The Observability Cost Conundrum: Are We Paying Too Much for Visibility?

Beyond the Numbers Blog Series (1/5)

Author

Allan Mann
July 24th, 2024 • Estimated Reading Time: 13 minutes

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Introduction

Observability is the buzzword on every tech guru's lips these days, and for good reason. In a world where our systems are more complex and distributed than ever, seeing what's happening across our stack is critical. It's like having a superpower that lets us peer into the very heart of our applications.

But with great power comes a hefty price tag to match. If you've been watching your Observability bills lately, you might have noticed a disturbing trend. The costs are creeping up, bit by bit, until one day, you realise you're spending a small fortune to keep the lights on.

It's like the old frog-in-boiling-water analogy. We're so focused on the day-to-day firefighting that we don't realise we're slowly cooking ourselves alive with rising Observability costs.

But fear not, my fellow Observability enthusiasts! In this first of five articles in a blog series titled “Beyond the Numbers”, we will deeply dive into Observability costs. We'll explore why they're rising, what's driving them up, and, most importantly, what we can do about it.

So buckle up, and let's prepare to tackle the cost conundrum head-on.

Your budget (and your sanity) will thank you later.

The State of Observability: Progress and Challenges

First off, let's give ourselves a pat on the back. We've made some serious strides in the Observability game. According to recent studies, about 10% of organisations have achieved full Observability across their tech stack. That's no small feat! It means they've got visibility into every nook and cranny of their systems, from infrastructure to applications to user experience. They can detect and diagnose issues faster, optimise performance, and confidently make data-driven decisions.

Another 36% have started their Observability journey, putting the tools and practices in place to get that holistic view. And 20% are gearing up to begin, recognizing the critical role Observability plays in the success of modern digital businesses

But it's not all sunshine and rainbows. Nearly half of organisations cite a lack of team knowledge as the biggest roadblock to Observability in cloud-native environments, up from 30% just a year ago1. This reminds us that while technology is advancing rapidly, our skills and expertise aren't always keeping pace. We must invest in training and education to ensure our teams can effectively leverage these powerful Observability tools and techniques.

There are other challenges too. Integrating disparate data sources, managing the sheer volume of data, and getting buy-in from stakeholders can all be hurdles on the path to Observability2. But the payoff – in terms of improved reliability, performance, and customer experience – makes it well worth the effort.

The High Cost of Observability

Now, let's talk about the elephant in the room: the cost. Brace yourself because the numbers are pretty staggering. Annual Observability spending is projected to hit a whopping $4.1 billion by 20283 , up from $2.4 billion this year. For a typical company, Observability tools consume 10-30% of its infrastructure budget4 . And as our digital environments keep expanding and getting more complex, those costs will only climb higher.

It's a bitter pill to swallow, especially considering that we're already stretching our IT budgets thin. We've got cloud bills, software licenses, hardware refreshes, and a million other line items to juggle. Tacking on a hefty Observability tab can feel like the straw that breaks the camel's back.

But here's the thing: as much as it pains me to say it, we can't afford not to invest in Observability. In today's digital landscape, where a single outage or performance hiccup can send customers fleeing to the competition, visibility is non-negotiable5 . We need to know what's happening across our systems in real time to deliver the seamless experiences our users demand.

So, the question isn't whether we should be investing in Observability but rather how we can do it in a sustainable and cost-effective way. More on that later.

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What's Driving Up the Bills?

So, what's behind these ballooning Observability bills? Well, there are a few key factors at play. First, there's the sheer volume of data we're dealing with. Microservices and cloud-native architectures generate massive amounts of data we need to collect, store, and analyse6. Every log entry, every metric, every trace – it all adds up.

We need fast data retrieval and analysis, which means investing in indexing and hot storage. When something goes wrong, we can't afford to wait hours or days to dig through our data. In the heat of the moment, we need answers now to minimize the impact of incidents.

Then there's the ephemeral nature of servers and the chaotic engineering practices we've embraced. Containers and serverless functions spin up and down in the blink of an eye, making it harder to get a stable view of our systems7. Chaos engineering intentionally introduces failure to build resilience but generates even more data to keep track of8.

And don't even get me started on the unpredictable data volumes tied to application demand. One minute, you're cruising along with a manageable data stream. The next, a viral post or a flash sale, sends your metrics through the roof. Those fluctuations can make it a real headache to predict and control costs.

The Struggle to Tame Costs

It's no surprise that 91% of organisations are trying to get their Observability expenses under control. More than half are seeking better visibility into monitoring costs, up from 36% last year1 . They want to understand where their money is going, identify waste, and make informed decisions about their Observability investments.

About 38% are adapting their data management practices based on cost considerations, compared to 27% previously1 . They're getting smarter about what data they collect, how long they retain it, and when they can safely archive or delete it. Some are exploring data sampling techniques or setting up tiered storage to keep costs in check.

Nearly a third are trying to collect less monitoring data altogether1. They're being more selective about their instrument, focusing on the most critical metrics and logs. But this approach can be risky; you don't want to fly blind when an issue crops up.

But here's the kicker: the pricing models based on data ingestion make it tough to predict and manage costs effectively9 . It's like trying to budget for your grocery bill when the price of bread changes every day. You think you're being frugal by buying just a loaf or two, but then your kid goes through a growth spurt, and suddenly, you're going through a dozen a week.

Some Observability vendors are offering more predictable pricing, such as tiered plans or credits that roll over10 . But it's still an evolving landscape, and it can be tough to compare apples to apples when evaluating different options.

The Bottom Line

So, where does this leave us? Well, Observability costs are a real pain point for many organisations. The expenses are high and unpredictable, threatening to undermine the value we get from Observability in the first place.

But as I said, we can't throw the baby out with the bathwater. Observability is essential to the success of our digital businesses. We need it to ensure reliability, optimise performance, and deliver great customer experiences. The key is to find a way to do it without breaking the bank.

That's where this series comes in. Over the next few articles, we'll explore strategies and best practices for taming Observability costs without sacrificing visibility. We'll look at things like:

  • Right-sizing your Observability stack

  • Optimising data collection and retention

  • Leveraging AIOps and automation

  • Negotiating better pricing and terms with vendors

  • Building a culture of cost awareness and accountability

But here's the exciting part: in our next article, we'll dive deep into a powerful framework for optimising your Observability spend. We'll show you how to turn off Observability for non-critical services, filter out junk data, and leverage AI/ML to automate issue detection. Plus, we'll share insider secrets for negotiating usage-based pricing with your vendors.

Trust me, you won't want to miss it. This framework has helped companies slash their Observability costs by up to 50% without losing visibility into what matters most11. It's a game-changer.

So stay tuned; we'll be back soon with all the juicy details. In the meantime, some of these cost-control strategies should be implemented. Every little bit helps, and you'll be ahead of the game when we drop our optimization framework.

It won't be easy, but I'm confident that by working together and sharing our experiences, we can crack the code on cost-effective Observability.

And don't be afraid to push back on vendors who aren't willing to work with you on pricing and terms. Remember, you're the customer – you've got more leverage than you might think.

As always, I'd love to hear your thoughts on this. Are you feeling the pinch of Observability costs in your organisation? What strategies are you using to keep them in check? Let's keep the conversation going and learn from each other.

Until next time, happy Observing!

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