Economic impact of application performance management


Today, the world is all about experiences. If customers don’t have good ones, they tend to take their business elsewhere. Yet many customer-facing online applications do not perform well enough to provide the positive experiences that customers crave.

Worse yet, most organizations don’t even track the performance of their applications to see if they’re working optimally, either in testing or in production. And that can lead to expensive consequences. Service level agreements may be breached, triggering penalties. Customers may resort to phoning call centres, or abandon their transactions – or even the brand – entirely.
Implementing application performance management (APM) software can offer insights into problems, reduce outages, and let organizations optimize customer experience. And those benefits can save significant sums.

APM looks at a number of dimensions, even down to the actual commands being used to connect, to help pinpoint the root cause of performance issues. It provides information that lets organizations bring the right technical people into troubleshooting efforts. And while it’s invaluable in production environments, deploying it in development and test environments as well identifies issues so they can be fixed before they impact customers.

To quantify the economic value of implementing APM, Forrester Research looked at a composite of five companies that shared their journeys to APM to calculate costs and benefits using Forrester’s Total Economic Impact (TEI) methodology. It revealed that, while there’s obviously a cost to implementing and running APM software, this composite organization experienced benefits of $7.2 million over three years, for a total cost of $1.7 million. Return on investment (ROI) was 316%, and payback period was three months.

The companies experienced similar challenges:

  • Quality of customer experience online was unpredictable, and troubleshooting the issues difficult if not impossible
  • Increase in call centre volume, which in turn increased expenses
  • Inefficient continuous delivery due to testing delays
  • Rapid code changes and demanding business needs for Docker containers created a need for tools that could identify performance issues in containers.

Quantifiable benefits of APM were reflected in two key areas:

  • Reduced application downtime, resulting in fewer service level penalties, and lower call centre costs. The cost to support a customer on the phone was, on average, eight times that of online self-service; smaller call centres can yield significant savings. Companies running APM software reduced the number of outages by 50%.
  • Using APM during the application development process, developer productivity was improved by 15% thanks to the avoidance of first-day failures for applications moved into production, compressing the time between development and testing, and letting some of the developers move from testing to addressing other business issues that need attention. In Forrester’s analysis, the three year benefit was over $5 million.

There are, however, unquantified benefits as well.

  • Organizations found that APM allowed them to improve the performance of Docker containers by identifying and assisting in troubleshooting issues.
  • In complex environments, APM reduced average time to resolution of problems and eliminated the finger-pointing between teams.
  • Brand value improvements result from fewer outages and performance issues, which improve customer satisfaction and retention, and thus, share of wallet.
  • Using APM in both production and development fosters a more collaborative approach between development and operations teams.

One dimension – Flexibility – fell into both the quantified and unquantified realms. As defined by TEI, it represents an investment in additional capacity or capability that could be turned into business benefit for a future additional investment. This provides an organization with the “right” or the ability to engage in future initiatives but not the obligation to so.

Two key unquantifiable benefits of APM in this area included:

  • Effective decision making thanks to the data provided by the APM solution.
  • Performance insights that allow companies to more confidently experiment with emerging technologies such as containers.

Learn more about the economic benefits of APM in this in-depth report.