Correlating Revenue and Application Performance

It’s no secret that IT can be seen as a cost center in many organizations today. IT spends millions every year digitizing business processes into online applications and services. Businesses have a fairly good idea of how much money they spend on IT, but very few have visibility into how much revenue IT generates through the applications they build and support.

Unfortunately, the information required to get this insight is not easy to find, and it can take days or weeks to get answers. Do you know what happens to the revenue when your applications slow down or crash? Does anyone know?

Achieving 99.99% availability is the current benchmark most IT organizations strive to achieve, but even this metric hides the real business impact, which is a poor end user experience or lost revenue. If IT is to be seen as a value center for the business it needs to start correlating IT metrics with business metrics so everyone can speak the same language.

In this post we look at how application monitoring tools can be used to gather performance metrics about IT and the business, enabling real-time visibility into how the business is really performing.

A new way to measure Business impact

The unique nature of every application service makes quantifying the actual revenue impact of poor performance challenging. Business intelligence tools often take hours or days to generate meaningful reports. What if you could get business performance metrics in real time? Wouldn’t it be great to identify business impact and react to it immediately instead of waiting hours, days or even weeks? This capability is possible today by taking advantage of the information carried within every Business Transaction (user request) that passes through your applications.

Monitoring Business Transactions

Monitoring the Business Transactions your users execute ensures that you are aware of problems affecting your business as soon as they occur. All too often infrastructure monitoring tools show all systems are available, but your end users are still experiencing errors or stalls. If you monitor the Business Transactions, however, you’ll always know when
your end users are affected. The traditional role of Application Performance Management (APM) tools would be to measure the response time of this transaction and show how it executes across the infrastructure and inside the application. But what if the APM solution could also extract business metrics such as the items in the basket and the checkout value? This would give both IT and business real-time visibility into how application performance affects the business, allowing everyone to be aligned around the same data and the same goals. In addition, IT can now use these new data points to inform decisions about areas to invest in. Which user devices generate the most revenue? Which browsers generate errors? Which geographies add the most items to their carts? These data points can help IT and the business decide where to invest their resources in the future.

How does performance effect Revenue?

In the graphic below, we can see the drastic drop in revenue at the point of application undeperformance. This gives us a deep insight into how crucial it can be to a business to have a regularly underperforming app. The increased application response time resulted in the loss of almost $40,000 a minute in revenue. However, the impact was minimized due to
swift remedial action taken after a proactive business performance alert.

 

app-revenue-dependenceq

An application performance management (APM) solution provides this unique view by extracting both the response time and dollar value of every transaction that flows through the application. This insight allows IT to see the real revenue impact of slow performance, and more importantly, allows them to drill-down and find the root cause of such business impact. By trending these business performance metrics over an extended time period, IT can see
how the business is performing. Are sales increasing? Is the order value on the rise? Are we maintaining our subscription base, are costs decreasing, etc.? By correlating these data points with IT performance and availability metrics it is possible to isolate the cause before the business is heavily impacted.

Summary

As application complexity increases with agile development, service oriented architectures (SOA), mobile technologies and cloud initiatives it’s important to keep a focus on what really matters to your business – your application revenue. By giving IT visibility into application revenue in real time they can now be more effective in how they identify, isolate and resolve application issues that affect the business. IT alerts will no longer reflect the health of infrastructure and servers, but the true health of the business. This better aligns development, operations and the business so they can make smarter decisions faster, allowing the business to become more competitive and agile.

June 12th, 2014|Business, Strategy|