The Real Cost of Application Performance Management (APM) Ownership


APM doesn’t need to cost what it cost 10 years ago.  Today, the costs of APM ownership can vary significantly depending on what solution you deploy. As the saying goes, “Buyer Beware.”

In addition, there are four ownership costs to be evaluated before making a purchase, three of which may not be obvious and may lead to unpleasant surprises.

  1. APM Software Licenses
  2. Hardware/System Software Required to Operate APM Software
  3. APM Deployment & Instrumentation Costs
  4. APM Ongoing Maintenance Costs

Simply put, if an APM solution requires extensive configuration or hardware to monitor your applications running in production, then the total cost of ownership will be significantly higher than the initial cost of just acquiring APM licenses.

Many organizations evaluate software offerings by their “time to value” and rapid ROI.  If your organization thinks this way, you may want to consider all costs that can accumulate over time. The last thing you want is to make APM shelf ware in your organization because it’s too costly or time consuming to deploy. If you already own an APM solution, ask yourself this question: why isn’t it deployed today in production across your entire application portfolio? I bet effort, complexity, and cost are top of your list for this lack of coverage.

Here are some useful tips to evaluate the expected costs in each of the four areas.

1. APM Software Licenses

This is probably the most obvious cost to evaluate and compare across APM vendors in the market place today. The problem for buyers is that APM license prices can differ significantly between vendors depending on the complexity and components of each solution. Most vendors will often charge per CPU, JVM or agent depending on their pricing model, but some vendors may also charge separately for licensing their management server and other add-ons/powerpacks. It’s therefore worth checking what you are getting and what you aren’t when presented with a vendor’s quote.

It is also important to consider that some APM vendors offer only a traditional perpetual licensing model with a large up-front payment and an annual maintenance/support fee.  The downside of this option is that it can create a shelfware risk if the software doesn’t get widely adopted within the organizations. Modern vendors offer subscription licensing models which benefit buyers with an ability to “rent” the solution for set time frame and validate that it works as designed in your environment before committing to a longer-term agreement.  Some vendors provide the choice of either option.

For calculating and comparing license costs lets use the following table, which provides insight into how APM costs differ across solutions:

License costs shown are approximated based on information made public on the Internet at DynaTrace, CA Wily and AppDynamics. Note: pricing shown is US pricing which is different to pricing in EMEA and Asia-Pacific.

It’s obviously worth pointing out that the license costs above reflect list prices, and of course you’ll get a cheeky discount if you say play golf, have dinner or high five your APM vendor of choice. It’s also true that you may get APM licenses thrown in for free as part of a larger enterprise license agreement (ELA) if your company is buying more than APM from the vendor. What is interesting is the range of APM license costs across vendors–with many choosing to still charge upwards of $8,000 per JVM or agent. For a 100-node application, that’s going in for a million dollars just to buy APM licenses. And we haven’t even arrived yet at the cost of support, deployment and solution maintenance.

No matter whether you pay for your APM licenses or get them for free, you’ll typically be required to sign up to a support & maintenance agreement. This is often a three-year contract, which means you’ll pay another 20-30% of your perpetual APM license price per annum. It is important to calculate the 3 or 5 year total-cost of licenses and maintenance when making a purchase decision.

Subscription pricing options on the other hand provides you with more pricing flexibility so you only pay for what you need or use. Subscription based pricing is usually an annual subscription, and maintenance/support is included in that annual subscription price.  Thus, there is no separate annual fee for maintenance/support.  With subscription license, you have the option to continue using the APM solution and renew on an annual basis, or quit with no penalty or additional costs.

Important Note: It is always advised to compare the 3-5 year cumulative costs of the vendor’s subscription or perpetual license options.  Typically, if you are already convinced that the software will work in your environment and you intend to use the APM software for many years, perpetual licenses can actually be cheaper than subscription licenses at the 3-4 year break even point.

2. Hardware/System Software Required to Operate APM Software

On-Premise and SaaS Application Performance ManagementThese costs depend on whether your APM infrastructure (management server, database, collectors) will be deployed on-premise are alternately provided by your APM vendor as a Service (via SaaS). The cost savings alone for going the SaaS route can often be huge as you’ll conclude after reading through this section.

If your APM solution install is on-premise, the next step is to identify how much hardware and capacity your APM solution will need in order to monitor your application(s). All applications are unique and different by user concurrency, transaction throughput, and infrastructure size. The more you want to monitor the more capacity you’ll need–and the more capacity you’ll need, the more hardware you’ll need to purchase and manage over time.

So let’s take a quick look at what hardware costs are typical for installing APM solutions within your organization.

For calculating hardware cost let’s assume the following:

  • Large Server = 16 core, 32GB, 4TB Disk, $15,000
  • Med Server = 8 core, 16GB, 2TB Disk, $7,500

APM Solution A – requires 1 large and 2 medium physical servers (1 mgmt server, 1 database, 1 collector) to monitor 400 JVMs at a cost of $30,000.

CA Wily – requires 1 large and 4 medium servers (1 MOM, 4 collectors) to monitor 400 JVMs at a cost of  $45,000.

AppDynamics On-Premise – requires 1 physical server (1 mgmt server including embedded database) to monitor 2,000 JVM’s at a cost of $15,000.

AppDynamics As a Service – no hardware purchase nor installation required.

Wily vs AppDynamics Hardware costs

A key conclusion here is that it’s relatively cheap to monitor one or two small applications, but then it becomes very expensive to monitor large or multiple applications as APM deployment increases.

The other conclusion is that hardware costs disappear entirely when a customer chooses a Software-as-a-Service APM solution. As an example, AppDynamics monitors a customer’s web application that uses over 4,000 Amazon EC2 nodes to deliver on quality of service goals. In this example, our customer does not have any APM hardware or system software costs because they are using our SaaS deployment option.  If this customer had gone with another APM vendor’s on-premise solution, the customer would have to pay more than $250,000 in APM related hardware costs.

Without this ease of deployment and high scalability, the hardware and admin costs for our APM solution might have made this APM deployment prohibitive from the start. If we look at the scalability of solutions A and B, it’s entirely possible to budget $250k for hardware alone to support such a deployment. That capital expenditure then becomes a depreciating asset over-time, which will probably be replaced after 3 to 5 years.

That is not the bad news, though. Just like your applications, your APM solution needs high availability, DR, and failover. What happens if your APM management server, database, or other components fail? You therefore need to purchase or provision spare capacity, which can be used by your APM solution to failover should failure occur. Remember, APM solutions are read/write intensive applications and rely heavily on processing power and Disk I/O. Again, for APM vendors that provide their solution via SaaS, all this high availability and additional cost and complexity is absorbed by the vendor with the customer just paying an annual subscription.

On top of the purchase costs, now look at the amount of physical servers you need to provision with software, maintain, and support just to keeping the APM solution operational:

You also need to factor in software licenses for physical servers, which require a commercial database like Oracle, SQL Server, DB2 or Sybase. Many APM solutions require these for scaling beyond 25 to 50 application tiers. For example, an APM database requiring Oracle 10g Enterprise Edition on an server with 8 cores is $47,500 list price from Oracle. If you have multiple database servers, then this cost can easily increase to over $100k.

The conclusion here is that many APM solutions can be expensive to own from a hardware and capex perspective depending on how well they scale. If you are looking to minimize these costs, then factor in your APM deployment goals for the first two years of APM ownership and make sure your APM solution can scale. APM as a Service becomes an attractive proposition as this deployment option costs zero and significantly cuts your time to value.

3. APM Deployment & Instrumentation Costs

Important Note: This is probably the largest hidden cost when deploying legacy APM solutions. This is also the most common “unpleasant surprise” post-purchase.  It is in the buyer’s best interest to ask the vendors a lot of very detailed questions about this topic.

Application and Agent deployment might sound simple, but it’s actually where the bulk of time, effort and cost is spent when deploying APM.

Important Vendor Trap #1 to Avoid: If you only evaluated the APM solution in a test environment and not in production, you may not have seen the complexity required to configure the APM solution’s instrumentation to avoid excess overhead.  Why?  In a test environment, where you may not care as much about the APM solutions impact on your app’s performance, the vendor may have used a high-overhead “dev mode” that  requires almost no configuration. Be demanding with the vendor and ask them to spell out the exact steps that need to occur when deploying the APM solution on a production application.

Important Vendor Trap #2 to Avoid: Another trick pulled by some APM Vendors is that they will show you basic application visibility out-of-the-box with little configuration required. Legacy APM solutions have a default “evaluation” setting that only monitors 10% of classes and methods by instrumenting standard interfaces like servlets, EJB, web services, JMS and JDBC. What they are hoping is that you won’t notice how few classes/methods that you can see in this mode. Why is this important? This basic visibility is insufficient when it comes to finding the root cause of performance issues because your application can contain thousands of classes and methods.

The important conclusion is that legacy APM agents require manual instrumentation and manual instrumentation is a very technical and time-consuming task to do correctly. It is time consuming because the cost of getting it wrong are high – you can crash or significantly slow down your application. Thus, many APM vendors provide instrumentation consultants that may spend 1-2 weeks with you to make the appropriate trade-offs or compromises between visibility given and overhead created. This intelligence for monitoring therefore has to come from an APM administrator or the developers that built your application, and this knowledge transfer sadly isn’t a five minute job. Even worse, it is not a one time job either, given that your applications likely evolve several times a month or year with agile releases and code changes. Your instrumentation will get out of date quickly if you don’t update it.

Fortunately, not every APM solution relies on “manual instrumentation” with manual configuration of “PBD files” or “Sensor Packs.”

The cost of agent deployment is therefore related to the complexity of the agent install itself and the configuration required to get the visibility you need in production from your APM solution. For APM solutions that require extensive configuration, some vendors recommend doing this in a test environment so you can verify visibility and agent overhead prior to any production deployment. On the other hand, other APM solutions require minimal configuration and can run out of the box in production with complete visibility so the effort and cost of deployment can vary significantly.

Let’s look at the common tasks and effort (mins) associated with monitoring an application in production with, say, 200 business transaction types and 25 nodes:

The effort (time) allocated to each of the above tasks is pretty conservative and will of course vary across APM solutions. While a week might sound like a short amount of time to monitor an application, it’s worth pointing out that this assumes all tasks can be carried out sequentially with no delay. In reality, this is often impossible. For example, finding the right people in development to sit down and tell you what classes and method to instrument could take a few days depending on their schedules. It’s the same case with finding a load test environment that’s available; not every organization has a pre-production environment for every application. If one is needed, it might need take weeks to provision or book. From speaking with customers who have owned first generation APM solutions, in the past these tasks can sometimes take weeks or months before an application is successfully monitored in production. It’s this lack of solution agility that limits the value an APM solution can have in production and for your organization. Time to value is therefore critical for any APM solution if it is to deliver the benefits you need when you need it the most.

Sadly, the effort and deployment cost doesn’t stop there. Practicing agile development methodology increases the frequency of change within an application production environment. If an application code base changes, it can significantly alter the components of an application and cause any APM configuration, monitoring and dashboards to become out of date. For example, new business transactions might be introduced and need defining, along with their thresholds and associated classes and methods for instrumentation. While re-configuring an APM solution for an agile release is less than configuring for a new application from scratch, it can still take several hours of effort. Depending on your frequency of application releases in production, it’s certainly worth taking this additional cost into account when evaluating APM solutions.

Remember, if you or your team doesn’t have the cycles to deploy or maintain your APM solution, then you’re easily looking at $2,000 per day per APM consultant depending on your deployment goals and objectives. While this may be acceptable costs for many organizations, professional services simply adds to the total cost of ownership of APM across the board. So if you want to get economies of scale and an ROI for APM, you have to look at the bigger picture and factor in all spend.

4. APM Ongoing Maintenance Costs

Some APM vendors deliver at least one major and one minor release every 12 to 18 months depending on their ability to innovate. These releases will typically contain new features and updated platform support so they can monitor your application as you upgrade your application middleware, infrastructure and databases. The simple question here relates to how much it costs to keep your APM solution current. How much effort does it take to upgrade all the components of your APM solution? Answers to these questions really depends on how big your APM Solution hardware install is and how many applications and nodes you are monitoring. If you have one management server and one database with 25 agents, then the cost will be reasonably low. On the flip side, if you have ten management servers, ten databases, and 2,500 agents, then the effort and associated cost could be significant.

Solution upgrades are also a primary reason why APM as a Service is an attractive proposition for organizations, as it limits the effort and cost associated with an upgrade. The APM vendor in a SaaS deployment deals with all the upgrades of management servers, databases, and APM infrastructure to ensure all components (excl. node agents) are correctly upgraded for their customers.

Depending on how many components your APM infrastructure has, you could be looking at a two to three week full-time project just to upgrade your APM solution every year so its up to date and can monitor your agile and evolving applications.


The real cost of owning application performance management isn’t just related to purchasing or acquiring software licenses. Total cost has a more direct relationship on how reliant an APM solution is on its administrator or users who must configure, deploy and maintain the APM solution over time. Time is money: the more time you manage your APM solution, the less time you’ll spend managing your application performance. The less time you spend managing application performance the less your ROI will be. APM must therefore be cost effective to buy, deploy, use and maintain.

When we built AppDynamics, our mission was to simplify the way customers managed application performance. We felt our APM solution should be plug-and-play versus the traditional model of plug and keep paying. We’re really a big fan of auto-discovery and automating mundane manual tasks so that our customers can focus on managing application performance rather than managing their APM solution. If you don’t believe us, then you can download our free product AppDynamics Lite or take a 30-day trial of AppDynamics Pro and see how easy APM can be.

So, how much do you value your time and money when it comes to owning APM?

App Man.

  • snsumner

    All your logic is sound and well explained.  Unfortunately, what I’ve found is that majority of software purchases are based on superficial relationships not on technical merit. One thing is very apparent in to today’s economy, that selecting a bad solution is a career ending move.  Most of the IT lemmings today will not buck the system and almost always go with the status quo (IBM, HP, CA), which is a sad state of affairs. Any solution from them might be a safe bet to the untrained eye but what they don’t realize is that everyone of these companies are really just selling services not software!  The best margins in the industry is services everyone knows it, look at what HP is doing for Pete’s sake.  The first question you should ask at software company that you are considering making a purchase with is how many Pre-Sales Engineers do you have vs. Professional Services Engineers?  If the ratio is not 4-to-1 then you know you are making the wrong decision.  Cost of ownership is the real son of the bitch not perpetual license yet most people don’t figure it out until its too late.  Thus the reason why most golfware turns into shelfware.  Food for thought.

  • App Man

    Good points Sir!

  • Chiquirin


  • Pingback: Gartner publishes 2011 Magic Quadrant for Application Performance Monitoring - AppDynamics: The APM Blog

  • Pingback: AppDynamics Disrupts APM Market with Free End User Monitoring - AppDynamics: The APM Blog

  • tw37

    AppMan…nice article there. Am going to be linking to your this from It’s worth sharing with rest of the community.

    Practical Performance Analyst

Copyright © 2014 AppDynamics. All rights Reserved.