How to Estimate ROI for Automated Monitoring and Management

Before implementing an automated monitoring and management solution, you will need approval from the decision makers who only typically care about one thing: ROI (return on investment).  Here are three practical models for quantifying return on investment in ways that address the objectives of different decision-makers within a company:

Model #1: Reallocating Resources

There are potential ongoing savings opportunities that automated monitoring and management provide in the areas of IT salary cost and consulting expense.  No matter how big the company is or what industry it is in, it relies on IT staff which can be costly.  Think about the number of IT personnel that are necessary to monitor a server (or application) at desired levels of performance and availability.  Depending on the business that ratio can vary, understanding the actual staff-to-server ratio requires identifying all of the different people managing a system and its applications.  IT professionals can support the operating system, network, e-mail, database, applications, and so on.

What an automated monitoring and management solution can do is improve the staff-to-server ratio.  For example, if your company has 200 servers and a 1:20 ratio staffed by permanent IT employees or contract consultants, you may be able to trim that staffing requirement to 1:25 with an automated monitoring and management solution.  You would only need 8 full time positions instead of 10 and would be able to save the associated salary, benefits, and overhead associated with those 2 extra employees.

Model #2: Ensuring Service Levels

It can take hours for IT personnel to track, document, analyze, and report on service level agreements (SLAs).  An automated SLA management solution delivers a measurable return in the form of soft-cost savings.  It allows the people tracking and reporting on SLAs to concentrate their efforts on other priorities such as new, revenue-producing applications.

Even if a formal SLA is not in place, IT organizations have typically established service-level targets to meet the expectations of their internal customers.  The existence of an SLA requires documentation to prove that compliance is being achieved, but these ongoing reports can take many hours to prepare when staffers are manually collecting, assembling, analyzing, and formatting data each month.  It can take an hour or two a day to collect the data and a day or two preparing the reports and graphs for management.  Automation brings the potential for better and more timely SLA documentation.

Model #3: Transaction-Cost Approach

This model assigns value to the business that would likely be lost during an unexpected system or application outage.  In the event of a serious performance slowdown, business would suffer.  This model applies to business that is done via the network including e-commerce sites in which customers place orders via the Web, travel companies that book reservations online, insurance companies for approving applications or processing claims, customer service centers that rely on customer records, and more.  If problem occurrence drops, there is less loss of revenue that is tied directly to network and application performance.

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