How network modernization creates measurable ROI

Business cases point to the results of network investments

When measuring the ROI of network investments, enterprises can realize direct and indirect returns. Most enterprises won't realize every return. It largely depends on how the organization conducts business.

Direct returns on investments

Some returns are easier to quantify than others. For example, if a company's e-tailing site is inaccessible because the network connecting the front end to the back end is down, that has direct and measurable costs. Essentially, when organizations prevent lost revenue during downtime, it can be seen as a return on the investment.

Any company should be able to compile an overall average cost per minute of downtime for these operations, as well as per-service and seasonally adjusted figures. A chief financial officer or chief revenue officer is likely to pay more attention to a network failure that happens during a rush, with its higher direct cost-per-minute-of-downtime, than to a generic scenario using an annual average.

It's also typically easier for IT staff to provide accurate estimates of the cost in staff and contractor time -- and therefore wages -- to restore network service.

Direct returns can also include penalties for failing to perform contractually obligated actions within a specified time. They might also result from a network-based breach that leads to the loss of client data, potentially resulting in fines, legal fees and settlements.

Indirect returns on investments

Other potential returns are harder to quantify, however. Take customer or staff satisfaction with enterprise systems, for example. Poor performance often affects both customer and user satisfaction. However, network performance isn't always a factor in system performance, and it might not be the most important.

Some aspects of poor performance, such as transaction failures caused by timeouts, are easy to track. These failures often occur due to packet loss or increased latency, which are more likely to cause transaction-level problems as applications shift to complex architectures. It's possible to quantify the return gained from avoiding episodes of poor performance and to estimate the potential added revenue from improved overall performance.

Indirect returns can include expenses like the money spent paying non-IT staff for time they are unable to spend on their jobs when the network is down. Some parts of a company, like sales, can quantify this kind of idle-time cost, but many other parts, such as HR or financial services, can't.

Measure to manage

It's crucial to have relevant data to understand the return on any investment. Important network metrics to evaluate include the following:

• Service availability. Service accessibility rather than component uptimes.
• User-level performance. Service performance at the user-relevant level, usually transaction rates and transaction completion times.
• Network metrics. Network operations metrics, such as mean time to repair and mean time to identify, measure IT's ability to address problems in the existing environment.
• Service flexibility. The time it takes staff to spin up new services.
• Network-based breaches. The number of network-based breaches and the median time to contain a breach and recover from a breach.

Similarly, CIOs will need to look at the following stats to determine the ROI of network investments:

• Revenue at as granular a level as possible -- dollars per transaction, dollars per minute and dollars per staff member.
• Customer satisfaction.
• Employee satisfaction, leading to greater productivity and less turnover.

Why investing in the network pays off

For most businesses, the ROI of a network primarily comes in the form of saved costs. However, CIOs can point to other returns, even if they are more difficult to quantify. A well-run modern network can make a business more flexible, while deep automation and resilient security reduce operational costs and cybersecurity risks.

A modern network can also improve employee satisfaction. When a network has fewer incidents of downtime and better application performance, it can decrease turnover and the associated costs related to it. In addition, when employees have less frustration with the network, it can translate to greater trust in the CIO and overall IT team.

Investing in the network can make it high-performing, secure and reliable, generating significant returns. CIOs, when building a networking ROI business case, should cite how these investments will avoid costs and deliver positive benefits.

John Burke is CTO and a research analyst at Nemertes Research. Burke joined Nemertes in 2005 with nearly two decades of technology experience. He has worked at all levels of IT, including as an end-user support specialist, programmer, system administrator, database specialist, network administrator, network architect and systems architect.