How to Prove the Value of Observability Software

Enterprise software has no doubt been among the best corporate investments in business history. It has helped make U.S. workers some of the most productive humans in history. No wonder global enterprises were expected to spend nearly $1.2 trillion on technology tools in 2019 to digitally transform themselves.

Yet measuring the return on a particular software investment isn’t always so easy. The business benefits of a given application are often hard to quantify, especially to the higher-ups who sign the checks. Even if the people who use the software adore it, the buyer may consider it another line item on an annual budget.

Observability software like ours often falls into this category. Understanding how observability plays a pivotal role in digital transformation and driving the customer experience is paramount. We help thousands of companies understand and improve the software and services they deliver to their customers daily.

Business people are always under pressure to cut costs. And the benefits of our highly technical, infrastructure-oriented products don’t seem as obvious as, say, CRM applications that increase sales efficiency. Even our most satisfied users sometimes ask us for help making the business case for our software to their internal check-writers.

This recently happened with a major client, a household name in the tech industry. In fact, management at this company had decided to drop us. Fortunately, our enterprising account sales rep asked if the company would work with him on a deeper dive to understand the ROI. Much to the company’s credit, and our ability to articulate the value proposition that New Relic delivers, they agreed. They decided to stick with New Relic. And we developed a finer-grained perspective on how we can help other companies maximize the business value of our products.

Here are some of those lessons:

Consolidate accounts. Like many SaaS companies, our growth has come primarily from individual engineers and small teams expensing our products with their credit cards, rather than through enterprise-wide contracts with the CIO. One reason this client grew concerned is that it had over 200 separate New Relic accounts. It was difficult, if not impossible, for the company to get a holistic view of both benefits and costs. So we consolidated all of the accounts into one master partnership. This step resulted in better visibility into how much the company was spending with us. It also provided a volume discount the company otherwise wouldn’t have qualified for.

Share the data. It’s not enough to consolidate accounts. The various projects had operated as silos, so teams and business leaders didn’t share the data and insights they’d gleaned. By requiring the teams to share information, the company extended best practices across the organization. They also developed benchmarks to compare the relative performance of different units and platforms.

Make sure you’re monitoring the things customers care about. This company was getting complaints from customers about the performance of its most strategic product. Even worse, the dashboards provided to these customers indicated the product was working perfectly, with no performance glitches. Our rep suggested the ops team sit down with the original developers of the product, who had all moved on to other projects. Only then did the ops people learn that the dashboard was not tracking the metrics that would surface the performance problems.

New Relic helped update the dashboards, enabling the customers to identify and proactively respond to those performance problems. The result: fewer complaints and higher satisfaction on a product the CEO has said is critical to the company’s long-term strategy.

Align KPIs to business value. In a clear case of “what gets measured gets managed,” the IT ops teams that were using our software at this company were measuring its performance against the traditional metrics that IT ops teams care about, such as uptime and mean-time-to-repair. When they realized how much money they were spending with us, business leaders wanted to see a more direct impact on the company’s overall business. Leaders wanted visibility into customer satisfaction and dollars-and-cents metrics, such as the amount paid out for falling short of service-level agreements. By adjusting our users’ key performance indicators (KPIs) to reflect these business-related goals, our observability data became much more relevant to the bottom line.

Don’t forget to factor in engineer productivity. Companies often gauge the value of enterprise software by the impact it has on the performance and quality of operations, but forget to factor in whether it helps developers accomplish those goals more efficiently. Our sales rep interviewed 50 of the client’s software engineers, and learned they spent 10%-to-15% of their time using observability tools to fine-tune app performance. At a fully loaded cost of more than $150,000 a year per developer, the productivity gains turned out to be about five times more than the overall price of our software.

Get dev and ops on the same page. At this particular client, the development team that created new services used our software, but the IT ops teams that were responsible for delivering the apps paid for it. Yet when problems with the apps cropped up, the IT ops teams were not authorized to change the code. In other words, our software could tell them what was wrong, but they couldn’t use it to solve the problem. The ops team was naturally frustrated at having to devote a significant portion of its budget to tools it couldn’t fully leverage. With our help, the client changed its policies to give the ops team the authority to use our products, not just pay for them.

Get buy-in at the top. Proving the value of technology requires some investment in time and money. The best way to get that is to get a C-level champion. And the best way to do that is to re-engineer the benefits of the technology in financial terms. Maybe it’s increased engineer productivity, lower rebates to customers for poor performance, or the reduced risk of customer churn from accounts that are tired of complaining about technical glitches or downtime. Making a high-level case that a CFO or CTO cares about is a great first step toward making an informed decision about the true business value of a technology.

Learn more about how observability can help you solve problems faster, work smarter, and create better digital experiences.