5 Takeaways on the State of Observability for IT and Telecommunications Organizations
June 12, 2024

Peter Pezaris
New Relic

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In May, New Relic published the State of Observability for IT and Telecommunications Report to share insights, statistics, and analysis on the adoption and business value of observability for the IT and telecommunications industries.

Here are five key takeaways from the report:

1. IT and Telco Experience More Outages than Other Industries

The report found that IT and telco organizations experience a much higher frequency of high-business-impact outages than other industries, including retail, education, healthcare, and financial services. In fact, 37% reported experiencing outages at least once a week.

Downtime costs IT and telco organizations an average of $12.71 million per year

The average annual downtime for IT and telco organizations is 26 hours, as compared to the overall average of 23 hours meaning it takes longer to detect and resolve outages. With 35% of respondents reporting that critical business app outages cost more than $500,000 per hour and 22% estimating they cost $1 million per hour, downtime costs IT and telco organizations an average of $12.71 million per year.

2. Focus on Security, Governance, Risk, and Compliance is Driving Observability Adoption

According to 50% of respondents, the top technology trend driving the need for observability amongst IT and telco organizations was an increased focus on security, governance, risk, and compliance. Despite this, the report found a diverse set of trends driving observability adoption.

Notably, compared to all industries, IT and telco respondents said some strategies and trends drive the need for observability more than others, including the development of cloud-native application architectures (48% compared to 38% overall), adoption of AI technologies (43% compared to 38% overall), and migration to a multi-cloud environment (40% compared to 37% overall).

3. Tool Consolidation is On the Rise

According to the report, IT teams in IT and telco organizations detected software and system interruptions primarily from one or more monitoring tools (77%), although about a fifth (21%) said they detect outages through manual checks or tests, complaints, or incident tickets. That said, the prevailing preference among IT and telco respondents was for a single, consolidated platform (56%). In fact, 41% said their organization is likely to consolidate tools in the next year to get the most value out of their observability spend.

The report also found that IT and telco organizations were more likely than average to use multiple monitoring tools for observability capabilities. More than two-thirds (69%) used four or more observability tools compared to 63% overall, with 23% using eight or more tools. The proportion of IT and telco respondents using a single tool has tripled since last year, growing from 1% to 3%. The data indicates that IT and telco organizations are spending time and money trying to sample and understand the different aspects of their business and avoid costly outages.

4. Observability Tooling Provides a Strong ROI

Respondents also indicated seeing high returns on observability tooling, with 57% of respondents stating their organization's return on observability investment exceeds more than $500,000 per year, including 43% who said $1 million or more. It is worth noting that IT and telco organizations reported a higher total annual value received from observability than average. These findings strongly suggest that IT and telco organizations receive a minimum 2x ROI from observability and that the ROI is even higher for organizations that monitor more of their tech stack or have a more mature observability practice.

When asked how observability helps improve their life the most, 39% of IT and Telecom decision-makers stated that observability helps establish a technology strategy, and 37% said it helps achieve technical KPIs. For practitioners, observability increases productivity so they can find and resolve issues faster (48%) and enables less guesswork when managing complicated and distributed tech stacks (32%). As far as business outcomes enabled by observability, 55% said observability improves collaboration across teams to make decisions related to the software stack. In addition, more than one-third said observability shifts developer time from incident response towards higher-value work (41%), mitigates service disruptions and business risk (37%), and improves revenue retention by deepening their understanding of customer behaviors (36%).

5. Observability Practices are Critical

It's abundantly clear that the stakes are high: If an IT or telco provider's website goes down or services are interrupted for even 30 minutes, it could cost them millions of dollars and negatively influence its customers' brand perception. Organizations simply cannot afford outages or risk losing customers due to a poor customer user experience. Data suggests that IT and telco organizations will act on their ambitious observability deployment plans in the next one to three years. By 2026, the majority of respondents expect to have deployed security monitoring (96%), network monitoring (96%), and infrastructure monitoring (94%).

Beyond preventing outages, IT and telco organizations will continue to look for ways to improve the digital customer experience, whether that is accelerating speed to market or improving uptime and reliability. While IT and telco organizations are already ahead of other industries in digital experience monitoring (DEM), even more investment in this area is anticipated as a way to create better experiences for their customers.

Organizations will continue to consolidate tools given their strong interest in deploying more capabilities in the next few years, with data indicating that more and more organizations will move from siloed tools to single, more robust platforms that provide end-to-end visibility.

Methodology: New Relic's observability forecast surveyed professionals across various industries and locations to better understand the current state of observability. Among the 1,700 technology professionals and decision-makers surveyed, 24.9% were associated with the information technology (IT) or telecommunications (telco) industries.

Peter Pezaris is Chief Design and Strategy Officer at New Relic
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