Transaction failure costing companies

Released 08/09/2009

Transaction failures costing firms £24m a year

Nine out ten firms have lost revenue due to transaction failures totalling at least £24 million a year, according to research commissioned by Progress Software Corporation (NASDAQ: PRGS).

The survey of CIOs, senior IT managers and department heads across 210 global organisations also revealed that those surveyed have seen an average of 16% increase in the volume of transactions but, transaction failures have soared by 35% in the last year.

The UK has seen a higher-than-average increase in transactions at 18% yet has witnessed the lowest rate failure increase in comparison to European counterparts with 11% of UK companies stating that they had experienced an increase. Seven times as many French companies had experienced an increase in transaction failures even though their increase in transaction volumes was half that experienced in the UK.

The survey, carried out by research specialists Vanson Bourne, suggests the growth in transaction volumes has been driven by customer demand for new products and services - and this in turn has led businesses to build and rely on ever-increasingly complex IT environments.

Six out of ten (57%) of respondents said that delivering bundled products and services and opening new channels to market have increased the complexity of IT.

A staggering 94% of those experiencing complexity said that it had led to occasional or frequent loss of transactions.

Dan Foody, vice president of Actional Products, Progress Software, said: "This research highlights a ‘Catch 22' situation for global businesses. Businesses are rolling out more and more services through different channels to satisfy customer demand and further monetise existing customer relationships. However, these new services are resulting in an exponential growth in complexity and transaction volume, which is dramatically increasing transaction failures. This sacrifices customer experience and directly impacts revenue in the process."

The survey indicated that the £24 million estimate in lost revenues is conservative. Of the companies surveyed:

- 63% feared that processing failure/delay definitely or probably resulted in customer churn.

- 82% said their best customers did not receive the best service on offer.

- And 89% felt that processing failure/delay diminished the customer experience.

Another hidden cost to businesses identified in the survey was the cost of fixing processing failure/delay issues. A huge global average of 64% of companies said dealing with transaction failures increased demand on resources. However, the UK, with 50%, appears to be coping with the problem better than the US where 79% said transaction failures increased demand on resources. Respondents also estimated that it took an average equivalent of 18 (UK=13, US= 20) full-time employees a minimum of two hours (UK = 1 hr 50 m, US= 2hr 15m) to fix each transaction problem once identified.

"This research clearly shows the far-reaching effects of transaction failures on global businesses today. The trend of increasing IT complexity is further compounding revenue loss through increased transaction failures, customer churn and inefficient use of IT resources.

"Companies should consider introducing a more streamlined approach to monitoring order flows across their IT environments delivering the ability to respond to changing conditions and customer interactions as they occur. This will enable business leaders to capitalise on opportunities, drive efficiencies and reduce the risk of impacting customer experience. The more responsive approach will provide visibility and control that can stop the ‘Catch 22' cycle in its tracks," concluded Foody.

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