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The Hidden Costs of an Unreliable Internet Connection





In business, an unreliable Internet connection costs dollars and cents. It’s that simple.

You might be tempted to think all Internet service is the same. Nothing could be more wrong.

The least expensive services may be so for a reason — slow speed, limited support, and other restrictions. And the difference between a business class of service and residential Internet service is often glossed over due to expense – but it shouldn’t be.

Over the years I’ve received enough frantic calls from business owners, IT managers and office managers when their Internet service went down, to know it can be a business catastrophe when you have no connectivity — or you have extremely slow Internet service — for hours or days on end.

Besides the monthly access and service fees you pay to your Internet service provider (“ISP”), there are other less obvious — yet potentially more costly — expenses.

Let’s break down the real issues and what they could cost you, to measure how important your Internet connection is.



Do You Realize Just How Reliant You are on Your Internet Connection?

First, do you stop to think just how reliant your business is on Internet connectivity?

Telephone

Once upon a time a business had many different phone lines (also known as POTS or plain ‘ole telephone service), or perhaps a digital T1 line that was connected to an internal phone system that handled the work of connecting and relaying phone calls in and out of your office. Ahh, those were the days! Maybe one line had an outage, but you still had others to depend upon.

However, in today’s market, many people rely on VoIP telephone services using a technology such as SIP trunking (Session Initiation Protocol) that relies on your Internet connection to produce those same calls. Sure, you still have a phone system or at least a small box to handle the IP routing, but when your Internet doesn’t work, neither does your phone service.

Cloud Services

Small businesses just can’t seem to live without cloud services today. According to one recent study, a small business uses on average six cloud services.

Although some cloud services can save data locally and push it back to the cloud when connectivity re-emerges, the vast majority of cloud services are not designed that way. When you’re down, you not functioning. Period.

A perfect example of such a problem is something I see often in my local wine shops and even coffee houses that use a cloud based point-of-sale solution on a tablet for ringing up sales. These offer a nice simple solution and fantastic reporting and management tools, but these apps live in the cloud. As such, no Internet and an unreliable Internet connection means it doesn’t work. This can be deadly or at least hugely disruptive to businesses with heavy retail traffic.

Remote Workers

Today, businesses have more remote workers than ever. Some businesses couldn’t function without them. You might be thinking, if my home or cafe Internet is working, why would I lose access? This is simply because the Internet source you’re using is different from the Internet source of your business. They are two separate networks connected in the cloud. If your business Internet loses connection to that cloud, other Internet connections cannot reach it.

Email and Systems

Then there is the problem of access to your network resources. Those resources could be a self hosted mail server or possibly a VPN/Terminal server to share drives with data on the network. Without access to customer service systems, sales orders systems or plain old email, you lose production.

Slowness

Reliability is not just an issue of full outages.

In fact, what’s more likely to happen on a more regular basis than a full outage, is connectivity issues. . .often referred to by techie types as “packet loss.”

It is no less problematic to have an unreliable Internet connection with large periods of significant packet loss as it is to have a complete outage. Packet loss means the transmission of data is not happening in the smooth consistent flow needed. In your office you would notice this as interruptions in your VoIP calls, or potentially delays in pulling up web pages or sending emails, or frozen or very slow systems if your business applications are hosted in the cloud.

Not all of these reliability issues directly result from the level of service. But service level is a big part of it.

Calculating the Costs

Let’s put some numbers on the loss of Internet service (or a slow unreliable Internet connection or disrupted service).

We’ll use the example of XYZ Consulting Inc. There are a variety of ways to calculate downtime expense, but we’re going to keep it simple and focus on two things: The amount XYZ has to pay employees even though they are not able to work, and the lost sales the company experiences.

Let’s assume four employees each make an average of $60,000 annually, including benefits costs. Based on working full-time (40 hours per week), the business spends around $28.85 per hour for each employee.

If those four employees each lose 4 hours of productivity time each month, that amounts to $462.00 simply in pay for lost time, each month.

But that’s not all.

Consider the lost revenue your business may be missing out on. Let’s assume each employee is responsible for generating or contributing significantly to $150,000 in annual sales, per person. That is $72.12 per hour in sales activity. Multiply that by 4 hours of lost employee time, by four people, and that’s $1,154 in lost sales monthly.

Add together the compensation you’ve had to pay out ($462), along with the lost sales ($1,154), and together the costs amount to $1,616.00. But, you think, they can do other things during that time, right? Yes, but think how dependent you are on your computers and systems. So let’s assume each employee is 75% dependent on IT systems. Multiply .75 x 1616, and you get to $1,212.00 lost each month in productivity and sales.

You can get a reliable Internet connection for a small business for a lot less than that each month!

How to Avoid Those Hidden Costs by Choosing a Reliable Provider

Choosing a reliable Internet provider, and opting for high speed business service, versus consumer service, can prevent losses. Here are some questions to ask:

  • Does the ISP have a solid track record of supporting their business clients?
  • What’s their uptime history been?
  • Does the ISP have their own Internet backbone that they own and operate? If they don’t, and they are just reselling someone else’s, you don’t know what you’re getting and your Internet performance may suffer. Top notch ISPs not only own their own IP backbones, they exchange traffic with other ISPs at multiple “meet me” points to ensure that your traffic can take the best route possible to get to its destination. ISPs that have few peering points may cause your packet to take a long and slow route, rather than a more direct, faster route.
  • What sort of availability do they have not only for the entry level support technician you may talk to, but for the engineering staff required to review larger issues?
  • If your target market is consumers, not businesses, does the ISP have a lot of consumer customers? Here’s why it’s important: If that is the case, then many of your customers can reach your website or application without having to jump from network to network. It all stays on the same network which helps performance.
  • Can they offer your business a fully inclusive solution with this solid Internet connection that can both save you money and let you focus on what your business does best?

Taking all of this into consideration can save you from the bigger headaches — not to mention expenses — in the long run.

No Internet Photo via Shutterstock

10 Comments ▼

Craig Sutton


Craig Sutton Craig Sutton is the owner of Sutton Brand Management. Using his background in tech, including 5 years managing the servers and networking team for a major regional Internet provider and also owner of an IT and Web software development firm, he harnesses the power of digital and traditional marketing to help small to medium sized businesses excel.

10 Reactions

  1. I can unfortunately relate to this, but as a freelancer. Until recently, I had an unreliable internet connection that got progressively worse. Because I work online, the dropped connections were not only costing me money, but potentially threatening my deadlines.

  2. Naomi@business start ups

    Hi Craig,

    I’m in similar situation to Ebele. This week has been a nightmare for slow internet connections and it’s losing me money and adding extra time onto my work day.

    I’m in the process of looking for a new provider so this article will really help me out.

    Thanks

    Naomi

    • Naomi, sorry you’re experiencing problems too. Hope you get things sorted out soon.

      I literally had to move my computer into my bedroom to use the main socket there. That’s how I’m now able to use the internet. It’s dropped less times, but last week was not funny.

      Hope the transition to find a new provider is a smooth one, and that you’re back up and running in no time.

  3. I unfortunately have the same problem. I have 23 VOIP phones and a cloud based ERP system as well as MS365 and Microsoft Exchange server. When I lose the internet I lose all communications with the outside world. I lose the internet about once a week for 10-30 minutes at a time. The enigma I am having that I am using Comcast for business. Go figure.

    • Anita Campbell

      I am not all that technical and don’t know the answer to your particular issue, Gary. But I will tell you my little story. At one point in the past we could barely use our VOIP phones because every other word would drop in a conversation. It was frustrating. It turned out we had outdated equipment (specifically an old generation router). In our case, we upgraded the router. We had to do some troubleshooting to get to that point of figuring out the issue.

  4. Craig Sutton

    Hi Gary,

    That is an interesting issue…

    How do you resolve the issue? Are you taking any action on your side that seems to “fix” it? That would go a long way in helping you determine possible causes…

    Remember all equipment in your network are essentially computers and as such have the potential for the same faults any other device has. The more resources you are using in a network, the higher “power” your main routing devices will need to be to support it. The consistency of timing would lead me to believe that a router or switch may be getting rebooted to fix the issue. If so, it may be time to look at a more updated device.

    Craig

  5. We have been fighting packet loss and dropped signal since the installation of Comcast at a new location last year. Dozens of Service Calls and conversations and no resolution as they come out and look and say “its working” now, see the lights are on. Numerous conversations but no resolution. We have forced to develop a fall-over plan but that does not address packet loss. Last week we had to forward calls to another office our cost of an unreliable service is huge. In fairness we have other locations using Comcast where the service works. Not this one.

  6. A fiber based servcie can make a big difference. Most customers sign up for Comcast “Business Class” internet service over coax cable. This is a fine and cost effective service. Comcast “Metro Ethernet” fiber based service, however, performs much better. Upload and download speeds are the same and the uptime of the service is the best I have seen. I have been selling this service for Comcast for 4 years. I do not get calls from customers about packet loss or downtime when they buy this service. I can say with confidence that this is the most reliable internet servie I have ever seen. For many businesses it is worth the extra money for this level of service as they can not afford to have the internet go down.

  7. Craig,

    Great article! I’m an independent broker of Telecom services and think your point is spot-on. It can be tough convincing business owners or decision makers of why it’s worth the like extra per month for a dedicated internet connection as compared to a best effort, lower cost internet connection.

    I used to work for some of the biggest carriers in the industry and now being able to sell them all gives me much better perspective and allows me to better help my business clients.

    Are you currently using any master agent to help your clients?

    David Herbert
    Sandler Partners

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