Observability Forecast 2023 executive summery hero
Published September 2023
Author: Alicia Basteri, Principal Content Manager, New Relic
Executive summary
The third annual Observability Forecast report examines how the practice of observability is evolving, areas with the most and least amount of growth, how external forces are influencing spending and adoption, and how observability impacts the lives of technical professionals and the bottom line.
We surveyed 1,700 technology professionals—making it the largest, most comprehensive study of its kind in the observability industry. Learn more about this report, including what’s new, definitions, methodology, demographics, and firmographics.
The theme that stands out the most this year is the business value of observability. Other key themes include increased adoption and improved service-level metrics, such as fewer, shorter outages. Organizations are investing in observability to help achieve core business goals and better business outcomes, including operational cost savings and increased revenue. And it’s paying off.
The survey results show that observability continues to deliver a clear, positive business impact and a 2x median annual return on investment (ROI). And they indicate how observability can transform an organization’s business, technology, and/or revenue. Most respondents expected a significant negative business outcome without observability—and noted higher operation costs and revenue loss from downtime as the concrete financial impacts of not having observability.
In summary, organizations continue to see the business value of observability—and expect to invest more in it.
View some of the key findings below, download an infographic of the key findings, or dive right into the data.
Outages are happening less frequently YoY
Outages still happen fairly frequently but the proportion of respondents who said they happen once per week or more decreased year-over-year (YoY) by 36% for high-, 52% for medium-, and 63% for low-business-impact outages.
Outages are expensive—a third (32%) of respondents said critical business app outages cost $500K+ per hour of downtime. But those with full-stack observability experience a median outage cost that is 37% less than for those without.
Full-stack observability correlates to better outcomes again
Most organizations (67%) still haven’t achieved full-stack observability, but those that have experience improved service-level metrics. Results show that full-stack observability can lead to fewer, shorter outages and lower outage costs.
Observability deployment is on the rise
While most organizations still don’t monitor their full tech stack, this is changing with more capabilities deployed YoY and more planned for the future. Plus, full-stack observability increased 58% YoY. By mid-2026, at least 82% expected to deploy each of the 17 different observability capabilities.
Number of tools is decreasing but tool fragmentation persists
Organizations are using fewer tools than in 2022. The proportion using a single tool more than doubled, and the average number of tools has gone down by almost one tool. But tool sprawl is still a struggle despite a 2-to-1 preference for a single, consolidated platform (up from last year).
Observability delivers 2x annual ROI
In other words, respondents receive a median $2 of return per $1 of investment. In fact, most respondents (86%) said they receive value from their observability investment, and 41% received $1M+ total annual value. The business value of observability is clear.
Regarding business value, like many organizations, I try to save as much money as I can because I don’t have an open budget or checkbook. And when I talk to financial people and businesspeople, I have to justify and express the numbers. When you express the lack of observability in dollars and cents, you may create a profound statement.
Observability 2023 Forecast
To capture new insights into observability, New Relic partnered with Enterprise Technology Research (ETR) to conduct a survey and analysis for this third annual Observability Forecast report.
What’s new
The largest, most comprehensive study of its kind in the observability industry, we increased our sample size once again. We also added another country this year (South Korea) and updated the regional distribution. We repeated about half of last year’s questions to compare trends year-over-year and added many new ones to gain additional insights. And we added security monitoring to our definition of full-stack observability.
In addition, this year’s report is entirely online with updated navigation to help make it even easier to find the data you’re looking for.
Note that to avoid bias, we did not define observability in the survey.
Observability enables organizations to measure how a system performs and identify issues and errors based on its external outputs. These external outputs are called telemetry data and include metrics, events, logs, and traces (MELT). Observability is the practice of instrumenting systems to surface insights for various roles so they can take immediate action that impacts customer experience and service. It also involves collecting, analyzing, altering, and correlating that data for improved uptime and performance.
Achieving observability brings a connected, real-time view of all data from different sources—ideally in one place—where teams can collaborate to troubleshoot and resolve issues faster, prevent issues from occurring, ensure operational efficiency, and produce high-quality software that promotes an optimal customer/user experience and competitive advantage.
Software engineering, development, site reliability engineering, operations, and other teams use observability to understand the behavior of complex digital systems and turn data into tailored insights. Observability helps them pinpoint issues more quickly, understand root causes for faster, simpler incident response, and proactively align data with business outcomes.
A subset of observability, organizations use monitoring to identify problems in the environment based on prior experience that is expressed as a set of conditions (known unknowns). Monitoring enables organizations to react to these conditions and is sufficient to solve problems when the number and complexity of possible problems are limited.
Organizations use observability to determine why something unexpected happened (in addition to the what, when, and how), particularly in complex environments where the possible scope of problems and interactions between systems and services is significant. The key difference is that observability does not rely on prior experience to define the conditions used to solve all problems (unknown unknowns). Organizations also use observability proactively to optimize and improve environments.
Monitoring tools alone can lead to data silos and data sampling. In contrast, an observability platform can instrument an entire technology stack and correlate the telemetry data drawn from it in a single location for one unified, actionable view.
Observability 2023 Forecast
Monitoring is still fragmented and too many monitoring tools is a challenge, but organizations are using fewer tools than they did last year. We also see an increasing move toward and strategic preference for a single, consolidated observability platform.
And, while most organizations do not monitor their full tech stacks yet, more observability capabilities were deployed year-over-year (YoY), and more organizations have achieved full-stack observability.
In addition, though outages still happen fairly frequently and are expensive, observing more of the tech stack, achieving full-stack observability, and implementing observability best practices help organizations improve service-level metrics and get the most business value out of their investments.
Continue reading to find out more about the current state of observability.