Adopting a new toolset in a tech company can be the added catalyst your team needs to increase productivity. While you know that bringing a new tool (like cloud logging) will help your organization, you also need to convince either your superiors or financial managers by answering some questions. How is it going to help the bottom line? What’s the business case for it? Time to get down to the brass tacks.
We’re going to look at the specific case of log analysis management services — how to understand your return on investment (ROI), how to determine cost analysis and some general tips and tricks for additional qualitative returns.
If you have any kind of operations in place and in production, you’re definitely going to be generating a lot of logs. Then of course you’ll need to monitor these logs in one way or another. After ingesting them comes the next step of analysis. The question is how do you determine ROI for both yourself, your superiors and your organization?
Breaking Down ROI
The basics of ROI have their fundamentals set in the business and financial world. It is a performance measure that is used to evaluate how efficient an investment is compared to a number of different investments. In our case, it’s the investment is a cloud logging tool. In a nutshell, it is the return on an investment relative to your initial upfront costs.
The return on investment formula can be seen in the following equation:
ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
The idea is pretty simple. If you’re going to be investing in a service, will it bring more value than what you paid for it? Any by how much? This handy formula can be utilized as a ratio or a percentage. If the formula gives you a positive value, then you received positive value, and it was a good decision. If not, you need to reevaluate your spend.
So, for cloud logging tools, the question is — will your organization realize enough value (cost savings, time savings, additional revenue, etc.) to justify the cost?
First, let’s employ some quick math as an example before we head into the costs of a logging management product. Finance and team leaders want to see some objective hard data on why they should employ a new system.
Let’s start with a simple example. Let’s say you’ll be spending $100 /mo on a SaaS product that saves one engineer one hour per week. If that engineer’s fully loaded pay (salary, bonus, payroll tax, benefits, etc.) is $75 per hour, it saves the company $300 per month (assuming four weeks per month). Going back to our ROI formula:
ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
ROI = ($300 – $100) / $100
ROI = 2 (often expressed as 2x, or 200%)
These sorts of arguments form the basis of your business case and subsequent ROI calculations.
Cost of Log Analysis
In order to make a business case and set a projection of ROI, you’ll need two important pieces of data. The cost (upfront or ongoing investment you’re looking to get a return on) and the potential revenue or savings benefit. Here’s a look at costs in the cloud logging sphere to start.
In our modern business era, the majority of SaaS and technology companies offer their services usually in a recurring monthly subscription. LogDNA does this in its “pay as you grow” format. Once starting out your business case, you’ll need to take this into account, as your ROI can be determined on a fluctuating monthly basis — but with an estimate of your monthly logging volume and required retention, you’ll have a good estimate of your monthly cost.
There may also be other costs lurking about that you may need to address. Depending on your business or potential enterprise needs – you may need to shift resources within your IT department to full or part time log management (this is especially the case when utilizing the ELK stack). We at LogDNA ensure to minimize the initial setup costs — with installation through a ~5-minute installation process; and with onboarding through our natural language search. As seen with one of our customers at Open Listing:
“We push hundreds of Gigs of data per month into LogDNA and their “pay as you grow” pricing structure works perfectly for us. It acts as a major cost savings vs. storing all that on our own infrastructure (on-premise). Additionally, there is less to manage, and we don’t have to have someone managing all the data that is moving around. We are thrilled to have LogDNA take that data and make it useable for us quickly, on the cloud. Regarding integrations, all of the data we push goes into LogDNA using AWS cloud, which we are already on, so integration was a snap.”
Once you establish your costs, you can start to look into the benefits and further ways to maximize your returns.
Proactive Logging for Better Returns
There are two main questions you need to ask yourself about your log management to understand some pricing predictions.
- How much of your data will be logged?
If you are already producing logs and/or utilizing a logging SaaS provider, you should already have an answer to this. If not, you’ll need to make an estimate (and don’t worry, you can always change this later).
Your log files provide a play by play history of what your software is doing while in production. In both regulated and non-regulated companies alike, making a decision on what you need to log is an important step in determining costs. Meaningful events like regular maintenance settings, sales data and important alerts should all be factored in.
- What will your retention period be?
The retention period is how long the log data will be held on the provider’s servers before it is deleted. Keep in mind any regulations that your business operates under, and what you need to remain compliant. An example is any health administration or business that has to uphold HIPAA.
It’s grown increasingly more important for healthcare professionals and business partners alike to maintain HIPAA compliance indefinitely. Log files (where healthcare data exists) must be collected, protected, stored and ready to be audited at all times. A data breach can end up costing a company millions of dollars.
Qualitative Return on Investment
A great log management toolset offers numerous benefits. One is that you’ll be able to search through logs quickly and pinpoint production issues faster, which saves the engineering team time. Another is that the data can be put up in a visual dataset for others in the team to look at and collaborate on. Another way to save time.
This is another great aspect of building up a business case for log management ROI. How often do you waste time sludging through logs looking for what went wrong? What if you could significantly reduce time spent by letting the technology do the work for you? Not to mention the benefits it gives your many users and customers.
You’re definitely increasing your savings by reducing time spent fixing issues, but what about preemptively stopping problems altogether? With a sophisticated cloud logging system in place, you can find problems and reduce problems (such as downtime). Are you experiencing random traffic spikes? Are there a number of similar bug alerts at once? You can look for trends in your log files and determine the best course of action before something becomes a major problem. In the case of reducing downtime, you’ll avoid lost traffic, lost sales and decreased reputation.
One overlooked aspect of the right cloud logging system is that you can also use your logs to make your company more money. There are troves of data created by your app that you can use for valuable insights into your customer behavior. Opportunities are everywhere that help you take certain metrics and apply those to new business initiatives.
Maybe you see that signups on your app are more prevalent during a certain time of the week. You can research the market conditions around this and try to learn how to replicate this during a slow period. The possibilities are endless.
While this is difficult to quantify at first, you can apply the formula and sort out some trial ROI runs in the first months of using a logging platform.
Bringing it all Together
By now you can tell that estimating ROI is dependent on many diverse factors and will ultimately come down to you determining and setting up your own metrics. It’s not going to be as simple as calculating your site’s uptime. But that doesn’t mean you shouldn’t be able to calculate it.
Just going through the act of creating a business case and determining the effect a technical tool like a cloud logger will have on your bottom line is worth the time spent. The great thing is that you can get started for free and begin to understand your ROI without any worry of wasted spend. And after that, you can factor in the monthly cost. Even just a few hours per month saved will be a tremendous boost of productivity to your DevOps team and overall organization. So go ahead and get your ROI hats on, start deliberating and get the tools you need to keep you productive.