By Ian King, Banyan Hill Publishing, 2024-07-23
Less than 1%.
That’s the share of Microsoft Windows devices that went down with the IT outage on Friday.
Around 8.5 million devices.
It doesn’t sound so bad until you see what these 8.5 million devices brought down with them:
- More than 3,000 flights in and out of or within the U.S. had been canceled and more than 11,000 were delayed.
- Areas in Oregon, Arizona and Alaska reported that some of their 911 emergency services were down.
- Customers at JPMorgan Chase, Bank of America and Wells Fargo reported trouble accessing their online accounts and their money.
- The Social Security Administration was forced to close all its offices, and other federal agencies, such as the Justice Department, Department of Veterans Affairs and Department of Homeland Security, were also affected.
- Twelve hospitals or hospital systems across the U.S. were affected, with some reporting that they had canceled previously scheduled elective procedures.
One faulty update from the cybersecurity company, CrowdStrike, and we ended up with the largest IT outage in history, with costs easily exceeding $1 billion based on current estimates.
Why?
Because today’s cyber systems are interlinked and more complexly configured than ever before.
This disaster highlights the need for cyber resiliency in our ever-evolving tech landscape.
The Growing Cost of IT “Brownouts”
Although we don’t often see outages at this scale, cyber brownouts (partial outages) and outages are all too common.
Human error, cyber-attacks, power outages and hardware failure are just a few of the reasons for these outages.
According to a LogicMonitor survey, over the past three years, 97% of enterprises experienced an IT brownout, and 94% of enterprises experienced a total IT outage.
It also found that the average number of brownouts for enterprises was 19 per year, and for outages, it was 15 per year.
And when it comes to consequences, the survey showed that 31% have experienced brand/reputation damage due to IT brownouts, and 32% say they have experienced brand/reputation damage due to IT outages.
Thirty percent of these companies also said brownouts and outages have lowered their stock price in the past.
And putting a cost figure to these outages and brownouts shows even more terrifying numbers.
Oxford Economics estimates that downtime costs Global 2000 companies $400 billion annually.
Between lost revenue, rebuilding customer trust, lost productivity, legal costs etc., that’s roughly $200 million per company per year.
Oxford’s number is an average. But the reality is the bigger your company, the more you have to lose.
Meta’s outage, which affected Facebook and Instagram for just two hours earlier this year, cost it $100 million in revenue alone.
A one-hour outage back in 2021 caused Amazon to miss out on $34 million in sales.
And during the biggest sales event of the year in China — Single’s Day — a 20-minute outage caused Alibaba to lose out on as much as $26.5 billion in sales!
But as high as the cost is for enterprises, this latest outage showed us that the potential cost could be human lives when 911 services and hospitals are affected.
Adaptive New Solutions for Cybersecurity
So, how do we mitigate the risks from such outages?
The answer is AI.
With the AI boom, we are constantly hearing about how AI could one day help transform a field.
But these are usually scenarios that will take years to play out.
Cybersecurity is one field in which AI can help today. In fact, it is already being used to augment several cybersecurity offerings.
Predictive AI is a tool that can help ensure cyber resilience.
These AI tools use historical data to study and build models of what is considered normal behavior for an organization’s cyber infrastructure.
In this way, it can scrutinize user activity and network patterns, enabling early detection of anomalies.
Once identified, it can either escalate the issue to a human supervisor or respond automatically.
This kind of predictive AI can deal with an issue before it has a chance to affect the entire cyber network.
The AI cybersecurity market was valued at $24.3 billion at the end of 2023. That is expected to grow 5X to $134 billion by 2030!
That’s a compound annual growth rate of nearly 24% until the end of the decade.
This growth rate is more than justified based on the wake-up call the world got on Friday.
Companies and organizations still recovering from this outage will consider adding AI tools to prevent disasters like this in the future.
There is already a company you can invest in to take advantage of this trend.
Palo Alto Networks, Inc. (Nasdaq: PANW) is already up over 3% since Friday, benefitting from the failure of its rival, CrowdStrike.
But the more lucrative long-term opportunity is Palo Alto’s Precision AI, a proprietary predictive AI system that gives its cybersecurity platform an edge over the competition.
At the moment, it’s seen as a helpful add-on for organizations that are purchasing cybersecurity solutions.
But soon, this type of AI assistant will be a requirement for IT managers who expect to keep up with the cyber challenges of tomorrow.
Until next time,
Ian King
Editor, Strategic Fortunes
