Enterprise Features Network Servers

Is it worth installing a monitoring system: a cost analysis

October 26, 2016

Is it worth installing a monitoring system: a cost analysis

This post is also available in: Spanish

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For some companies it can be difficult to put a monetary value on a monitoring service, especially if that company has never experienced a serious network or system failure. In the balance between cold, hard cash and a bunch of hypothetical variables which it’s your sysadmin’s job to sort out, you might be tempted to think it’s not an essential investment. On the other hand, if you’ve ever had a server go down due to monitorable elements misbehaving (overloaded data drives, security breaches), or experienced a non-functioning application slowing down your procurement process, you know how much business can be lost before the problem is diagnosed and your network is up and running again.

We’re going to attempt to formulate an equation to calculate the benefits of having a monitoring system in place. Not just any monitoring system, but our own multi-tasking monitoring application, Pandora FMS; equally at home monitoring HW and infrastructure, applications, servers and business processes, among its bag of tricks. The more of your network Pandora FMS is monitoring, the greater the benefits will be, but for now let’s just focus on network monitoring.

Before we begin let’s just take a quick look at what we mean by a network monitoring system, and how a business or organization could be affected by a network outage.

What is a network monitoring system?

Briefly put, it’s a system, or software tool, capable of observing all the different components of a network, both software and hardware, and reporting on their status and activity with the objective of avoiding incidents before they happen, or, if something does happen, to provide a solution.

So, for example, Pandora FMS can take highly abstract information, like the activity inside a network, and represent it graphically, giving you a clearer view of what’s happening. This information can be further segmented and grouped to give information about the different OSs installed, or the bandwidth they’re occupying, about the availability of your website, or the status of your servers, all delivered through a configurable dashboard. Most importantly, the system generates alerts, according to the parameters established by the user, which warn us of any changes in the elements or components being monitored.

Now we know a little more about what a monitoring system can do, let’s take a look at the different areas of our organization which could be affected by not having a monitoring system installed, and try to put a cash value on them.

Areas affected by not having a monitoring system

Human Resources and Financial Resources

Employees are often said to be the most valuable asset of any company, but that manpower comes at a cost.

System Administration team

How big is it? How many workers do we have checking on our network, and solving incidents? How much is our system administration costing us? A quick look at the payroll should give us our answer. Are the employees working around the clock to keep an eye on the network? Are they working with an outdated legacy system, requiring specialist knowledge of the idiosyncrasies of that system? Wouldn’t it be cheaper to automate that service, or to export to a homogenous, integrated system, and have it maintained by an onsite technician with remote backup support?

Incident resolution time

Another function of a network monitoring system is to assist the people in charge of maintaining the system to detect and solve problems as quickly as possible, which, thanks to their mapping and analytical capabilities, monitoring systems are very efficient at doing.

Call Centers

If a company operates a call center, monitoring the availability of our network is imperative, since a lack of availability is going to seriously affect the quality of the service. A monitoring system capable of detecting and resolving possible availability issues is going to be able to maintain, or increase, the traffic at that center.

Other employees

If your email server is down, plenty of employees are going to be affected, productivity is going to decrease and business is going to be lost. And that’s just email. Imagine the number of applications any organization is running and you have an idea of what it costs for those applications to be down.

Advantages for businesses

There’s a direct relationship between the correct functioning of our network and our balance sheet; depending on the kind and size of company the impact of an outage will be greater or lesser, for example:

  • Online sales: obviously a business that relies on an internet connection is going to be affected by a network outage, not only financially but also their reputation is going to be affected as well, seeing as they were unable to provide a satisfactory customer experience.
  • Companies using internal software tools: Any company with a BackOffice system and employees working in incident resolution, orders, purchasing, customer attention and so on, is going to be at risk of some seriously costly downtime if there is an outage. Monitoring those internal software elements is going to save a lot of money, and our reputation, in the case of an incident.
  • Network-based client services: Telemarketers, telecommunications companies, multimedia services, and so on, rely completely on access to a network to provide those services.

Intangible values

These are values which are difficult to calculate, or put a cash value on, for example brand reputation. It isn’t easy to evaluate the value of a brand, but we know it decreases if it’s associated with any of the situations described above.

Associated costs of monitoring software

We’ve seen how a network outage can adversely affect a company’s or business’s bottom line, either through loss of sales, downtime or damage to the brand reputation. Now it’s time to look at the costs of acquiring a network monitoring tool. Even an open source tool, such as Pandora FMS, has some costs associated with its installation and configuration which will form part of the equation we’re trying to work out. The chief costs are:

  • Licensing costs, in the case of Enterprise versions
  • Maintenance costs, and the cost of the internal support team. These costs will be higher if the software isn’t backed up by an external support team, who can give valuable help with the initial installation, and any subsequent upgrade installations, new releases and new functions, incident resolution, etc.
  • HW and SW storage for the monitoring tool.
  • Training in the use of the tool.
  • Consultation and/or post-sales services.

Calculating the ROI

One of the principal functions of a monitoring system is to detect problems in the network, and launch alerts to avoid any collapse or loss of availability.

Different manufacturers have different ways to calculate cost-savings based on having their monitoring systems installed, but there are so many variables and hypotheticals involved that a really accurate calculation is almost impossible to make.

The simplest evaluation to calculate is to look at the impact on employees of a network outage using the following parameters:

NT = Number of times there has been an outage in the past year

AD = The average duration of the outage

EA= Employees affected

CE = Cost of maintaining an idle employee

TOTAL LOSS = (NT * AD) * EA * CE

In the hypothetical case of a medium-size company of 100 employees

If the company experiences six outages a year, with an average duration of three hours each, affecting a third of the employees (33) and costing $25/hour we get the following result:

(6 * 30) * 33 * 25 = $148,500/year in losses due to outages, without taking into account any loss of sales or damage to the brand.

Does my organization need a monitoring system?

We’ve seen how it’s possible to get a rough estimate of the cost on our business of network non-availability and the usefulness of consulting with potential suppliers the viability and benefits of monitoring systems.

What to keep in mind when deciding which network monitoring tool is the right one for our needs

Installing a network monitoring tool is vital if we want to avoid losses related to network issues, and dedicate our employees’ time to more productive tasks. However, not every system is going to be the right one; the right tool for the job should be our motto, so keep in mind:

  • You should be able to deploy and configure your chosen tool rapidly and easily
  • It should be simple to maintain
  • It shouldn’t have any hidden costs

Keep in mind that as your business grows your monitoring system should be able to grow with it. It’s what we mean when we talk about scalability; the ability to incorporate new functions and new elements to monitor without implying an increase in the licensing fee.

Hidden costs can be taken to mean using an open source version rather than an Enterprise package. With open source there are no license fees, but there’s a higher cost in terms of the expert manpower needed to oversee the system. Keeping a high-level systems engineer on the payroll is always going to be more costly than having an integrated and supported package requiring only a systems administrator to keep an eye on things.

Hopefully, some readers will now have a better idea of the cost-saving potential of network monitoring, which, if we factor in other levels of monitoring, such as server, application or process monitoring, can only result in even more time and money saved.


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    3 comments
    1. Attilio Cuccato

      Very interesting but (6 * 30) * 33 * 25 = $14,850/year isn't correct. The result is $148,500. Do you agree? Thanks a lot Attilio PS ) Marketing hook?

      • Carla Andres

        Hi Attilio, Oooops! That was my fault! Thank you very much for you correction! Regards :)

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