New Relic 2023 Observability Forecast Reveals Rising Outage Costs

Ever wonder what the cost of IT downtime actually is? According to the New Relic 2023 Observability Forecast report, the median annual cost of an outage has now reached $7.75 million.

New Relic is an IT observability company that Francisco Partners and TPG recently took private in a $6.5 billion deal. New Relic's 2023 Observability Forecast, which surveyed more than 1,700 tech professionals globally, provides detailed insight into the state of observability and IT operations today.

Given the high cost of downtime, increasing investment in observability tools and practices is becoming a priority. The research shows that achieving robust observability across infrastructure and applications pays major dividends.

New Relic's report reveals that implementing full-stack observability can reduce the median annual outage cost by 59% compared with only partial or no observability.

Peter Pezaris, chief strategy and design officer at New Relic, defines "full-stack observability" as "the ability to see everything in the tech stack that could affect the customer experience. It's based on a complete view of all telemetry data."

The report predicts broad adoption of observability capabilities over the next few years. By 2026, more than 80% of those surveyed expect to have deployed various observability tools across their technology stack.

Related:Applied Observability: Converting System Performance to Business Performance update from October 2022

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Key findings of the report include:

"The biggest surprise in the report was that the median annual cost of high-business impact IT outages has reached an astronomical $7.75 million," Pezaris told ITPro Today. "We knew that outages are expensive, but the data makes it clear that in a business environment in which most interactions with customers, suppliers, and business partners are conducted digitally, downtime has become an existential threat."

The IT Operations Failures That Contribute to High Costs

According to the report, about a third (32%) of respondents experience high-business-impact outages once per week or more. Forty-four percent said it took more than 30 minutes to detect these outages, and 60% said it took more than 30 minutes to resolve them.

"IT operations failures, errors, downtime, and outages are bound to happen," Pezaris said. "Finding the source of an error or failure isn't as straightforward as you might assume."

Observability tools collect and analyze the metrics, logs, and traces generated by IT infrastructure and applications at scale. That said, Pezaris noted that many organizations still struggle to achieve the comprehensive view of the IT environment needed to avoid costly assumptions and mistakes. According to New Relic, organizations with full-stack observability consistently have fewer outages than organizations without full-stack observability.

Key Metrics for Reducing the Risks of an Outage

According to Pezaris, the key metrics organizations should be carefully monitoring to help reduce the risk of an outage and the impact of inevitable outages are mean time to detection (MTTD) and mean time to resolution (MTTR).

He explained that MTTD represents the average time it takes to identify that a problem has occurred, while MTTR measures the time to remediate the underlying issues. The two metrics serve as a benchmark for understanding an organization's level of awareness of the status of its systems and the speed with they can diagnose and act upon problems.

According to the Observability Forecast, organizations with full-stack observability are more likely to experience the fastest MTTR and are 19% more likely to resolve high-business-impact outages in 30 minutes than those without full-stack observability. 

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New Relic's 2023 Observability Forecast Details Full-Stack Observability Benefits

According to New Relic, organizations with full-stack observability had lower median outage costs overall.

Organizations can achieve full-stack observability by deploying specific combinations of observability capabilities, including customer experience monitoring/digital experience monitoring, services monitoring, log management, environment monitoring (back end), and security monitoring, Pezaris said.

According to New Relic, adopting a data-driven approach for end-to-end observability helps empower engineers and developers with a complete view of all telemetry data so they don't have to sample data, compromise their visibility into the tech stack, or waste time stitching together siloed data.

The report also found a growing need for observability overall. Pezaris explained that modern applications typically run in the cloud and depend on hundreds of components, each introducing additional monitoring challenges and security risks.

"With cloud adoption, cloud-native application architectures, and cybersecurity threats on the rise, it's not surprising that an increased focus on security, governance, risk, and compliance was once again the most frequently cited strategy or trend driving the need for observability," he said.