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WHITE PAPER - BY RICH WILHELM, NETGUARDIANSMB

INTERNET SERVICE PROVIDER FAILOVERWhat are the risks and what are the benefits to your small business?

Most successful companies today are dependent on internet connectivity to run their mission critical business operations. Whatever your business, you use the internet to communicate with customers, process transactions, deliver goods and services, and maintain and grow your business. This includes access to cloud systems (back office operations, accounting, and CRM), cloud storage (office files and documents), VoIP system (telephone system and services), and secure external access to internal voice and data operations via a VPN (Virtual Private Network). The internet is an indispensible business tool.

But your business is vulnerable, because the reality is that internet connectivity fails from time to time, jeopardizing your business operations in ways you may not even be thinking about.

WHAT ARE THE RISKS TO A BUSINESS WHEN YOU LOSE INTERNET CONNECTIVITY?

1 See below, Calculating the costs of ISP Failure.2 According to AppDynamic, part of Cisco research, Product Blog, The True Cost of Downtime [INFOGRAPHIC], June 27, 2016, by Kevin Goldberg. https://

cloudscale365.com/blog/high-cost-of-internet-downtime/3 IHS Markit Network Monitoring Equipment Annual Market Report: Excerpts 26 June 2018

There are various estimates of the average amount of downtime and the actual cost that businesses suffer as a result of an internet outage.

• One estimate is that each year businesses typically lose at least 16 percent in productivity (revenue, profits, and time) due to lost network connectivity.1

• Another estimate, according to AppDynamics /Cisco research, is that downtime can cost a Small to Medium Business between $8,580 and $74,000 per hour.2

• IHS Markit reports that the biggest impact of downtime is on employee productivity, which accounts over 70% of total downtime cost, followed by revenue losses at 20% of the cost.3

There are differences in every business’ experience, but the unfortunate constant is that businesses should expect to suffer from internet outages which will hamper their business operations, productivity, and profitability.

HOW ARE BUSINESSES AFFECTED WHEN INTERNET SERVICES FAIL?

Secure business transactions are threatened

• No Point of Sale transactions

• No credit card transactions

• No purchasing

• No accounts payable

• No accounts receivable

• No billing

• No invoicing

• No email

• No CRM system access

Vital business processes are unavailable• No customer service or technical

support for customers

• No in-house access to vendors and external technical support organizations

• No webinars

• No appointment scheduling

• No dispatching of technical staff

• No HR

• No payroll transactions

• No remote access to IT resources for external staff

• No social media and web activities

• No phone calls (VOIP systems) conference calls and faxes

General problems• Attempts to operate business

manually create confusion, errors, delays, and decline in staff morale.

• Workers are unproductive, but the business still has payroll obligations.

SPECIFIC BUSINESS EXAMPLES:Every business owner can recall their own horror story of what happened when they lost their internet connectivity at a critical time. The following are just a few anecdotes from real customers (Names withheld to protect the innocent).

• Any Online Retailer or Service Provider that loses internet connectivity will have a complete interruption of their e-commerce functionality and online sales operations. All operational functions of the business are halted, including access to their cloud-based back-office operations, their network security solution, their email connectivity, their accounting, billing, and their HR systems.

• A food and entertainment establishment (think a restaurant, club, bowling alley, golf course, etc.) that loses internet connectivity can’t make or receive phone calls, operate their point of sale system, and process transactions and credit card payments. Web-based scheduling systems are halted. Food and beverages can’t be sold. Internet-based entertainment is halted. Imagine a popular sports bar and grill not being able to do all these vital activities during the Super Bowl or a World Series game?

• A technology company that experiences an internet outage cannot make or receive phone calls, email messages, and web-based support portal requests. They can’t remote in to customer systems to remotely diagnose/trouble-shoot,

repair, manage, and update their customer’s mission critical applications. Business development and sales activity is halted. Staff productivity is halted. Business transactions and revenue are halted. Their business reputation suffers. Their customer loyalty suffers.

• An HVAC company that loses internet connectivity will not receive calls via their VoIP telephone system, so customers and field staff are out of touch. People shopping for products, service, and support find another supplier. Equipment and parts can’t be ordered, quotes can’t be generated, customer statements can’t be produced, payroll can’t be processed, and technicians can’t be dispatched. The business’ revenue and survival is threatened.

• A home healthcare company that loses internet connectivity won’t be able to make and receive calls from senior and disabled clients who need immediate care. If a caretaker can’t make an appointment, the main office can’t receive the notification from their employee that a replacement needs to be dispatched. Computer access to client records may be restricted during an internet outage, which hampers client and patient care. Client billing may be halted and prone to errors. Remote staff can’t be effectively managed.

There are many reasons why a business can lose connection to the internet, disrupting their vital business operations. Most are beyond the control of individual businesses, and as you will read, may even be beyond the control of the Internet Service Provider.

WHY DO BUSINESSES LOSE INTERNET CONNECTIVITY?

• Internet services can be interrupted by severed lines caused by construction and road work, upgrades, connectivity services and repair work on neighboring last mile feeds, switch software upgrades, cyber attacks to service provider systems and infrastructure, accidents, and terrorism.

• Service providers experience technical problems that affect connectivity for their customers.

• Type of connectivity: More costly fiber connections tend to provide more reliable internet connectivity than broadband and DSL connections. If you are connected via less reliable broadband or DSL, you are more likely to suffer an outage.

• Locational variability of connectivity: There are often different connectivity experiences between business locations. Main street suburban businesses, rural facilities, and downtown professional services all may have different connectivity experiences.

• ISP (Internet Service Provider) Coverage: ISP’s service providers often have better infrastructure in some areas than in others. The top performing service provider in one region may be the worst choice in another area.

• Variability in type of business determines impact on revenue and productivity: A retail business which depends upon constant uptime for POS systems and credit card transactions may experience a greater immediate impact from a service interruption on revenue than a business such as a general contractor or agency that bills customers monthly.

• Actual Experiences: The best measure often is the actual historical experiences of each business. How often do you lose ISP connectivity now?

INTERNET SERVICE PROVIDER FAILOVERIt is critically important that business owners protect their business operations from the loss of internet access. An automatic internet failover solution helps owners ensure continuity of internet access. There are a number of ways to do this, including via a secondary wired or mobile internet connection.

Wired Failover Example:

Wired redundancy for internet failover works, but it comes with certain costs and risks. The monthly cost for a second wired connection can be significant. Most backup wired lines are laid in the same area and manner as the primary service, making it subject to the same potential physical damage and vulnerability as the primary line. Repairs of damaged wired services could take many days or weeks to repair. There is another option that may be less expensive overall, and eliminate the risks of using a wired strategy.

Wireless ISP Failover Example:

An Internet Failover solution that provides a secondary wireless internet connection offers a secondary path independent of wired redundancy. When the primary internet connection fails, in seconds traffic is automatically routed to the backup wireless connection. The solution must manage automatic failover to a secondary wireless connection without the intervention of staff. As well, the solution should auto-detect when the primary internet service is restored, and switch back to the primary service automatically. A solution that offers a wireless failover strategy ensures the continuity of your critical business operations in a way that wired solutions cannot.

CALCULATE THE RISK TO YOUR BOTTOM LINE:As mentioned, one estimate is that businesses annually lose up to 16 percent in productivity (revenue, profits, and time) due to lost network connectivity. When most small business only have a profit margin of 7 percent or less,3 that’s a significant cost of doing business and a serious risk to your bottom line. What is the potential cost of that productivity?

Calculating the costs of ISP Failure4

The table shows how to calculate the potential costs of ISP Failure for a typical small business. We show three cases, where ISP uptime performance is 99.9 percent, 99.0 percent and 98.0 percent.

Many small firms experience ISP uptime as low as 96%!

There are many components that go into the costs of ISP Failure. We illustrate only potential lost revenue and the payroll cost of employees idled by an internet outage.

Calculating the potential lost revenue due to ISP Failure over the course of a year is fairly straightforward: divide gross revenue by the annual number of business minutes, then multiply by the

annual number of minutes of ISP Failure. To calculate the cost of payroll during downtime, multiply the payroll expenses times the percentage of the percentage of lost revenue, which yields the potential cost of lost employee productivity.10

What’s the bottom line?

As the table illustrates, a company runs significant risks of lost revenue and lost productivity when their internet connection is lost. By implementing an ISP failover solution, the same company could increase its profits significantly by capturing both the lost revenue of their business operations and cost of employee downtime. How much could your profit margin increase for your business? Use our online calculator here to see what’s possible for you: www.csa.canon.com/NetGuardianROI

3 Jeff Wiener, What Is The Average Profit Margin for a Small Business in North America? SEPTEMBER 30, 2019 4 https://cloudscale365.com/blog/high-cost-of-internet-downtime/ 5 Earnings Before Interest, Taxes, Depreciation, and Amortization 6 Payroll expenses and percentages do vary, but a common calculation is that for most businesses, payroll expense falls between 15 to 30 percent of gross

revenue depending on the industry. https://smallbusiness.chron.com/much-gross-revenue-should-payroll-18985.html 7 Annual Business Minutes of 124,800 minutes (2,080 hours) for an operation running 8 hours a day, 5 days a week, 52 weeks a year. 8 This indicates how much of the business would be impacted by a loss of ISP service. An on-line retailer using VoIP might be 100%. A retailer with traditional

phone lines might be 80%. 9 These are estimates of ISP loss for the purposes of the three scenarios.10 https://cloudscale365.com/blog/high-cost-of-internet-downtime/

Assumptions Low Scenario* Medium Scenario* High Scenario*

Gross Revenue $1,000,000 $1,000,000 $1,000,000

Typical EBITDA5 Profit Margin 7% 7% 7%

Typical EBITDA $70,000 $70,000 $70,000

Estimated Payroll Expense 20.0% 20.0% 20.0%

Annual Business Minutes 124,800 124,800 124,800

Percentage Revenue impacted 100.0% 100.0% 100.0%

Implied ISP Uptime performance 99.9% 99.0% 98.0%

Annual minutes of ISP Failure 720 5,256 10,512

Annual Potential Losses

Potential Lost Revenue $5,769 $42,115 $84,231

Potential Payroll Loss $1,154 $8,423 $16,846

Potential Cost of Lost Productivity $6,923 $50,538 $101,077

EBITDA without ISP Failure $76,923 $120,538 $171,077

EBITDA Profit Margin without ISP Failure 8% 12% 17%* Scenario refers to annual minutes of ISP Failure

WHAT IS SECURE & RELIABLE INTERNET CONNECTIVITY WORTH TO YOUR BUSINESS?Instead of suffering the potential costs of lost productivity while your business is halted by a problem with your ISP, an ISP failover solution helps keep your productivity intact, reducing losses that might hurt your bottom line. In addition, you will probably earn even more in the long run, since you’ll also reap the rewards of not missing new customer opportunities, enhancing customer satisfaction by always being available, and avoiding damage to your business’s reputation caused by an ISP service outage.

To avoid these losses, how much would you be willing to spend? What if you could save even more money with a solution that does more than provide ISP Failover? You could find a turnkey solution to replace your current firewall security and telephony services with a solution that also ensures your internet connectivity is secure and reliable. Not only would you help prevent the costs of ISP failure and downtime, you would also be able to simplify your data and voice services, implement state-of-the-art network security, and eliminate multiple vendors, software, hardware, and the bills associated with your current networking.

Firewall, Network Services & Captive Portal

Web/Content Filter, Antivirus & Spam Filter

VPN

SSL VPN Remote Access (Secure Sockets Layer Virtual Private Network)

QoS & Bandwidth Management

Telephony & IP-PBX with Unified Communications

All Inclusive VoIP Services, Legacy (POT, T1, PRI) & measured VoIP Services

ABOUT NETGUARDIANSMB

NetGuardianSMB is a turnkey multifunctional Firewall, ISP Failover, and VoIP telephony solution that can save you money over your current services and contracts, while enabling secure and reliable ISP connectivity with a 4G wireless failover. NetGuardianSMB helps SMB customers configure, monitor, and maintain the confidentiality, availability, and integrity of their network and communications all from a single web browser user interface. From the point of view of the Canon Solutions America Five Pillars approach to security, NetGuardianSMB combines and provides a state-of-the-art, defense-in-depth cybersecurity platform for the four subordinate security pillars in a single turnkey appliance.

To learn more about the benefits of ISP Failover with NetGuardianSMB, contact your local Canon Solutions America Sales Representative today.

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