Application Management ROI: How to Show Real Results to the Business

By Carl Eberling  |  Posted 2010-10-19

Application Management ROI: How to Show Real Results to the Business

Application management solutions that monitor and manage the entire application infrastructure, detect performance and availability problems in real time, and enable fast root-cause diagnosis can save businesses money by reducing application downtime.

In addition, application management solutions that automate much of the application management effort can boost the efficiencies of business-critical applications and staff productivity, further reducing the costs of IT operations. In short, the right application management solution can deliver significant, positive ROI with a short payback.

To deliver ROI with a short payback period-one of the most important metrics for evaluating technology investments-application management solutions must provide significant, direct benefits (as well as harder to measure indirect benefits). Direct benefits provide savings in staffing, time and overall costs that can be realized almost immediately. These direct benefits include reduced hardware, support and consulting costs, and reduced service-level agreement (SLA) penalties.

Indirect benefits provide returns such as customer satisfaction, increased productivity, business flexibility and others that are not directly measurable but still are important to the overall ROI picture. These benefits often are recurring and likely to increase over the years as the product is deployed to additional users, so it's important to take a measured approach to calculating them.

How do you show the business that the benefits of a proposed application management solution outweigh its costs? Your ROI calculation should include the following:

Reduced Hardware Costs

Reduced hardware costs

A reduction in the cost of hardware can be a direct, measurable benefit from an application management solution purchase. Many IT organizations find the right solution can reduce the cost of new hardware purchases either because better monitoring extends the life of existing hardware or because trend monitoring identifies future problems. This gives IT time to negotiate better prices for replacement hardware than would be available in a crisis situation. A reasonable estimate of hardware savings for the average company should be between two and 10 percent of the annual infrastructure hardware budget.

Reduced consulting costs

This also would be a measurable benefit of an application management solution that facilitates more accurate application monitoring. Spot on monitoring can reduce the need to hire consultants and experts to identify problems and tune response time.

Reduced SLA Penalties

Reduced SLA penalties

This direct benefit would be derived from an application management tool that detects problems before they impact the performance SLA. A solution that also reduces problem mean time to resolution (MTTR), speeding up the resolution of a performance degradation or outage, also can contribute to reduced or eliminated SLA-compliance penalties.

Improved conversion rate

This indirect benefit can result when an application management solution provides data that helps the IT organization understand the performance or navigation changes necessary to reduce the number of abandoned transactions.

Increased Productivity

Increased productivity

This is an indirect benefit that can be derived from an application management tool that simplifies the identification of current and potential problems, reduces the number of critical issues and streamlines the process of fixing issues that do arise. IT productivity also will increase with deployment of a solution that allows for the consolidation of multiple monitoring tools down one or two. With fewer tools to manage, database administrators can be redirected to other projects.

Delivering ROI with a fast payback is critical for businesses today. The right application performance management solutions can provide significant, measurable value to the organization, with especially quick payback coming from mitigating the risk of application downtime and reducing the frequency of application incidents and MTTR. Further savings and improvements in productivity can be realized by leveraging application management solutions that automate daily monitoring and problem resolution tasks.

Carl Eberling is Vice President and General Manager of the Virtualization and Monitoring Business Unit at Quest Software. Carl is an IT industry veteran. Most recently, he was senior vice president of IT at Kaiser Permanente. Prior to that, Carl held senior-level IT management positions at Verizon Wireless, Pacific Bell, Cellular One and AirTouch Communications. Carl holds a Bachelor's degree from San Francisco State University and completed his graduate studies at University of California, Berkeley, and Golden Gate University. He also served in the United States Marine Corps. He can be reached at

Rocket Fuel