The ROI of APM: Application Performance and Impatient End Users

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How much time will your customers spend on your web site if it slows to a crawl? Will they linger patiently, or will they immediately surf away to a competitor?

According to a 2009 research study by Forrester Consulting, 47% of users expect a web page to load in two seconds or less–and 40% will abandon a web page if it takes more than three seconds to load. Those time measurements have doubled from a similar study published in 2006; as transfer speeds have increased, users expect their web sites to keep pace.

From these numbers, it’s easy to understand the incredible impact of lost revenue for every second that an application performs poorly. Unacceptable performance is a surefire way to cause the end user to surf away and perhaps never return. What is the cost of a transaction taking 4 seconds, when it should only take 1 second? Again, according to the 2009 Forrester study, a matter of seconds constitutes the average online shopper’s expectation for a web page to load. Can you measure customer frustration in terms of its actual revenue impact upon your organization?

The way to measure lost revenue due to poor performance is to determine the application’s Service Level Agreements (SLAs), attach revenue to them, and evaluate how much your organization can preserve through maintaining and even improving those SLAs. For example: how long should the “check out” transaction take? How long should the “add to cart” transaction take?

Once you determine these time frames, you can attach dollar numbers to each of them. For example, let’s say that your SLA is to have the “pay my bill” transaction on a banking site take 1 second. Let’s say that for every time that SLA is violated, the company loses 5 dollars in revenue—due to the aggregate result of some users abandoning their sessions to slow performance.

If the organization is able to determine how often the “pay my bill” transaction is being violated, it can assign a revenue number to the ability to maintain that SLA over time—say, a 99.99% success rate at maintaining the SLAs of 50,000 transactions over a three month period. If the previous success rate had only been 90%, that means 5,000 successful transactions have been rescued. At 5 dollars a transaction, this becomes $25,000 in revenue that never leaves the bottom line.

Obviously, determining and maintaining SLAs can take a lot of work. But the right application performance management system can assist you by learning the behavior of the application, and by creating dynamic baselines that can dramatically help reduce your time to develop SLAs. And once you develop those SLAs, and attach revenue numbers to them, you will quickly see how managing application performance on a proactive basis can help protect your company’s revenue stream.

Jyoti Bansal

Jyoti Bansal

Jyoti founded AppDynamics in early 2008 with the vision of defining the next-generation of application performance management (APM) solutions for distributed applications running in cloud, virtual, and physical environments. Before founding AppDynamics, Jyoti led the design and architecture for several products at Wily Technology. Jyoti received his BS in Computer Science from the Indian Institute of Technology, Delhi. He is the lead inventor on 14 US patent applications in the field of distributed applications management.