Building an AIOps RoI Calculator for CIOs.

Mar 13, 2023. By Anil Abraham Kuriakose

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Building an AIOps RoI Calculator for CIOs

AIOps is a significant transformation. And like all enterprise transformations, it requires buy-in and committed effort from all stakeholders. To pull this off, CIOs need to engage all the stakeholders - not just the C-suite but also the middle managers. One straightforward way to convince all these stakeholders is to show clear, demonstrable Returns on Investment(RoI). While the top brass cares about the NPVs of an investment, the middle managers care about the time saved and efficiency gains. In today's blog, we draw a roadmap to derive RoI that is of interest to all stakeholders.

RoI of AIOps due to efficiency gain

Efficient operations are the main draw of AIOps. It is the reason it has become a buzzword in IT Operations. Let us look at AIOps efficiency metrics in terms of its three elements - Observe ( for Monitoring and finding incidents), Engage (for human interaction and support), and Act (for automation in incident remediation and service fulfillment).

Observe with AIOps

Clearly understand the impact on incident response teams. Mean Time to Detect(MTTD) reduction: All incident handling times are divided into two elements - Time to Diagnose and Time to Repair. MTTD is a more straightforward way of looking at incident recognition teams' speed in identifying the cause of issues. AIOps observe elements like root cause analysis rapidly speed up the time to detect and diagnose incidents. Monetary value of MTTD reduction: Monetary value is easily obtained by computing MTTD times the cost of the incident management team's time. This cost is proportional to the number of incidents in your organization, making it a clear indicator to show potential gains from AIOps. User-generated Ticket Counts Reduction: By observing the environment and identifying issues faster, AIOps drives support teams to fix issues before users are affected by them. This can lead to a reduction of 35-60% in ticket counts. Tool Consolidation: By using a single AIOps platform for observation, engagement, and automation, enterprises can reduce the number of tools needed to manage their IT infrastructure. This means a direct reduction in employee time trawling through tools to find incidents as well as a reduction in licensing and tool costs.

Engage with AIOps

Track the performance of L1 Virtual Agents. L2 Escalation reduction: L1 support's limited expertise and the inability to handle the vast number of tickets leads to L2 escalations. This leads to more time spent on fixing issues at L2 that can be solved at L1. A well-trained, cognitive L1 virtual agent can reduce these escalations in measurable ways. Mean Time to Resolve(Service fulfillment) reduction: L1 resolution times are typically the simplest way to glean an L1 support team's effectiveness. And this is no different with an L1 automation tool either. Mean Time to Resolve (request fulfillment) is one of the best metrics to show engagement efficiency. FTE reduction: One of the cleaner ways to derive the monetary impact of Engagement efficiency is to look at the percentage reduction in the number of FTEs required to maintain L1 support at the same quality.

Act with AIOps

Measure the benefits of automation. Mean Time to Repair(incident management) reduction: MTTR covers both detection and repair times. AI-powered agent for incident auto-remediation automatically takes the right action to repair after incident recognition. This creates a huge, visible reduction in MTTR. AI-enabled tools can drive a reduction of 25-35% in MTTR. Downtime reduction: Downtime has a very direct monetary impact. Downtime costs can vary between $ 100,000 to over $1 million per hour (Uptime Institute), depending on the organization's size. Cutting downtime directly affects every other profitability metric. By automating incident recognition and repair, you are directly cutting down on downtime.

RoI of AIOps in IT Data Security Investments

The cost of security incidents can vary wildly between organizations, but averages can act as a helpful guide. According to industry research, the worldwide average cost of a data breach in an enterprise is close to $4 million. This cost is much higher in sensitive industries like Healthcare, Pharmaceuticals, and Financial Services. The estimated cost of security incidents in your organization is one of the items to keep in mind while planning an AIOps investment.

RoI due to Customer Satisfaction

In addition to efficiency and security, AIOps tools can directly impact the top line by driving better consumer satisfaction and, consequently, loyalty. This can be measured in terms of end-user experience with Apdex scores, response times for customers, and quality-of-service surveys. Understanding the AIOps adoption impact on the customer is one of the best approaches to consider the long-term impacts on your enterprise as well.

RoI of Better Planning

The best AIOps platforms also enable managers to plan better. Models trained on systems usage data can accurately predict future usage months ahead of time. This can be measured in the Reduction of incidents due to capacity shortage and Capacity Forecast Accuracy.

All of the above metrics ultimately add up to a single goal for the enterprise - Total Cost of Ownership reduction. TCO creates a layer of abstraction overall internal elements and describes the overall impact on your enterprise. It is the final metric to measure the influence of AIOps adoption strategies. AIOps tools can drive a TCO reduction of 25-45%(Everest research) for large-scale organizations over a 4-5 year period.

68% of large enterprises do not clearly understand the impact of AIOps solutions and more have tried and failed with internal projects. Two of the key challenges cited for large-scale adoption are lack of relevant performance metrics and internal resistance. As CIOs look to investigate new opportunities in their enterprise, they can drive cultural change in the organization by using these performance metrics as a strong endorsement for AIOps.

To learn more about Algomox AIOps, please visit our AIOps Platform Page.

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