Three Strategies to Increase ROI Through Better Observability

New Relic’s 2022 Observability Forecast compiled 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 managers maximize the return on their observability investments.

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

These new technologies require unprecedented resources in terms of 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 problems and errors based on its external outputs – telemetry data such as metrics, events, logs, and traces.

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

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

Three Strategies for Successful Observability

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

1. Choose the right pricing structure

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

Affordable pricing is a priority for those investing in observability. The 2022 Observability Forecast found that 35.6% of respondents ranked economy 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 ready to make significant investments in observability — 69% of respondents allocate 5-15% of their overall budget to observability — but they want to be able to build predictable pricing into their broader spend .

Observability tools and platforms are primarily sold using one of two models: subscription-based pricing or consumption-based pricing. While subscription pricing offers the benefit of stable and predictable spending, these models are less flexible when an organization needs to quickly increase or decrease the amount of telemetry data it ingests or monitors. Consumption-based pricing allows organizations to respond to macroeconomic trends, adapting in both directions with a pricing structure that always matches their needs.

2. Lay the groundwork for wide adoption

Imagine that a hockey team decides to invest in new high-end skates and sticks. However, when it comes time to start training and playing, they only give the final gear to one player. If the organization does not take the time to distribute the best tools and train every team member in their use, the benefit of this investment will naturally be limited. But while this is evident in our hockey example, many organizations struggle to deploy observability tools across organizations and implement them into their overall processes.

The 2022 Observability Forecast found that only 31.8% of respondents said users had broad access to telemetry data and visualizations. An organization that chooses to spend on telemetry and observability data but does not make these tools available to its employees will never get the most out of its investment. When planning an observability strategy, organizations need to zoom out to consider the different ways this information could help the business. Observability platforms require money and dedicated staff to be successful, and forward-thinking organizations will allocate resources for the future state of their observability practices to facilitate rapid scaling. Above all, organizations must take the time to train their staff in the use of observability tools, effectively democratizing access to this essential information.

3. Create space to seize opportunities

There is no perfect state of observability. Although some organizations may have reached 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 the ROI of their observability spend by adopting approaches such as automated incident response workflows, incident learning practices, and observability service level objectives. These strategies increase overall efficiency while allowing engineers to focus on higher-level tasks.

A mature observability practice will also always look for new opportunities for automation, especially when it comes to 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 cited DevOps best practices as a solution to reducing MTTR, while 38% cited automated incident response workflows.

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

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