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How Does APM Affect the Bottom Line?

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APM Digest dives into the issue of how Application Performance Management affects financial results. They talked to IT Operations managers, directors, and VPs and quote them extensively. Among their findings:

1) increased sales and revenue
2) reduced downtime
3) better end-user experience
4) greater customer satisfaction
5) higher productivity
6) decreased reliance on costly experts (Who? Me?)
7) greater innovation
8) reduced operational costs
9) higher Google ranking (because of improved site speed)
10) intangibles (other)

Before we explore this list a bit, what does “bottom line” mean? There is some confusion about that. It can mean gross margins, earnings before interest and taxes (EBIT) and net income, which, when written onto a profit and loss statement is in fact at the bottom, hence the term “bottom line.”

Net income can vary widely from margins, so we should say that APM improves margins. How is this? Obviously if there is latency in the system, pages that time out or downtime, customers cannot make orders. If this happens often enough, they will go elsewhere.

One executive weighs in to say that APM reduces mean-time-to-resolution (MTTR) for production-related outages and cites the example of Thomas Cook (a centuries old travel agency) who increased bookings, recovered financial losses from downtime and improved MTTR after adopting APM.

User satisfaction is “the most important benefit of APM,” says one CEO. APM can directly measure satisfaction. If web pages do not render quickly enough, the user is experiencing stress and grows impatient, waiting for the screen to paint.

Productivity gains reduce man hours, says another expert. This means the IT staff is available to support more with the same headcount. (The corollary to this, of course, is the company can reduce headcount and keep the machinery of business running.)

Another boost to the bottom line is improved innovation. Instead of firefighting outages, the IT staff can spend time learning new technology. They can take tutorials and hone their skills through practice and reading. This speeds developing new applications, because new frameworks are constantly coming online to help the programmer build applications more quickly, once they have learned the new frameworks (That takes time.). Support people benefit from learning new skills too when they, for example, learn a new scripting language.

There are just a few of the key points taken from the APM Digest list of 10 ways that APM boosts profits.

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