marketing Manager

February 28, 2020

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