An e-business operates a high-volume catalog sales center. Through the use of clustered servers and mirrored disk drives, the data center has been able to achieve data availability of 99.5 percent. Although this exceeds industry norms, the organization still receives periodic customer complaints that the Web site is unavailable (due to data outages). A vendor has proposed several software upgrades as well as expanded disk capacity to improve data availability. The cost of these proposed improvements would be about $50,000 per month. The vendor estimates that the improvements should improve availability to 99.99 percent.

a. If this company is typical for a catalog sales center, what is the current annual cost of system unavailability? (You will need to refer to Tables 12-2 and 12-3 to answer this question.)

b. If the vendor's estimates are accurate, can the organization justify the additional expenditure?

Cost of Downtime, by Type of Business TABLE 12-2 Approximate Estimated Hourly Cost Industry/Type of Business $7 million Financial services/Brokerage operations Financial services/Electronic $2.5 million transactions (card) processing Retail/Tele-sales $115,000 Travel/Reservation Centers $90,000 Logistics/Shipping Services $28,000