IT Outages Cost Businesses $2 Million Per Hour, Report Finds

High-impact IT outages are costing businesses an astonishing $2 million per hour, according to the latest 2025 Observability Forecast from New Relic. This significant financial burden is prompting IT leaders to reconsider their approaches to monitoring complex systems. The report highlights that organizations employing full-stack observability can reduce these costs by as much as 50%, underscoring the substantial business advantages of enhanced monitoring practices.

As organizations continue to adopt artificial intelligence (AI) technologies, the report reveals that 54% of businesses now utilize AI monitoring in production environments, a notable increase from 42% the previous year. Executives have identified AI-assisted troubleshooting as the most impactful application, followed by automatic root cause analysis and predictive analytics. These AI-driven tools enable IT teams to minimize mean time to resolution and mitigate the effects of incidents.

The report also raises concerns about the increasing reliance on AI systems, which are themselves complex and often lack transparency. Applications powered by large language models (LLMs) and agentic AI can fail in ways that traditional monitoring methods may not capture. This growing complexity in dependencies across APIs, pipelines, and downstream applications complicates the identification and mapping of failures. Consequently, some organizations are resorting to deploying AI to monitor AI, leveraging real-time analytics to ensure that new models perform as anticipated.

AI adoption has emerged as a primary driver for the demand for deeper observability, outpacing other factors such as security and cost control. Leaders who proactively implement AI-powered observability capabilities position themselves to identify hidden issues and prevent silent failures, thereby enhancing resilience as AI-driven applications expand.

“Despite the promise of AI to speed application production, the data reveals engineering teams are still losing a third of their time battling issues that are difficult to pinpoint,” stated Ashan Willy, CEO of New Relic. He emphasized that full-stack observability can significantly reduce the cost of major outages while accelerating detection and resolution, allowing teams to concentrate on innovation that aligns with business objectives.

The implications of outages extend beyond financial losses; they also threaten revenue, customer trust, and brand reputation. Survey respondents indicated that annual exposure to high-impact outages can reach $76 million, highlighting why downtime has become a critical concern at the board level. Organizations with full-stack observability not only limit the frequency of outages but also diminish their impact, resulting in faster problem detection and fewer high-impact incidents.

Despite the progress in observability, challenges remain. The average organization still employs 4.4 monitoring tools, a decrease from six two years ago, yet silos persist. Over half of IT leaders plan to consolidate their tools onto unified platforms within the next 12 to 24 months, driven by both financial and operational motivations. Multiple tools lead to overlapping costs, increased integration overhead, and slower response times during incidents. By reducing the number of platforms and streamlining data flows, organizations can expedite incident resolution and lower maintenance expenses.

Seventy-five percent of businesses report positive returns on their observability investments, with nearly one in five experiencing returns three to ten times the initial cost. Key benefits include reduced downtime, improved operational efficiency, and enhanced customer experience. Executives highlighted that decreased unplanned downtime is the top advantage, while practitioners noted a reduction in alert fatigue and quicker troubleshooting. Both groups have observed improved collaboration across teams as visibility into systems expands.

Many organizations still face challenges in detecting outages, often learning about issues through customer complaints or manual checks. Approximately 41% of leaders indicated that tickets or complaints alert them before automated detection mechanisms kick in. System complexity and fragmented data are significant barriers to achieving observability maturity, with 36% of respondents citing complexity as a major issue and 29% pointing to the number of monitoring tools available.

To overcome these challenges, organizations must strive for end-to-end visibility. Without it, engineers often struggle to piece together incidents from incomplete data, resulting in prolonged resolution times and increased costs. As the financial implications of IT outages grow, the need for robust observability tools has never been more urgent.