Observability at a Crossroads: AI, Economics, Complexity and the Enduring Power of Open Source

Learn more about Grafana Labs

The 2026 Observability Survey from Grafana Labs paints a vivid picture of an industry maturing fast, where AI is welcomed with careful conditions, SaaS economics are reshaping spending decisions, complexity remains a defining challenge, and open standards continue to underpin it all.

Among the key findings:

  • 92% see value in AI helping surface anomalies and issues before they cause downtime
  • 38% say complexity and overhead are their biggest observability concern
  • 77% say open source or open standards are important to their observability strategy
  • 77% say centralized observability has saved their organization time or money
  • Half of organizations now use observability tools to track business-related metrics

Together, the results point to a clear industry direction: organizations want observability solutions that are open, cost-efficient, and capable of delivering meaningful operational insights without adding complexity.

Practitioners Want AI That Earns Its Place, Not AI for AI’s Sake

The survey makes clear that observability practitioners are open to AI, but on their terms. Across a range of use cases, support is overwhelming: 92% see value in AI surfacing anomalies before they cause downtime as well as generating dashboards, alerts, and queries, while 91% endorse AI for forecasting and assisting with root cause analysis. Autonomous actions garner 77% support, but stand out as the highest area of skepticism: 15% don’t yet trust AI to act on their behalf and another 8% see no value in using AI for this.

The No. 1 barrier to AI adoption? Too much manual input of required context (26%). In other words, practitioners don't want AI that creates new toil in place of old toil. And 95% say it’s important for AI to show its reasoning, the clearest possible signal that transparency is not optional. Notably, those who are most enthusiastic about AI are also the most insistent on explainability.

SaaS Adoption Surges as Organizations Invest for ROI, Not Just Growth

The economics of observability are shifting. Half of all respondents now use SaaS for observability in some capacity (up from 43% in 2025). The share using SaaS exclusively has grown steadily from 10% in 2024 to 17% in 2026, a clear signal of market maturation and growing confidence in managed services.

Spending is rising, but thoughtfully. Half of respondents expect to spend more on observability next year, not because vendor prices are going up (only a quarter of respondents cite this), but because of broader adoption (63%) and expectations of higher ROI (31%). Those who expect to spend less point to more efficient operations (37%) as the reason. Meanwhile, cost remains the single most important tool selection criterion for the third year running (65%), followed by ease of use (49%).

The message to vendors is clear: organizations are willing to invest, but they expect demonstrable value in return.

Complexity Remains the Industry's Defining Challenge - and Centralization Is Helping

Complexity and overhead topped the list of observability concerns for 2026, cited by 38% of respondents, more than signal-to-noise challenges (34%) or cost (31%). Alert fatigue remains the biggest single obstacle to faster incident response, cited by 30% of respondents, nearly double the next most common response.

Yet there is genuine progress. More than three-quarters (77%) say they have saved time or money through centralized observability. Teams with mature, centralized practices are more satisfied with their internal operations (61%) compared to those with siloed setups (53%). The industry is also expanding its scope: nearly half (46%) of organizations have unified infrastructure and application observability in full production, and SLO adoption and business observability are both on the rise.

Self-managed teams are most likely to cite complexity as their top concern, while SaaS users are more likely to point to cost. The shift to SaaS, in part, is a direct response to the complexity burden, a trend expected to accelerate.

Open Source Remains the Bedrock while OpenTelemetry Is Coming Into Its Own

For the fourth consecutive year, open source and open standards are foundational to how practitioners think about observability. 77% say open source/open standards are important to their observability strategy, with 61% calling them “essential” or “very important.”

Almost two-thirds (65%) of organizations are investing in both Prometheus and OpenTelemetry. While Prometheus maintains a slight edge in overall investment (77% vs. 76%), OpenTelemetry is showing stronger growth signals: more respondents are building POCs or actively investigating (35% vs. 18%), and a higher share report increased investment over the past year (47% vs. 42%).

OpenTelemetry is no longer niche. It is now in broad use across metrics (57%), traces (50%), and logs (48%). Practitioners cite ease of adoption (41%) and the freedom to switch vendors (37%) as the top reasons they are turning to OTel, a direct expression of the industry’s desire for openness and portability, not lock-in.

Methodology: The survey is based on 1,363 responses from engineers, SREs, and technology leaders across 76 countries, collected through online outreach and industry events between October 1, 2025 and January 6, 2026. 

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Observability at a Crossroads: AI, Economics, Complexity and the Enduring Power of Open Source

Learn more about Grafana Labs

The 2026 Observability Survey from Grafana Labs paints a vivid picture of an industry maturing fast, where AI is welcomed with careful conditions, SaaS economics are reshaping spending decisions, complexity remains a defining challenge, and open standards continue to underpin it all.

Among the key findings:

  • 92% see value in AI helping surface anomalies and issues before they cause downtime
  • 38% say complexity and overhead are their biggest observability concern
  • 77% say open source or open standards are important to their observability strategy
  • 77% say centralized observability has saved their organization time or money
  • Half of organizations now use observability tools to track business-related metrics

Together, the results point to a clear industry direction: organizations want observability solutions that are open, cost-efficient, and capable of delivering meaningful operational insights without adding complexity.

Practitioners Want AI That Earns Its Place, Not AI for AI’s Sake

The survey makes clear that observability practitioners are open to AI, but on their terms. Across a range of use cases, support is overwhelming: 92% see value in AI surfacing anomalies before they cause downtime as well as generating dashboards, alerts, and queries, while 91% endorse AI for forecasting and assisting with root cause analysis. Autonomous actions garner 77% support, but stand out as the highest area of skepticism: 15% don’t yet trust AI to act on their behalf and another 8% see no value in using AI for this.

The No. 1 barrier to AI adoption? Too much manual input of required context (26%). In other words, practitioners don't want AI that creates new toil in place of old toil. And 95% say it’s important for AI to show its reasoning, the clearest possible signal that transparency is not optional. Notably, those who are most enthusiastic about AI are also the most insistent on explainability.

SaaS Adoption Surges as Organizations Invest for ROI, Not Just Growth

The economics of observability are shifting. Half of all respondents now use SaaS for observability in some capacity (up from 43% in 2025). The share using SaaS exclusively has grown steadily from 10% in 2024 to 17% in 2026, a clear signal of market maturation and growing confidence in managed services.

Spending is rising, but thoughtfully. Half of respondents expect to spend more on observability next year, not because vendor prices are going up (only a quarter of respondents cite this), but because of broader adoption (63%) and expectations of higher ROI (31%). Those who expect to spend less point to more efficient operations (37%) as the reason. Meanwhile, cost remains the single most important tool selection criterion for the third year running (65%), followed by ease of use (49%).

The message to vendors is clear: organizations are willing to invest, but they expect demonstrable value in return.

Complexity Remains the Industry's Defining Challenge - and Centralization Is Helping

Complexity and overhead topped the list of observability concerns for 2026, cited by 38% of respondents, more than signal-to-noise challenges (34%) or cost (31%). Alert fatigue remains the biggest single obstacle to faster incident response, cited by 30% of respondents, nearly double the next most common response.

Yet there is genuine progress. More than three-quarters (77%) say they have saved time or money through centralized observability. Teams with mature, centralized practices are more satisfied with their internal operations (61%) compared to those with siloed setups (53%). The industry is also expanding its scope: nearly half (46%) of organizations have unified infrastructure and application observability in full production, and SLO adoption and business observability are both on the rise.

Self-managed teams are most likely to cite complexity as their top concern, while SaaS users are more likely to point to cost. The shift to SaaS, in part, is a direct response to the complexity burden, a trend expected to accelerate.

Open Source Remains the Bedrock while OpenTelemetry Is Coming Into Its Own

For the fourth consecutive year, open source and open standards are foundational to how practitioners think about observability. 77% say open source/open standards are important to their observability strategy, with 61% calling them “essential” or “very important.”

Almost two-thirds (65%) of organizations are investing in both Prometheus and OpenTelemetry. While Prometheus maintains a slight edge in overall investment (77% vs. 76%), OpenTelemetry is showing stronger growth signals: more respondents are building POCs or actively investigating (35% vs. 18%), and a higher share report increased investment over the past year (47% vs. 42%).

OpenTelemetry is no longer niche. It is now in broad use across metrics (57%), traces (50%), and logs (48%). Practitioners cite ease of adoption (41%) and the freedom to switch vendors (37%) as the top reasons they are turning to OTel, a direct expression of the industry’s desire for openness and portability, not lock-in.

Methodology: The survey is based on 1,363 responses from engineers, SREs, and technology leaders across 76 countries, collected through online outreach and industry events between October 1, 2025 and January 6, 2026. 

Related Links

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When the Database Is the Problem, Is APM Enough?

Production incidents rarely announce themselves as database problems. They appear as slow transactions, timeouts, rising response times, or an application struggling under a workload it previously handled. APM provides an essential starting point. It can identify a slow transaction path, highlight an affected service, and show that a database dependency is consuming more time than expected. But identifying the database as part of the problem is not the same as explaining what is happening inside it ...

From Cleanup to Prevention: The Future of Cloud-Native Cost Optimization

Cloud teams are under constant pressure to reduce spend without slowing development or increasing operational risk. They are deploying autoscalers, rightsizing workloads, enforcing resource requests, reviewing utilization dashboards, and building FinOps processes around cloud-native environments. Yet the results often disappoint ...

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For decades, enterprise networks were designed around a simple assumption: work happened inside the office. Applications lived in centralized data centers, employees connected through internal infrastructure, and security focused on protecting the perimeter that surrounded everything ... But the way organizations operate today bears little resemblance to that environment. Cloud platforms host critical applications, employees connect from homes and airports as often as they do from offices, and partners collaborate through shared systems that exist far beyond corporate walls. In short, the corporate network no longer resembles the environment it was designed to protect ...

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