Application Performance Management this, Application Performance Management that, with all the talk about Application Performance Management in the industry, and all of the bells and whistles that companies developing Application Performance Management tools are promising, it is very easy to get thrown off track and forget what implementing the right Application Performance Management solution will do; increase your bottom line.

Application Performance Management’s Bottom Line

Application Performance Management tool developers will use various synonyms to express the bottom line increase that Application Performance Management  yields; reduced risk, increased efficiency, improvement of mean time to resolution, the ability to plan capacity, optimize IT performance, improve business performance, increase customer satisfaction, and increase availability. All of these Application Performance Management promises boil down to the most important equation that all enterprises thrive and dwindle on; reduced costs and increased revenue equal higher profits.

When the right Application Performance Management solution has been procured a high ROI is inevitable; this statement is trivial to anyone who has calculated the TDC (True Downtime Cost) for their own enterprise. For those unaware of their own TDC, Table 1 will aid in providing an example of the potential ROI that the right Application Performance Management solution will yield.

Table 1: Typical Revenue Loss per Hour of Downtime (Source: Gartner Dataquest, 2007)

Another necessary figure for quantifying the potential ROI that a good Application Performance Management tool may provide is the amount of downtime hours experienced per year. A poll taken by Gartner at the November 2007 datacenter conference showed that 25% percent of the companies (that participated in the poll) ranked “very good” in regards to the downtime of their most critical applications; defined as 61 downtime hours per year. The percentage of companies that ranked “best in class” - defined as 5 downtime hours per year - was 20%.

ROI yielded by the Right Application Performance Management Solution

Consider the following scenario that quantifies the impact of implementing an Application Performance Management Solution by utilizing the median downtime average cost per hour in Table 1: 

“Company A” has not invested in the proper Application Performance management solution,  yet still manages to have a “very good” downtime of 61 hours per year, which translates to a lost revenue of $5.49M. 

“Company B” on the other hand, has invested in a good Application Performance Management solution, which, including overhead, came to a cost of $0.5M. Due to the implementation of their Application Performance Management Solution their downtime ranking has improved from “very good” to “best in class”, which translates to a bottom line increase equal to more than $4.5M in comparison with company A, resulting in an ROI of over 900% per annum.
 

It goes without saying that each enterprise must do its own TDC estimate, to the transaction level (if possible), in order to better understand what ROI may be yielded from the right Application Performance Management investment.  Surely quantifying the capabilities of a good Application Performance Management solution by estimating how many hours an entire system is put out of commission does no justice to today’s advanced Transaction based Application Performance Management tools - once a good ApplicationPerformance Management solution is put into place - many of the benefits are hard to qualify because performance is not black or white - uptime versus downtime.  The True Promise of Application Performance Management  The fact of the matter is that Transaction Management delivers the true promise of Application Performance Management which is to improve your bottom line. In today’s economic turmoil IT departments and entire enterprises are being required to do more with less in order to stay out of the red.

Application Performance Management – The Right Solution

Classic Application Performance Management solutions have many shortcomings that are unacceptable in today’s environment. These Application Performance Management tools should not be labeled as solutions, rather as tools, as they are not able to show the application owner the big picture. This leads to endless meetings - notwithstanding the so called Application Performance Management Solution - involving many professionals that have been called on to “put out the fire”. Anyone who has tried to solve problems in complex systems knows that these problems always come in pairs; it therefore takes a robust Application Performance Management solution to find the root cause(s).