Skip to main content

Time is Money

Robin Lyon

Time is an important measurement of IT service, especially if we use transaction time. Time is well understood and begins to answer some of the fuzzy questions such as slowness and what is performance. Of course there are other great questions in IT and one of the most dreaded is: "How much does this application cost?" This question creates countless man hours of work quickly running into the diminished returns of hours spent vs. accuracy.


Here is an enumerated example:
 
1. The cost of the actual application (license, lease etc.) + depreciation as appropriate.

2. The cost of maintenance agreements.

3. The cost of the man power supporting the application (often fractions of various head count.)

4. The cost of the dedicated hardware supporting the application.

5. The proportion cost of shared hardware and software such as Databases and SAN space.

6. The proportion cost of network equipment + and then network support hours.

7. The cost of data center space + power + environment.

8. The proportional cost of management.

9. The cost of shared services such as backup and monitoring.

10. …

As you can see this becomes quite a long list and rapidly becomes time intensive. I remember one organization that spent days deciding how to divide the data center power bill into the application numbers. The humorous or sad reality is thousands of dollars of time in meetings was used to shift increments of hundreds of dollars between the applications. What was disturbing is at the end of weeks of work by most of IT, a reasonable number was returned but what it didn’t show was one of the greatest and most forgotten costs of an application, that of user time. There are good reasons for this such as "user time is not part of the IT budget" or "how could we possibly calculate that number to any accuracy?"
 
Now that we have a method to understand transaction time, we can understand the cost of slow application. A simple formula is (the number of transactions) x (the average transaction time) x (the cost of loaded headcount per time).

This is not perfect, nor do I want to make perfection the enemy of good. It is reasonable to say if a user waits more than a minute for a result, they start multitasking. This can be corrected by ignoring transactions longer than one minute for this simple formula. There are other exceptions and all can be corrected for, but let’s take an example application and figure out some numbers.

We have an application that 600 users use 60 times a day with an average transaction time of 10 seconds. That comes out to 36,000 transactions or 360,000 seconds or 100 hours. HR tells us that our loaded headcount is 40 dollars an hour so we have $4,000 per day of lost time spent waiting for application response. This is a shocking number; it often exceeds the total cost from the tedious exercise of calculating an application cost. Other ways to think of this number are $88,000 per month or 12.5 people doing nothing but waiting every single day.
 
Fortunately, with information comes opportunity. There are several beneficial ways to use this discovered cost. One way is it may help reluctant organizations understand the importance of IT and good systems. When the cost is presented to the application owner, they might want to invest in improving application performance. Assume when looking at the application performance we find most the time is spent in the database. After a bit of testing we can see a 25% increase of performance by moving to a DB cluster and the cost of doing this is $100,000. Using our $88,000 cost of time per month we calculate the DB improvement pays for its self in 5 months ($88,000 x .25 x 5 = $110,000) in increased productivity.
 
This number is also a key management number. During the year end budget and priority cycle there are several ways to decide how to assign the all too few resources given to IT. Other than compliance and obsolescence, a strong argument is improving what will gain the most productivity, and money is the understandable measure to use.
 
Businesses run by understanding costs. Application management allows IT to start speaking the same language as rest of a company – one of dollars and cents. An old basic business adage is you can’t manage what you don’t measure.

Robin Lyon is Director of Analytics at AppEnsure.

Hot Topics

The Latest

According to Auvik's 2025 IT Trends Report, 60% of IT professionals feel at least moderately burned out on the job, with 43% stating that their workload is contributing to work stress. At the same time, many IT professionals are naming AI and machine learning as key areas they'd most like to upskill ...

Businesses that face downtime or outages risk financial and reputational damage, as well as reducing partner, shareholder, and customer trust. One of the major challenges that enterprises face is implementing a robust business continuity plan. What's the solution? The answer may lie in disaster recovery tactics such as truly immutable storage and regular disaster recovery testing ...

IT spending is expected to jump nearly 10% in 2025, and organizations are now facing pressure to manage costs without slowing down critical functions like observability. To meet the challenge, leaders are turning to smarter, more cost effective business strategies. Enter stage right: OpenTelemetry, the missing piece of the puzzle that is no longer just an option but rather a strategic advantage ...

Amidst the threat of cyberhacks and data breaches, companies install several security measures to keep their business safely afloat. These measures aim to protect businesses, employees, and crucial data. Yet, employees perceive them as burdensome. Frustrated with complex logins, slow access, and constant security checks, workers decide to completely bypass all security set-ups ...

Image
Cloudbrink's Personal SASE services provide last-mile acceleration and reduction in latency

In MEAN TIME TO INSIGHT Episode 13, Shamus McGillicuddy, VP of Research, Network Infrastructure and Operations, at EMA discusses hybrid multi-cloud networking strategy ... 

In high-traffic environments, the sheer volume and unpredictable nature of network incidents can quickly overwhelm even the most skilled teams, hindering their ability to react swiftly and effectively, potentially impacting service availability and overall business performance. This is where closed-loop remediation comes into the picture: an IT management concept designed to address the escalating complexity of modern networks ...

In 2025, enterprise workflows are undergoing a seismic shift. Propelled by breakthroughs in generative AI (GenAI), large language models (LLMs), and natural language processing (NLP), a new paradigm is emerging — agentic AI. This technology is not just automating tasks; it's reimagining how organizations make decisions, engage customers, and operate at scale ...

In the early days of the cloud revolution, business leaders perceived cloud services as a means of sidelining IT organizations. IT was too slow, too expensive, or incapable of supporting new technologies. With a team of developers, line of business managers could deploy new applications and services in the cloud. IT has been fighting to retake control ever since. Today, IT is back in the driver's seat, according to new research by Enterprise Management Associates (EMA) ...

In today's fast-paced and increasingly complex network environments, Network Operations Centers (NOCs) are the backbone of ensuring continuous uptime, smooth service delivery, and rapid issue resolution. However, the challenges faced by NOC teams are only growing. In a recent study, 78% state network complexity has grown significantly over the last few years while 84% regularly learn about network issues from users. It is imperative we adopt a new approach to managing today's network experiences ...

Image
Broadcom

From growing reliance on FinOps teams to the increasing attention on artificial intelligence (AI), and software licensing, the Flexera 2025 State of the Cloud Report digs into how organizations are improving cloud spend efficiency, while tackling the complexities of emerging technologies ...

Time is Money

Robin Lyon

Time is an important measurement of IT service, especially if we use transaction time. Time is well understood and begins to answer some of the fuzzy questions such as slowness and what is performance. Of course there are other great questions in IT and one of the most dreaded is: "How much does this application cost?" This question creates countless man hours of work quickly running into the diminished returns of hours spent vs. accuracy.


Here is an enumerated example:
 
1. The cost of the actual application (license, lease etc.) + depreciation as appropriate.

2. The cost of maintenance agreements.

3. The cost of the man power supporting the application (often fractions of various head count.)

4. The cost of the dedicated hardware supporting the application.

5. The proportion cost of shared hardware and software such as Databases and SAN space.

6. The proportion cost of network equipment + and then network support hours.

7. The cost of data center space + power + environment.

8. The proportional cost of management.

9. The cost of shared services such as backup and monitoring.

10. …

As you can see this becomes quite a long list and rapidly becomes time intensive. I remember one organization that spent days deciding how to divide the data center power bill into the application numbers. The humorous or sad reality is thousands of dollars of time in meetings was used to shift increments of hundreds of dollars between the applications. What was disturbing is at the end of weeks of work by most of IT, a reasonable number was returned but what it didn’t show was one of the greatest and most forgotten costs of an application, that of user time. There are good reasons for this such as "user time is not part of the IT budget" or "how could we possibly calculate that number to any accuracy?"
 
Now that we have a method to understand transaction time, we can understand the cost of slow application. A simple formula is (the number of transactions) x (the average transaction time) x (the cost of loaded headcount per time).

This is not perfect, nor do I want to make perfection the enemy of good. It is reasonable to say if a user waits more than a minute for a result, they start multitasking. This can be corrected by ignoring transactions longer than one minute for this simple formula. There are other exceptions and all can be corrected for, but let’s take an example application and figure out some numbers.

We have an application that 600 users use 60 times a day with an average transaction time of 10 seconds. That comes out to 36,000 transactions or 360,000 seconds or 100 hours. HR tells us that our loaded headcount is 40 dollars an hour so we have $4,000 per day of lost time spent waiting for application response. This is a shocking number; it often exceeds the total cost from the tedious exercise of calculating an application cost. Other ways to think of this number are $88,000 per month or 12.5 people doing nothing but waiting every single day.
 
Fortunately, with information comes opportunity. There are several beneficial ways to use this discovered cost. One way is it may help reluctant organizations understand the importance of IT and good systems. When the cost is presented to the application owner, they might want to invest in improving application performance. Assume when looking at the application performance we find most the time is spent in the database. After a bit of testing we can see a 25% increase of performance by moving to a DB cluster and the cost of doing this is $100,000. Using our $88,000 cost of time per month we calculate the DB improvement pays for its self in 5 months ($88,000 x .25 x 5 = $110,000) in increased productivity.
 
This number is also a key management number. During the year end budget and priority cycle there are several ways to decide how to assign the all too few resources given to IT. Other than compliance and obsolescence, a strong argument is improving what will gain the most productivity, and money is the understandable measure to use.
 
Businesses run by understanding costs. Application management allows IT to start speaking the same language as rest of a company – one of dollars and cents. An old basic business adage is you can’t manage what you don’t measure.

Robin Lyon is Director of Analytics at AppEnsure.

Hot Topics

The Latest

According to Auvik's 2025 IT Trends Report, 60% of IT professionals feel at least moderately burned out on the job, with 43% stating that their workload is contributing to work stress. At the same time, many IT professionals are naming AI and machine learning as key areas they'd most like to upskill ...

Businesses that face downtime or outages risk financial and reputational damage, as well as reducing partner, shareholder, and customer trust. One of the major challenges that enterprises face is implementing a robust business continuity plan. What's the solution? The answer may lie in disaster recovery tactics such as truly immutable storage and regular disaster recovery testing ...

IT spending is expected to jump nearly 10% in 2025, and organizations are now facing pressure to manage costs without slowing down critical functions like observability. To meet the challenge, leaders are turning to smarter, more cost effective business strategies. Enter stage right: OpenTelemetry, the missing piece of the puzzle that is no longer just an option but rather a strategic advantage ...

Amidst the threat of cyberhacks and data breaches, companies install several security measures to keep their business safely afloat. These measures aim to protect businesses, employees, and crucial data. Yet, employees perceive them as burdensome. Frustrated with complex logins, slow access, and constant security checks, workers decide to completely bypass all security set-ups ...

Image
Cloudbrink's Personal SASE services provide last-mile acceleration and reduction in latency

In MEAN TIME TO INSIGHT Episode 13, Shamus McGillicuddy, VP of Research, Network Infrastructure and Operations, at EMA discusses hybrid multi-cloud networking strategy ... 

In high-traffic environments, the sheer volume and unpredictable nature of network incidents can quickly overwhelm even the most skilled teams, hindering their ability to react swiftly and effectively, potentially impacting service availability and overall business performance. This is where closed-loop remediation comes into the picture: an IT management concept designed to address the escalating complexity of modern networks ...

In 2025, enterprise workflows are undergoing a seismic shift. Propelled by breakthroughs in generative AI (GenAI), large language models (LLMs), and natural language processing (NLP), a new paradigm is emerging — agentic AI. This technology is not just automating tasks; it's reimagining how organizations make decisions, engage customers, and operate at scale ...

In the early days of the cloud revolution, business leaders perceived cloud services as a means of sidelining IT organizations. IT was too slow, too expensive, or incapable of supporting new technologies. With a team of developers, line of business managers could deploy new applications and services in the cloud. IT has been fighting to retake control ever since. Today, IT is back in the driver's seat, according to new research by Enterprise Management Associates (EMA) ...

In today's fast-paced and increasingly complex network environments, Network Operations Centers (NOCs) are the backbone of ensuring continuous uptime, smooth service delivery, and rapid issue resolution. However, the challenges faced by NOC teams are only growing. In a recent study, 78% state network complexity has grown significantly over the last few years while 84% regularly learn about network issues from users. It is imperative we adopt a new approach to managing today's network experiences ...

Image
Broadcom

From growing reliance on FinOps teams to the increasing attention on artificial intelligence (AI), and software licensing, the Flexera 2025 State of the Cloud Report digs into how organizations are improving cloud spend efficiency, while tackling the complexities of emerging technologies ...