Tricky Task: How to Measure DevOps ROI
The impact of DevOps on organizational performance is significant but could be even more if you measure your DevOps ROI. Find out how it can be improved here.
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DevOps accelerated the pace of software delivery and ensured the creation of a flexible environment. As a result, productivity enhanced, costs reduced, the period from conception to realization shortened, failure rate decreased, and recovery fastened. DevOps is an integral part of the development process. It ensures the seamless delivery of even the most complex solutions. The impact of DevOps on organizational performance is really huge just as it is, but it could be even more significant if you measure your DevOps ROI and find out how it can be improved.
Why Doesn’t the Classic ROI Formula Suit Calculating Potential Revenue From DevOps Implementation?
Beginning a new technology transformation, you should first measure its ROI to know if it’s worth investing in. This way, you can evaluate the progress from the implementation of new technology. Otherwise, how will you understand that you have achieved your DevOps plans? Also, if DevOps doesn’t work, ROI shows you the problem area so that you can transform your goals.
Calculating DevOps ROI is not a no-brain move. We can’t use a usual ROI formula, (((R-I)/I*100%), where R is for “return” and I is for “investments.” “R” has a lot to do with the value of increased productivity; “I” is also tricky because investments are continuous and consist of two parts:
The initial investment in implementing DevOps practices, which includes tools and training
Current re-investment in the DevOps team
Implementing DevOps requires calculations for technology acquisition and maintenance, data infrastructure rebuilding, replacing existing systems, and employee training. And since there are no companies that are not focused on the return of investments, you need a definite method to measure it. You can calculate DevOps ROI in two ways.
1. Calculating Downtime-Related Costs
Here you can measure possible returns from the cost of downtime avoided. Based on the study by IBM, the average cost of an unplanned application’s downtime on enterprises is about $400,000 per hour. And for the 35% of respondents, unplanned outages are a monthly practice. Thus, calculate DevOps ROI to understand how much money you can save by avoiding downtimes. Returns can be measured by summarizing mean time to restore (MTTR), cost of downtime, deployment frequency, and changing failure rate percentage.
To calculate *instinctools DevOps ROI, you need to monitor those metrics:
Philosophy: Simultaneous focus on people, processes, and technology
Performance: Includes high, medium, and low IT performance
Velocity: Measure efficiency, resiliency, and recovery of the infrastructure, release frequency, iterations, and automation level.
2. Calculating Value
The most direct measurable profit is the cost savings thanks to accelerating software delivery. The faster you release an application, the more competitors you’ll leave behind. DevOps can help you here.
Veritis State of DevOps Report demonstrates that yearly returns are possible from costs of unnecessary rework avoided. To measure them, summarize average salary and benefits for employees, technical staff size, and percentage of time spent on unnecessary rework.
Four Steps To Calculate DevOps ROI
Follow this methodology to get information about how efficient and successful the implementation of DevOps ideas is as well as insights about how it can speed up your company’s growth.
1. Measure Process Initiation Costs
Consider development environments and processes for CI and CD and be aware of data security, protection, and preservation. Besides, to understand necessary investments, you need to keep in mind the adjusting of employees to a new working environment apart from implementing the process itself.
The lower the number of manual tasks across DevOps practices is, the better. Therefore, at this stage, automation is a heavy hitter. However, here hides a tricky moment you should be aware of: the main bottleneck in DevOps value streams is continuous testing. To optimize DevOps ROI, you need to optimize test verdicts. Reducing this bottleneck also is a key to reducing investment costs. You should find a middle ground between the amount of testing and the level of automation. Don’t forget to add the cost of reaching the new level of automation to the cost of the tools.
2. Calculate Software Development Costs
Measuring cost savings becomes possible only if you understand your current costs. You should have something on which to base your calculations. You can start with the costs of software development per hour. To calculate this, divide the average yearly salary of a junior/middle/senior software developer, including the company’s benefits, by the number of working hours annually.
3. Measure Costs and Time Savings
Successful implementation of DevOps ideas and tools leads to overall financial improvement. These indicators should easily identify the impact of having DevOps in place. You can measure returns from costs of unnecessary rework avoided and returns from the cost of downtime avoided.
4. Calculate Profits
Finally, you should identify your beneficial areas by comparing the time savings and the cost of implementing a new process and tools in the short and long term. The first one is measured over a year, and the second is calculated for at least three years.
The final real-world formula to measure the return of investments from DevOps implementation looks like this:
Use it to understand at what stage of employment of DevOps practices you are, whether the process goes luckily, and the best ROI you can get from your DevOps investments.
Getting a Measurable Value
Implementing DevOps is important to keep up with your business competitors while measuring and improving DevOps ROI is essential to outperform them. Calculate DevOps ROI to make sure that you are not just going mainstream, but leveraging the new operational way to the fullest.
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