Will a Network Documentation Solution’s ROI Pay Off?

calculating-roi

Ah, ROI calculation and network documentation. I know, I know: it’s not the world’s most exciting topic but it may just help you fully understand why you need network documentation software…and, most importantly, it may help you in justifying the purchasing and finally getting that network documentation going.

ROI-Calculator

So, you want to figure out the potential ROI you’ll get from getting a professional network documentation solution. The first ROI calculation to look at? IT inefficiency. IT inefficiency is basically this: how well you are utilizing the hardware you’ve got. Inefficiencies can be caused by numerous issues…I’ll go ahead and name a few for fun: zombie servers, underutilized port and zombie cables, underutilized switches and routers, and I could go on.

Wait: did he just say Zombie server? What the heck is a Zombie server?

The sweet and short version: it’s a machine that’s powered up but not doing any actual work or function. That means: power is being consumed for no reason – which is not free – and rack units are occupied – again, for no reason and not free. The average cost per RU? $1200. Zombie cables are a similar beast: they are taking up your ports but not really being used. All of these things add up to big inefficiencies.

Based on a Meta Group study, the average IT inefficiency rate is around 20%. 20% of what, you ask?

This 20% rate is based on an industry standard calculation of the hardware costs times the inefficiency. Think like this: if you’ve got 100 racks, on average, you probably have around $94,600 worth of equipment in a rack. If you have a 20% inefficiency rate (from zombie servers, ports, cables, underutilized routers and switches) across all of your racks, then you are wasting around $1.8 million per year because of these inefficiencies. Yikes! That is some serious cash. Of course, if you’re not a Fortune 500 company then those numbers will be smaller…but the calculations remain the same.

Not quite your situation? Let’s scale back a bit. Say you are a small sized company and have only 10 racks of equipment. What is your calculation? Well, it would be 10 (racks) x $94,600 (industry average) x .2 (inefficiency) = $189,200. Now that 20% may still seem like a large number…but even at 5% inefficiency, you are talking about a respectable $47,300 per year.
Which means if you can become 5% more efficient by documenting your network you save $47,300 per year. Now, that’s something my boss will like!

But wait there is more…

The other big ROI calculation to look at is downtime. This one seems to make more sense to people since its one of those things that all IT people have the joy of dealing with very day. “Hey Bob, my email is not working….” Ugh..open a ticket and stand in line. Downtime can be exasperated when you don’t know how your network is connected, can not search for information, can’t figure out where a piece of equipment is (how can you find it if its offline?), or if you must send people out to manually check and track problem equipment.

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So how to calculate downtime? The best place to start is by figuring out how many hours of downtime you experience per year! Not sure how many that is? Gartner estimates it to be around 87 hours per year. They also estimate that the cost per hour is typically $42,000 per hour for a Fortune 500 company. So, if you’re experiencing 87 hours of downtime and the average cost is $42,000 then you lose around $3,654,000 per year to downtime.

Let’s scale back again and assume you are not a Fortune 500 company. Maybe you are a small company? For you, that per-hour cost of downtime might be more like $420 per hour. At 87 hours, that works out to be $36,540. Again, no small piece of change when you are talking about wasted money per year. So, how do you improve this number and save that money? With proper network documentation, you can reduce your MTTR (mean time to repair) and start eliminating hours of downtime which in turn saves you money.

Something else to mention…some of the numbers I am quoting are from some studies that are probably 10 years old. I mention this because the costs have only gone up over time… So, you could very well end up saving even more once you start documenting your network. Bottom line? Start documenting today.

Jason Sherman
Jason Sherman
As Graphical Networks’ Sales Engineering and Support Services Manager, Jason Sherman leads the pre and post sales cycle with the entire Graphical Networks software portfolio, and ensures current customers are able to use the software to its fullest potential.

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