Assessing ROI from AIOps

By – Pratik Kumar

(Digitate Client Services | Digitate)

“The following article is intended for Transformation Program Managers, Change Managers and Evangelists working specifically with AIOps adoption and value delivery. Additionally, it also provides a perspective to CIOs and CTOs on the benefits and challenges of AIOps adoption in their enterprise.”

Have you recently embarked on the journey of AIOps adoption in your Enterprise IT and asked yourself the following questions?

Does it really work in my environment?
What have I got?
Okay you have this capability, so what?

If you have, then you would have been assessing ROI on your AIOps implementation, only to start digging a rabbit hole in an attempt to justify the investment made. Let me simplify this for you.
Going by a very basic Wikipedia definition –

Return on investment is a ratio between net profit and cost of investment.

This definition intrinsically, attaches a ‘$’ value because that is how any business will measure profit. IT operations by its very nature is a cost incurred to any business and hence its culture is to justify it by reducing cost rather than maximizing revenue. Therein lies the conundrum.

AIOps should be seen as a multi-faceted, intelligent machine. Incorporating it into your IT operations has benefits that can and should be articulated in many more facets rather than cost alone. Some of them being:

  • Productivity – By enabling AI to perform autonomous actions, MTTR (Mean Time to Repair) reduction of up to 90% has been achieved for completely automated incidents. This is a drastic improvement over manual operations.
  • Customer Experience – A more resilient and adaptive IT Operations have a direct impact on your customer experience, especially on retail channels. Here are some statistics from a Forbes report on the value customer experience brings to businesses:
    • Brands with superior customer experience bring in 5.7 times more revenue than competitors that lack in it.
    • Customers switching companies due to poor service costs U.S. companies a whopping $1.6 trillion.
    • 81% companies view customer experience as a competitive differentiator.
  • Reduced Risk – The ability to predict, backed by historical knowledge of IT incidents, reduces the risk of an outage considerably. To put this in perspective, according to Gartner, “the average cost of network downtime is around $5,600 per minute. That is around $300,000 per hour.

To understand this in detail, let us for a moment consider where IT Operations personnel spend their maximum time and energy. Gartner defines ITOM as:

IT Operations Management (ITOM) software is intended to represent all the tools needed to manage the provisioning, capacity, performance and availability of computing, networking and application resources — as well as the overall quality, efficiency and experience of their delivery.

Anyone who has ever been inside an IT Operations center will tell you that to deliver this promise, IT operations personnel are staring at glass panes 24×7, displaying the metrics of their IT resources in operation. If I tell you that you can actually have an intelligent machine looking at those panes of glass (virtually) and keeps your far more talented personnel free to develop skills that add value to your business, how would you calculate the ROI then? The cost is straightforward – price of the product and the effort that goes into its deployment; but the profits are multifold.

The immediate visible profit is definitely cost saved by freeing personnel, which may or may not look “earth-shattering” for the business. Next comes efficiency achieved by removing the probability of human error due to aspects such as skill level, fatigue, stress, and so on. Now how do you extrapolate the efficiency improvement of a task into profits? To do this, the assessment needs to expand beyond IT Operations metrics and relate to the IT operations requirement.

Considering IT Operations as a business enabler, you need to be mindful of which LOB (Line of Business) or portfolio or domain you are servicing. For those LOBs, what is the value of your efficiency? Did this ensure that your distribution channels are not choked which in turn ensure that your customer experience got better? If it did, what is the ‘$’ value you put to your customer experience? If you have that answer, therein lies your ROI on AIOps.

Consider the following illustration:

Consider the following illustration

This diagram illustrates how the benefits of implementing an AIOps platform flows through the enterprise. To realize the potential business benefits, the enterprise needs to bring in a wave of change within itself and adapt to newer ways of working, before business value can be realized and quantified. With the implementation of an AIOps platform, the creation of an implementation team becomes imminent.

Creation of the right team, with well-defined roles and responsibilities along with the right governance framework is critical to the realization of potential benefits. Once you have this foundation in place, next comes transforming your IT Helpdesk teams who now have to co-exist with AIOps to monitor as well as continuously train it. Focused and empathetic leadership skills are required to manage this change. The intelligent machine should be seen as an enabler and a co-worker rather than a competitor.

As Lisa Bodell, one of the most renowned names in Innovation Management says –

“Change cannot be put on people. The best way to instill change is to do it with them. Create it with them.”

If the enterprise has successfully adopted the changes at all levels, only then can it get into tracking the desired value and potential benefits. It is not easy to assess this and hence, it is recommended to setup a focused group or a task force to drive this exercise. Many organizations today are setting up Centers of Excellence and Communities of Practice which implement a framework to drive and measure the adoption of this organizational change.

As mentioned earlier, value from AIOps is multifaceted. In the ITOM world, the immediate benefits will be measured as MTTR (Mean Time to Repair), MTTD (Mean Time to Detect), and other similar ticket-based metrics. These metric improvements create a direct and/or an indirect impact to business outcomes like customer experience improvement, cost reduction, risk avoidance and revenue assurance. All these outcomes can be quantified and only at this level, business value of AIOps adoption can be assessed. The milestone at which these outcomes are delivered defines the starting point of value realization. Until then, it is merely a cost to the organization.

For the visionaries, we can also go a step further and elaborate how improving these KPIs has given strategic advantage to the business, widening the gaps with its competitors. With metrics like revenue and margins, we arrive at the forever evasive ‘$’ value which gives the business the ROI it is looking for.

AIOps adoption is an enterprise wide cultural change and as quoted by Padraig Byrne, Senior Director Analyst at Gartner –

IT leaders are enthusiastic about the promise of applying AI to IT operations, but as with moving a large object, it will be necessary to overcome inertia to build velocity

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