NOTE: The Network View is offering a series of ROI-related posts focused on the question: “Why optimize my network and/or security monitoring?” This is the first installment, which will review the meaning of ROI briefly and set up the second entry.
INTRODUCTION
The term ROI, or return-on-investment, is used widely these days, however, not everyone views it the same. Any major purchase should theoretically be evaluated against what business value will be returned…in a perfect world anyway.
Let’s start off by reviewing what ROI means in its simplest form. Our “official” definition of ROI is:
ROI = (Incremental Revenue Provided / Original Investment) – 1.0
Basically, ROI represents the percentage of return you receive for your investment in some new or additional tool, program, etc. In order to properly measure the ROI, we must first deduct the original investment itself to account for payback of the capital outlay. Everything else is ROI. Sounds fairly simple, but not so fast…
In reality, ROI is never simple to measure, and to make matters worse, it is often a moving target.
Think about it; what exactly lines up to contribute to incremental revenue for technology purchases? If an APM tool reduces downtime by 5%, increases availability by 8%, and improves application response time by 11%, what is your ROI? Taken at face value, very few business decision makers, not to mention data center operators, can calculate ROI on arbitrary statistics like those cited.
Considering how many moving parts there are in networks and applications, it is crucial that IT decision makers approach the problem from several angles. First, you must pinpoint the assets that will be most affected by the new purchase. Then, after making reasonable assumptions, you can map out a way to estimate the ROI in a reasonable range for each asset area affected.
Since we are writing this to analyze the expected ROI for Monitoring Optimization, which you can achieve with the Anue Net Tool Optimizer, we will focus on three assets: the network, the monitoring tools themselves, and the productivity of the staff tasked with managing the data center.
NEXT: Part II: The Network
