The financial impact of Internet outages on businesses is well recognized. Yet, the exact cost remains difficult to gauge due to the individual nature of each company, its environment, the industry, risk tolerance, and so on. A significant breakthrough in understanding this cost has been achieved through a recent commissioned study conducted by Forrester Consulting on behalf of Catchpoint, entitled, Increase Revenue with Internet Performance Monitoring. The focus of the research was on the effect of Internet disruptions on eCommerce companies.
By putting a figure on the often-underestimated cost of Internet disruptions, this research not only confirmed our suspicions, but also revealed that the actual toll of Internet disruptions is even higher than what most organizations are prepared to accept. This blog focuses on what the research revealed to be the main reason why Internet disruptions are so damaging for eCommerce companies: lack of visibility into what has become the primary enterprise network - the Internet.
First, let’s recap the headline findings from the study:
• In the month before the study, 37% of the organizations surveyed estimated their companies lost between $100,000-$499,000, and 39% lost $500,000-$999,999 due to internet disruptions.
• Disruptions also damage companies internally by increasing employee churn (55%) and reducing workforce productivity (49%).
• Without adequate visibility, companies are experiencing 76 disruptions per month on average.
The challenge of gaining visibility into the Internet
Users’ digital paths to your services and apps move across a tangled web of distributed network systems that make up your Internet Stack.
As you can see, the Internet Stack is a fragile web of components that makes up your service delivery chain – most of which you are unable to visualize or control. These can include applications, microservices, routing protocols, data centers or cloud providers, BGP routing, DNS providers and APIs, SASE, WANs, and external network delivery mechanisms like fiber, broadband, local ISPs, and mobile networks. It’s a giant mess no matter where you look at it from and a challenge to troubleshoot.
So, when your business is disrupted, how do you figure out where the disruption is? The only way is by having visibility into all the layers of the Internet Stack. If a business only monitors its applications and not the entire Internet stack, it may be completely unaware of issues affecting customers in different regions. Your network may seem up to you, but if your users can’t reach it, they’re having a bad experience. Inevitably, that will negatively impact you in terms of churn and revenue. This lack of visibility can make it extremely challenging to diagnose and resolve problems quickly.
This inability to identify Internet disruptions threatens business, according to the Forrester study: “Too often, companies rely on a process of elimination to locate disruptions. Quickly identifying the source is critical, even if it’s outside the company’s control. It allows the company to mitigate the disruption’s damage by communicating with customers or reaching out to third-party providers immediately. E-commerce companies must overcome these challenges, or they’ll continue losing millions of dollars per year.”
Few Companies Successfully Manage Internet Performance
Since the Internet is eCommerce’s life force, monitoring performance to identify and fix disruptions quickly should be a top priority. According to the Forrester study, this is an area companies are struggling with. “Without the right technologies and tools, identifying and fixing Internet disruptions is hard — and few companies are doing it well.”
When asked, “Which of the following best describes Internet Performance Monitoring efforts at your company right now?” only 29% of respondents’ companies said they monitor Internet performance across the whole Internet Stack and enterprise. Forrester considers this a significant issue, stating, “Given the importance of Internet performance and the impact disruptions have on business success, this number should be closer to 100%.”
This lack of visibility resulted in an average of 76 disruptions per month.
Internet Performance Monitoring (IPM) is critical to business success
What tools can eCommerce companies use to mitigate the risks of disruptions? Sixty-one percent of respondents agreed they needed tools to quickly anticipate, detect, and fix Internet performance problems. Forrester strongly recommends investing in Internet Performance Monitoring (IPM) to gain complete visibility into the Internet Stack and the ability to identify issues before they impact the business. “Companies that don’t invest in IPM are vulnerable to huge financial losses as service disruptions drive away customers and employees,” says the study.
Underscoring the value of IPM, 75% of respondents said IPM would deliver a “large” or “significant” increase in revenue.
“The survey findings make a strong case for IPM, quantifying the consequences of not closely monitoring all aspects of a customer’s experience and addressing issues before they happen,” said Howard Beader, Vice President of Product Marketing at Catchpoint. “Monitoring the entire Internet Stack isn’t easy, with thousands of blind spots that could become disruptions or affect experience, but clearly a failure to do so is having a material impact on businesses profitability and productivity.”
Conclusion: The true cost of ignoring IPM
The study makes it clear that failure to identify and resolve network problems can lead to costly Internet disruptions that directly impact a business’s bottom line. With millions of dollars on the line, companies must prioritize IPM to minimize losses and protect their revenue. By investing in IPM, businesses can ensure they have the visibility needed to ensure Internet Resilience and safeguard their reputation and financial stability.
To learn more about the impact of Internet disruptions on eCommerce companies and how IPM can help mitigate these risks, download the complete study by Forrester Consulting.
To find out how you can get a unified view of all your distributed services, download our Network Experience Solution Brief.
Watch the recording of guest speaker Sucharita Kodali, VP, Principal Analyst at Forrester, and Leo Vasiliou, Director of Product Marketing, exploring these new insights and opportunities for retail & eCommerce businesses to generate more revenue through Internet Resilience.