New Solutions For Businesses Navigating Cloud Outages And Downtime

During a major Amazon Web Services (AWS) outage in December, companies worldwide were hobbled by lost revenue, delayed shipments and product failures.

However, cloud outages and downtime have largely gone unaddressed by the insurance world. Can businesses successfully navigate these stalemates? Let’s talk about some solutions.

The Potential Impact of Third-Party IT Outages

The global pandemic pressured many businesses to operate differently. Restaurants engaged in online ordering and delivery services. Much of society turned to ecommerce and online retailers to purchase items. Online streaming services skyrocketed while individuals complied with stay-at-home orders. And ongoing digital transformation can be likened to a pushing of the reset button for the promotional products industry.

Many of the businesses above have one thing in common: they use third-party IT services. Although cloud-based companies couldn’t be hotter than now, they face unique challenges. Cloud outages and downtime threaten business continuity—and the damage outages cause can be extensive.

For example, many companies rely on app-based services for marketing material, payment processing, file transfers, shipment generation, etc. Suppose your company encountered a cloud outage while neck-deep in developing marketing material for an exhibitor booth at a major upcoming event. Among other damages, you might not be able to finish the design, let alone ship the materials to the event location. When conferences and summits drum up a significant portion of your revenue, even a short outage could painfully carve away at your cash flow.

Real-Life Examples of Cloud Outage Losses

When businesses operate at scale, just an hour-long outage can do tremendous damage. Also, consider the cybersecurity issues that surface when cloud services fail. Companies of all sizes could suffer costly cyberattacks due to the increased vulnerability of cloud downtime.

The AWS Outage
Businesses and institutions nationwide were stifled for several hours by the December AWS outage. One ecommerce seller couldn’t ship 10,000 to 12,000 items. Amazon drivers spent their shifts singing karaoke or were sent home for lack of work. Educational institutions delayed exams and app-based devices (i.e., vacuums, pet feeders, etc.) failed. The accumulation of damages is still unknown, but the overall loss is likely jaw-dropping.

The Google Spanner Outage
One major retailer with locations peppered across North American experienced downtime during the 2020 Google Spanner outages. Unfortunately, both outages occurred on Saturdays, the busiest shopping day worldwide. Payment processing services were hampered, which proved crushing. It wasn’t thousands of dollars that they lost; the missed revenue was well into the millions—in less than an hour.

The Akamai Outage
Or, consider the 2021 Akamai outage. Several major companies dealt with multiple website-user issues and many incredibly frustrated clients. Others were forced to expose their clients to data protection issues as their services relied solely on the cloud. While an hour or so doesn’t seem long, it can feel like an eternity when you heavily depend on cloud-based operations.

New Solutions Specifically Designed for Outages

Protecting cloud-based businesses isn’t a one-size-fits-all approach. One solution might suit your professional needs better than another. The following ideas can help cloud-based companies defend themselves from cloud outages and downtime.

Rely on a Multi-Cloud Infrastructure
Most businesses that depend on the cloud only use one company’s cloud infrastructure, such as AWS or Akamai. However, if the third-party IT service experiences an outage, it can knock its clients offline.

One way to mitigate this threat is to use a third-party IT service that relies on customized support for multi-cloud infrastructure. One cloud outage won’t bring your business operations to a screeching halt, because it doesn’t rely solely on one cloud infrastructure. This multi-cloud approach is similar to hitching six horses to a wagon instead of only one; you can still pull your wagon with five good horses.

Elect Specialized Insurance Programs
Another option to navigate cloud outages successfully is to build a robust risk management plan for your business, including specialist insurance programs. For decades the insurance industry has failed to address the issue of cloud outages and downtime. Founder Shield recently rolled out coverage, specifically designed for these ongoing issues.

The premise is relatively straightforward; businesses of every size experience losses during a cloud outage, and this insurance policy responds to business interruption by providing compensation for such situations. Unlike the previous solution, this approach accepts that we can’t always avoid outages—but we can avoid losses.

Cloud outages and downtime aren’t breaking news. We might even have to learn to live with them in the digital age. Remember, you don’t have to muddle through a devastating loss. Find a solution that works for you and run with it.

Jonathan Selby is the general manager of Founder Shield, a commercial insurance broker.


filed under January 2022
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