Three Strategies to Increase ROI from More Observability

The 2022 Observability Forecast from New Relic brought together survey responses from over 1,000 IT professionals. Organizations recognize the need for observability to support next-generation technologies. Peter Pezaris, SVP of strategy and user experience at New Relic, shares three strategies that can help IT leaders maximize the return on their observability investments.

The world is at a technological turning point. The combination of generational technology innovations like 5G connectivity, artificial intelligence, blockchain and Web3 have led both the tech industry and society as a whole to the precipice of new realities and experiences. The ways in which we work, communicate, relax, and create are changing.

These new technologies demand unprecedented resources in terms of both computing power and engineering talent. In order to keep pace with these technological needs, developers and engineers must be able to rely as much as possible on their tools while focusing on the creativity and vision involved in building new solutions. Observability is the ability to measure a system’s performance and identify issues and errors based on its external outputs — telemetry data like metrics, events, logs and traces.

Observability is key to staying on top of rapidly evolving tech stacks and maintaining reliable performance for even the most ambitious new technologies. Achieving observability provides a real-time view of all data from different sources in one place, allowing teams to collaborate and resolve issues more easily, ensure more efficient operations, and produce high-quality software for an optimal customer experience.

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In the 2022 Observability Forecast from New Relic and ETR, more than 1,600 technology professionals from across the world answered surveys regarding the current state of observability and its potential implications for the future. Notably, these respondents highlighted the need for observability when discussing key technologies. From edge computing to cloud gaming to the Internet of Things, a meaningful number of respondents acknowledged the importance of observability for each of these categories.

Three Strategies for Observability Success

Not all observability approaches are created equal. Companies that compete to build the next big thing in tech may find themselves being outmatched by competitors with more mature observability practices. To increase return on investment in observability, companies must adjust their operations to conform to established best practices. These three strategies can set organizations on a clear path to observability success.

1. Choose the right pricing structure

Even the best product in the world won’t deliver good ROI if it’s too expensive, and observability solutions differ widely in how they charge customers. To deliver good value, observability tools must offer transparent pricing and predictable spending. In particular, the ability to scale automatically without penalty and pay as you go and for exactly what you use is essential for high-growth companies.

Affordable pricing is a high priority for those making observability investments. The 2022 Observability Forecast found that 35.6% of respondents ranked budget-friendly pricing as a top priority in an observability tool, and the ability to use a single license metric was cited by 30.7% of respondents. Engineering teams are prepared to commit significant investments to observability — 69% of respondents allocate between five and 15% of their overall budget to observability — but they want to be able to integrate predictable pricing into their broader spending.

Observability tools and platforms are primarily sold using one of two models: subscription-based pricing or consumption-based pricing. While subscription-based pricing offers the benefit of a stable, predictable expense, these models are less flexible when an organization needs to quickly increase or decrease the amount of telemetry data they’re ingesting or monitoring. Consumption-based pricing allows organizations to respond to macroeconomic trends, flexing in either direction with a pricing structure that always matches their needs.

2. Lay the groundwork for broad adoption

Imagine a hockey team decides to invest in new, top-of-the-line skates and sticks. However, when the time comes to begin practicing and playing, they only give the latest equipment to one player. If the organization doesn’t take the time to distribute the best tools and train each team member on how to use them, the benefit of that investment will naturally be limited. But while this is obvious in our hockey example, many organizations struggled to deploy observability tools across organizations and implement them in their overarching processes.

The 2022 Observability Forecast found that just 31.8% of respondents said that users broadly have access to telemetry data and visualizations. An organization that chooses to spend on telemetry data and observability but doesn’t make those tools available to its employees will never make the most out of its investment. When planning an observability strategy, organizations must zoom out to consider the different ways this information could help the business. Observability platforms require money and dedicated staff for success, and forward-thinking organizations will allocate resources for the future state of their observability practice to facilitate rapid scaling. Above all, organizations must take the time to train their staff on how to use observability tools, effectively democratizing access to this essential information.

3. Build in room for opportunity

There is no perfect state of observability. While some organizations may have achieved a mature observability practice, there will always be more opportunities to expand data collection or improve insights by applying new observability practices. Organizations can maximize ROI on their observability spending by embracing approaches like automated incident response workflows, incident learning practices, and observability service-level objectives. These strategies increase overall efficiency while simultaneously freeing up engineers to focus on higher-level tasks.

A mature observability practice will also always look for new automation opportunities, particularly regarding incident response. Survey respondents highlighted both DevOps practices and automated incident response workflows for their benefits in reducing mean time to resolution (MTTR). According to the Observability Forecast, 39% of respondents called out better DevOps practices as a solution to reduce MTTR, while 38% mentioned automated incident response workflows.

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For organizations just beginning to make investments in observability – and even for those seeking to develop a more mature practice – there is a path forward that can drive increased ROI. By choosing transparent and reasonably priced observability tools, preparing diligently to deploy them across the organization, and regularly finding new applications for telemetry data, today’s engineering leaders can dramatically increase ROI on their observability spending and improve operations in the process.

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