All digital businesses have their own particular business and operational requirements, but three basic needs crop up over and over again: the necessity to operate faster and more efficiently, the requirement to build revenue from digital businesses, and the imperative to find and capitalize on new digital opportunities.

New Relic is built to help organizations understand, manage, and minimize the poor performance, slow transaction processes, and application errors that can cut into digital revenues. By helping you identify the root cause of such issues more quickly, New Relic can help boost productivity and control development and other costs. Just as important, those efficiencies free up resources for the innovation required to drive new business opportunities.

To help our customers understand the complex factors at work here, and how New Relic can help you deal with them, we’ve created five equations that describe the business value of New Relic and help quantify its influence on both revenues and operating expenses.

Let’s start with a useful new KPI we call “Lost Customer Time.” Critically, LCT doesn’t just measure the impact on external customers but also how it affects internal staff, costing companies millions in lost productivity.

1. Customer experience: speed x errors = Lost Customer Time

To help our customers better understand the customer experience they’re delivering, New Relic developed the concept of “Lost Customer Time” as a new key performance indicator of customer satisfaction. This new KPI multiplies system transaction time—measured in a variety of ways, including page-load time, cart-checkout time, query-completion time, and so on—by the number of errors an end user experiences.

Typically, the more time a customer loses, the higher their dissatisfaction with their user experience. Lost Customer Time can weigh heavily on brand perception, customer attrition, and user adoption of internal systems. We believe this new KPI will prove to be a far stronger indicator of satisfaction with the digital customer experience than are Net Promoter Scores.

New Relic is built to help you boost application performance and reduce errors. Just as important, though, New Relic helps you identify exactly where in your entire technology stack those slowdowns and issues are occurring—helping you find the needle in the haystack. That enables your development and operations teams to resolve latency or service degradation issues more quickly, ideally even before they contribute to Lost Customer Time.
Customer Experience equation chart

2. Measuring efficiencies: volume x time = headcount

Roughly speaking, the number of system issues, bugs, and outages a site or application experiences, multiplied by the amount of time it takes to resolve those issues, directly impacts the number of IT professionals that a business requires to maintain that app.

We have seen many customers use New Relic’s full-stack monitoring to help drive down both the number of issues they experience, and the time it takes to troubleshoot and resolve those issues by 30% or more—irrespective of where in the stack the problems originate. Fewer issues and faster mean time to resolution (MTTR) are key to helping IT departments reduce the headcount needed to resolve these issues, liberating resources to focus on innovation dedicated to driving revenue.

Measuring Effiicencies equation chart

3. Measuring performance: customers x spend = revenues

This one is simple: more customers who spend more money boost revenues. But that simplicity doesn’t matter if you can’t measure—and optimize—metrics like revenue leakage, customer attrition, competitive performance, and so on. New Relic is designed to enable you to do just that, helping you quantify the financial impact of system issues and measure the changes in customer spending.

Measuring Performance equation chart

4. DevOps metrics = more frequent software releases

Measuring the effectiveness of DevOps approaches and practices is notoriously difficult. But many New Relic customers tell us that they observe significant operational and business benefits from including New Relic in their DevOps initiatives. While every company’s situation is different, customers have seen improvements such as 50% faster time to market with new products and features, 30% less redundant work and—significantly—twice as frequent software releases.

Notably, many customers using New Relic to support their DevOps practices also see business value, including reduced spending on IT operations (~30%) and development (~25%) needs. Of course, every customer’s results will vary, depending on their internal policies and processes as well as how they leverage the data they derive from using New Relic.

DevOps Metrics equation chart

5. Operational performance => business performance = monitoring maturity

As illustrated in the chart below, every company has its own place on the monitoring maturity curve, from basic IT ops monitoring through instituting a DevOps culture to achieving true operational/business alignment. But most organizations still sit in the bottom third of the curve, to the left of the DevOps Culture marker. That means they still monitor applications or systems independently, and are not yet able to connect inherent dependencies such as APIs, virtual machines, networks, and so on.

This level of maturity often leaves companies with unanswered questions. A company may have trouble completely analyzing—and thus prioritizing—the full scope of a system issue; for example, including its impact on revenues or customer experience.

Operational to Business Performance chart

[click to enlarge]

New Relic can help organizations move up the curve toward monitoring maturity and business alignment. At the same time, the full value of New Relic is unleashed as customers move up the maturity curve toward complete alignment of operational and business performance metrics. At that stage, enterprises are better equipped to prioritize their development and operations resources to address the most important issues, an essential step toward optimizing efforts to grow revenues and manage costs.

Rob Peterson is Senior Director of Business Value and Strategy at New Relic. Rob has 21 years of experience building and managing highly effective organizations in finance, technology, and support for brands like American Express, eBay, and Qwest Communications. He has led financial planning departments with oversight of budgets ranging from $1.4M to $1.27B, including operations departments of 100 employees and technology teams with 23 analysts and engineers. Rob built the Global Resource Planning group for the world's first major e-commerce platform and consults for various e-commerce startups to develop their business and technology strategy. Rob has bachelor’s degrees in both accounting and economics and an MBA from the University of Utah. View posts by .

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