New Relic Forecast Reveals High ROI from Observability Investments

New Relic, the Intelligent Observability Platform, released its 2024 Observability Forecast, the industry’s most comprehensive report on the state of observability. Surveying over 1,700 technology professionals across 16 countries, the report highlights key growth areas, challenges, and external trends influencing observability investments. Globally, the data reveals a median annual downtime from high-impact outages is 77 hours, with an hourly cost of up to US$1.9 million. For India, the median hourly cost for high-business-impact was US$2 million, higher than the median hourly outage cost across all respondents. The findings demonstrate a strong correlation between full-stack observability and reduced downtime, fewer interruptions, and lower annual outage costs—reinforcing the critical role observability plays in maximising operational efficiencies and business performance. 

Outages drive considerable downtime and revenue loss

According to the research, engineering teams devote 30% of their time addressing interruptions—equivalent to 12 hours out of a standard 40-hour work week. The leading causes of unplanned outages over the last two years include network failure (35%), third-party or cloud provider services failure (29%),  and human error (28%).  

Nearly two-thirds (65%) of respondents in India experienced high-business-impact outages at least once per week, with 31% stating they experienced them once a day or more, the highest of all countries surveyed. Four-fifths (84%) said the cost of that considerable downtime for critical business app outages was $500,000 USD or more per hour, including three quarters (77%) who said it cost more than $1 million per hour. The median hourly cost for high-business-impact outages in India was $2.0 million, slightly higher than the median $1.9 million per hour outage cost across all respondents.

The report also highlights that observability practices can significantly reduce downtime. Key practices that have helped reduce downtime include root cause analysis (RCA) and post-incident reviews (37%), monitoring DevOps Research and Assessment (DORA) metrics (34%), tracking the golden signals (latency, traffic, errors, saturation) (33%), and managing Mean Time to Detect and Resolve (MTTx) outages (33%).

Organisations in India specifically, indicated that observability practices have helped their organisation reduce downtime with over two-thirds (67%) saying their MTTR (Mean Time to Repair) improved since adopting observability. Nearly half (44%) of those respondents said they tracked, reported, and incentivised MTTx metrics to reduce their downtime.

The evolution of observability is tied to the rise of AI

The biggest technology strategy or trend driving the need for observability in India was the adoption of AI technologies (39%). This was followed by the increased focus on security, governance, risk, and compliance (37%), and integration of business apps like ERP and CRM into workflows (36%). The least popular trends were the adoption of serverless computing (24%), followed by the containerization of applications and workflows (25%). 

AI monitoring was the most deployed capability in India (57%), followed by dashboards (53%) and application performance monitoring (50%). 

On a global scale, Artificial Intelligence (AI) and security are driving the growing need for observability, with 41% of respondents citing both AI adoption and increased focus on security, governance, risk, and compliance as key trends. Security monitoring was the most deployed capability (58%), followed by AI monitoring (42%), machine learning (ML) model monitoring (29%), and AIOps (24%). Additionally, 39% plan to deploy AIOps within the next year, while 36% expect to implement AI monitoring and 34% anticipate adding ML model monitoring. 

Organizations deploying these AI-related observability capabilities reported higher annual total value from observability and a stronger return on investment (ROI).

Observability delivers ROI for Indian businesses

Most Indian organisations (85%) said they receive $1 million or more in total value per year from that investment, with 70% receiving $5 million or more in value. The median annual ROI for India was notable at 294%. About a third (36%) said observability improves business and/or revenue growth and other top observability benefits included improved system uptime and reliability (42%), increased operational efficiency (42%), and improved developer productivity (40%).

Although Indian businesses benefit from observability adoption, tool fragmentation is continuing to prevent them from achieving full-stack observability. More than half (57%) of Indian organizations use five or more tools, and just 5% use only one tool. Over a third (40%) said too many monitoring tools and siloed data was a primary challenge to achieving full-stack observability, and more than a third (35%) planned to consolidate tools next year to maximise the value of their observability spend.

“The high outage costs associated with downtime can be crippling for organisations. With Indian businesses experiencing outages more frequently than any other country surveyed, the need for full-stack observability has never been greater.” said Peter Marelas, Field Chief Technology Officer for APJ at New Relic. “The Observability Forecast has once again highlighted the tangible business benefits that observability delivers including less downtime, fewer critical outages, and high ROI, and cemented its role in helping organisations achieve their core business goals.”

Other key findings from the report include:

• Observability is adoption is beyond incident response. Almost two-thirds of Indian organisations (60%) see observability as enabling core business goals rather than for incident response or insurance (14%).
  

• Investing in observability pays off with 3.9x ROI. Over three-quarters of Indian organisations (77%) spend $1 million or more on observability per year, with a median annual spend of $2.43 million. Most (85%) said their organisation receives $1 million or more in total value per year from that investment, with 70% receiving $5 million or more in value. The median annual ROI for India was 294%, or 3.9x.
  

• Observability adoption is extensive and delivers business value. As well as delivering nearly 4x ROI, about a third of Indian organisations (36%) said observability improves business and/or revenue growth. Other top observability benefits were improved system uptime and reliability (42%), increased operational efficiency (42%), and improved developer productivity (40%).

• Business observability critical for IT pros. Correlating business outcomes with telemetry data (business observability) was a top priority for IT professionals globally, with 40% already deploying it and 47% planning to deploy it within the next three years. Those with business observability reported 40% less annual downtime, 65% lower outage costs, and 25% less time addressing interruptions compared to those without it.