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Published September 2023
Author: Alicia Basteri, Principal Content Manager, New Relic

Executive summary

The third annual Observability Forecast report examines how the practice of observability is evolving, areas with the most and least amount of growth, how external forces are influencing spending and adoption, and how observability impacts the lives of technical professionals and the bottom line.

We surveyed 1,700 technology professionals—making it the largest, most comprehensive study of its kind in the observability industry. Learn more about this report, including what’s new, definitions, methodology, demographics, and firmographics.

The theme that stands out the most this year is the business value of observability. Other key themes include increased adoption and improved service-level metrics, such as fewer, shorter outages. Organizations are investing in observability to help achieve core business goals and better business outcomes, including operational cost savings and increased revenue. And it’s paying off.

The survey results show that observability continues to deliver a clear, positive business impact and a 2x median annual return on investment (ROI). And they indicate how observability can transform an organization’s business, technology, and/or revenue. Most respondents expected a significant negative business outcome without observability—and noted higher operation costs and revenue loss from downtime as the concrete financial impacts of not having observability.

In summary, organizations continue to see the business value of observability—and expect to invest more in it.

Key findings

Outages are happening less frequently YoY

Outages still happen fairly frequently but the proportion of respondents who said they happen once per week or more decreased year-over-year (YoY) by 36% for high-, 52% for medium-, and 63% for low-business-impact outages.

Median annual outage cost is $7.75M—but observability helps

Outages are expensive—a third (32%) of respondents said critical business app outages cost $500K+ per hour of downtime. But those with full-stack observability experience a median outage cost that is 37% less than for those without.

Full-stack observability correlates to better outcomes again

Most organizations (67%) still haven’t achieved full-stack observability, but those that have experience improved service-level metrics. Results show that full-stack observability can lead to fewer, shorter outages and lower outage costs.

Observability deployment is on the rise

While most organizations still don’t monitor their full tech stack, this is changing with more capabilities deployed YoY and more planned for the future. Plus, full-stack observability increased 58% YoY. By mid-2026, at least 82% expected to deploy each of the 17 different observability capabilities.

Number of tools is decreasing but tool fragmentation persists

Organizations are using fewer tools than in 2022. The proportion using a single tool more than doubled, and the average number of tools has gone down by almost one tool. But tool sprawl is still a struggle despite a 2-to-1 preference for a single, consolidated platform (up from last year).

Observability delivers 2x annual ROI

In other words, respondents receive a median $2 of return per $1 of investment. In fact, most respondents (86%) said they receive value from their observability investment, and 41% received $1M+ total annual value. The business value of observability is clear.

Regarding business value, like many organizations, I try to save as much money as I can because I don’t have an open budget or checkbook. And when I talk to financial people and businesspeople, I have to justify and express the numbers. When you express the lack of observability in dollars and cents, you may create a profound statement.