IT holds more business influence than they realise

A ‘well oiled’ organization is one where IT and the rest of the business are working together and on the same page. In order to achieve this there needs to be good communication, and for good communication there needs to be a common language.

In most organizations, while IT are striving to achieve their goal of 99.999% availability, the rest of the business is looking to drive additional revenue, increase user satisfaction, and reduce customer churn.

Ultimately everyone should be working towards a common goal: SUCCESS. Unfortunately different teams define their success in different ways and this lack of alignment often results in a mistrust between IT departments and the rest of the business.

Measuring success

Let’s look at how various teams within a typical organization define success today:

Operations:
IT ops teams are responsible for reducing risk, ensuring the application is available and the ‘lights are green’. The number ‘99.9’ can either be IT Ops best friend or its worst enemy. Availability targets such as these are often the only measure of ops success or failure, meaning many of the other things you are doing often go unnoticed.

Availability targets don’t show business insight, or the positive impact you’re having on the business. For instance, how much did performance improve after you implemented that change last week? Has the average order size increased? How many additional orders can the application process since re-platforming? Is anyone measuring what the performance improvement gains were for that change you implemented last week?

Development:
Dev teams are focussed on change. The Business demands they release more frequently, with more features, less defects, less resources and often less sleep! Dev teams are often targeted according to the number of updates and changes they can release. But nobody is measuring the success of these changes. Can anyone in your dev team demonstrate what the impact of your last code release was? Did revenues climb? Were users more satisfied? Were there an increased number of orders placed?

‘The Business’:
The business is focussed on targets; last month’s achievements and end of year goals. This means they concentrate on the past and the future, but have little or no idea what impact IT is having on the business in the present. Consulting a data warehouse to gather ‘Business Intelligence’ at the end of the month does not allow you to keep your finger on the pulse of the business.

With everyone focussing on different targets there is no real alignment to the overall business goals between different parts of an organization. One reason for this disconnect is due to the lack of meaningful shared metrics. More specifically, it’s access to these metrics in real-time that is the missing link.

If I asked how much revenue has passed through your application since reading this blogpost, or what impact your last code release had on customer adoption, how quickly could you find the answers? How quickly could anyone in your organization find the answers?

What if answers to these questions only took seconds?

Monitoring the Business in Real-time

In a previous post, I introduced AppDynamics Real-time Business Metrics which enables you to easily collect, auto-baseline, alert, and report on the Business data that is flowing through your applications… as it’s really happening.

This post demonstrates how to configure AppDynamics to extract all checkout revenue values from every business transaction and make this available as a new metric “Checkout Revenue” which can be reported in real-time just like any other AppDynamics metric.

With IT Ops, Dev and Business Owners all supporting business critical applications that are responsible for generating revenue, it is a great example of a business metric that could be used by every team to measure success.

Let’s look at a few examples of how this could change the way you do business, if everyone was jointly focussed on the same business metric.

Outage cost
The below example shows the revenue per minute vs. the response time per minute of an application. This application has obviously suffered an outage that lasted approximately 50 mins and it’s clear to see the impact it has had on the business in lost revenue. The short spike/increase in revenue seen after the outage indicates users who returned to complete their transaction, but this is not enough to recover the lost revenue for the period.

RtBM - outage

Impact of agile releases
This example shows the result of a performance improvement program that has taken place. The overall response time has improved by over a second across three code releases and you can clearly see the additional revenue that has been generated as a result of the code releases.

RtBM - agile releases

Here a 1 second improvement in response time has increased the revenue being generated by the online booking system by more than 30%. The value a development team is delivering back to the business is clearly visible with each new release, allowing developers to focus on the areas that drive the most return and quantify the value they are delivering.

Marketing campaign
This example is a little more complex. At midday there is a massive increase in the number of people visiting this eCommerce website due to an expensive TV advertising campaign. The increased load on the system has resulted in a small increase in the overall response time but nothing too significant. However, despite the increased traffic to the site, the revenue has not improved. If we take a look at the Number of Checkouts, which is a second Business Metric that has been configured, it’s clear the advertising campaign has driven additional users to the site, but these users have not generated additional revenue.

RtBM - marketing

Common metrics for common success

With traditional methods of measuring success in different ways it’s impossible to to align towards a common goal. This creates silo’d working environments that make it impossible for teams to collaborate and prioritise.

By enabling all parts of the business to focus on the business metrics that really matter, organizations benefit from being able to proactively prioritise and resolve issues when they occur. It helps IT truly align with the priorities and needs of the business, allowing them to speak the same language and manage the bottom line. For example, after implementing AppDynamics Real-time Business Metrics Doug Strick, who is the Internet Application Admin at Garmin, said the following:

“We can now understand how the application is growing over time. This data will prove invaluable in guiding future decisions in IT.”
-Doug Strick, Internet Application Admin

AppDynamics Real-time Business Metrics enable you to identify business challenges and react to them immediately, instead of waiting hours, days or even weeks for answers. Correlating performance, user experience, and Business metrics together in real-time and in one place.

If you want to capture the business performance and measure your success against it in real-time , you can get started today with Real-time Business Metrics by signing up and taking a free trial of AppDynamics Pro here.

Introducing Real-Time Business Metrics

I’ve been looking forward to writing this blog for some time.  I have worked with many enterprise customers to document the pain they solved using AppDynamics and a common question I always ask is “What was the actual business impact of that slowdown or outage?”, the result is that most customers guesstimate the revenue impact of slow performance, and are generally nervous about calculating such number.

They’re nervous because they might expose to the business how much revenue they are costing them each year thru incidents and outages. That’s definitely one way to look at things. However, if you flip this problem around IT could actually show the business how much revenue it created as a result of agile releases or initiatives such as SOA, Cloud and Virtualization.

Imagine if a new application feature suddenly caused a 5% increase in revenue? Wouldn’t it be cool for IT to share this fact with the business? With AppDynamics new real-time business metrics IT can do just that. Here’s how it works…

1. Monitoring Business Transactions

A business transaction is a type of user request in your application. AppDynamics can auto-discover these and monitor the response time of such requests, this allows IT to see the real end user experience and detect problems instantly as they happen. For example, below is a Checkout transaction from one of our customers that was requested 4,639 times, it had 53 errors and over 700 were classified as slow from their normal performance baseline.

1

2. Extracting Revenue Metrics from Business Transactions

Once you starting discovering and monitoring the performance of business transactions, the next step is to define which key business data you want to extract and report on. In AppDynamics you can define “Information Points” which are essentially custom metrics from extracting method parameters in application code. For example, in the below screenshot I created an information point called “Checkout Revenue” and specified the application code where AppDynamics should extract the revenue values, in this example it was the method signature:

com.online.business.action.CheckOut.confirm() 

I then created a custom metric called Checkout Revenue based on a SUM operation on the getter chain:

getShoppingCart().getAdjustedTotal().getAmount().intValue()

AppDynamics will now extract all the checkout revenue values from every transaction and make this available as a new metric “Checkout Revenue” which can be reported in real-time just like any other AppDynamics metric.

Business Metrics Wizard

3. Correlating Application Response Times with Application Revenue:

Now that AppDynamics is monitoring the performance and revenue of your business transactions, its possible to correlate and report these metrics over-time so IT can understand their relationship. Take the below example, which shows the revenue per minute vs. the response time per minute of the application. As the screenshot shows, its pretty clear what the real business impact of this slowdown was to the business. Now imagine the reverse,  imagine if the application got faster and that have a positive impact on revenue and transaction throughput? Wouldn’t it be great to track this information over-time so you can see the real impact of agile release cycles?

Correlating revenue and performance

4. Creating Real-time Business Dashboards

Today nearly every monitoring dashboard is about application response times, or the health and resource of infrastructure. So when something glows red or flashes on a dashboard it denotes something very bad is happening. The reality is that most dashboards glow red everyday when performance and resource spikes. When is a problem really a problem? With real-time business metrics you can now mash and fuse business KPI’s with your application and infrastructure metrics. So when something turns red you can see the revenue impact of such issue.

real-time business metrics dashboard

5. Being Pro-Active with Business Alerts

Looking at monitoring dashboards periodically (like the above) is the first step to being pro-active with business impact. However, if you want to be truly pro-active you need to automate this entire process and let your monitoring solution do the alerting for you. The great thing with AppDynamics is that it can self-learn the normal value of every metric it collects, and create a dynamic baseline (threshold) over-time. This allows it to accurately detect deviations caused by abnormal activity. So just like we can detect deviations in application performance we can now do the same for your application revenue or order throughput. For example, one of our customers Orbitz said:

“If we’ve sold less than $1,000 in five minutes, there is probably a problem, even if it’s 2 o’clock in the morning. If our sales have flatlined, that’s a critical problem. I don’t know how to be any clearer.”

Geoff Kramer, Manager of Quality Engineering at Orbitz Worldwide

The ability to alert on business impact vs. application or infrastructure performance can be a game changer. It helps IT truly align with the priorities and needs of the business, allowing them to speak the same language and manage the bottom line.

You can get started today with real-time business metrics by signing up and taking a free trial of AppDynamics Pro here.