How to Calculate ROI for Network Management & Monitoring

Calculating ROI for Network
Management and Monitoring

© 2013, SolarWinds Worldwide, LLC. All rights reserved.
1

Agenda
• Benefits of an NMS

• ROI – Why is it important?
• How to Calculate ROI?
• Understand your NMS Costs!
• How to Calculate Cost Savings?
• ROI for SolarWinds NPM

• EMA® Case Studies on Rightsizing NMS

2

Improve
ROI with
SolarWinds
NPM

NMS Benefits
Network management and monitoring benefits are typically
realized across a number of areas that can be segmented into the
following:
•
•
•
•
•

Salary/Staff Time Savings
Reduced Network Downtime
Reduction in Support Calls
Decreased Time-To-Resolution
Managing Service Level Agreements

3

Network Management ROI – Why is it important?
In IT infrastructure, the “network,” and its various components, has become
a competitive differentiator for businesses of all sizes.
IT staffs are being asked to do more with less, as well as show a tangible ROI
for investments made on IT, by rightsizing their NMS solution.

Why it’s important to calculate ROI
Companies implementing network management and monitoring
software are experiencing strong ROI, improved data analysis
and reporting, and reduced network downtime.

4

Calculating ROI
»

But in reality, you will use the more comprehensive Net Present
Value (NPV)[1] and Internal Rate of Return (IRR )[2] measurements
to compare the investment in your NMS against alternative
investments that your business can make.
[1] & [2] Click here for detailed information on NPV and IRR

5

Understanding Your NMS Costs
Before rightsizing your Network Performance Solution, understand your costs!

What costs do I incur?
The cost of network monitoring and management is comprised of a
number of different elements that combine to provide a total cost of
ownership (TCO).
• License Cost
• Product Maintenance, Support, and Upgrades
• Dedicated Hardware or Software
• Installation/Implementation/Consulting
• Training
• Solution Management

6

Calculating Your Cost Savings
Calculating your cost savings or benefits can typically be
categorized as follows:
1. Cost Savings in Employee Productivity
2. Cost Savings in Lost Revenue
3. Cost Savings in IT Productivity

7

Calculating your Cost Savings (cont…)
»
[1]

[2]

[3]

[1], [2] & [3] Click here for detailed calculations about cost savings
8

Your questions answered!
FAQs for finding the right network performance monitoring
solution
•

How do I achieve balanced objectives of feature/function capabilities
matched with cost effectiveness?

•

How do I find a solution that keeps pace with changes in the managed
environment and the organizations they serve?

•

Should I select an enterprise class network or systems monitoring
platform solution with all the bells and whistles? Or will this choice be
overly complex for my needs?

9

SolarWinds Network
Performance Monitor (NPM)
Ensures Improved ROI

10

What is SolarWinds NPM?
SolarWinds Network Performance Monitor (NPM) is an easy-touse network monitoring software that offers:
Unified Fault, Availability and Performance
Monitoring
•
•

•

NPM can quickly detect, diagnose, and resolve network performance problems
and outages.
NPM tracks response time, availability and uptime of routers, switches and other
SNMP enabled devices.
Shows performance statistics and includes out-of-the-box dashboards, alerts, and
reports.

11

Calculating the ROI for SolarWinds NPM
Take a look at a hypothetical business with the following characteristics.
•
•
•
•
•

•
•
•

A network infrastructure with approximately 1000 interfaces, 300 nodes, and 130 volumes.
3 IT employees focused on network management 100% of their time with an average
annual loaded cost of $120K.
An average monthly downtime of 60 minutes.
Approximately 440 employees with an average annual loaded cost of $100K.
10% of employees affected by system downtime at any given time with a 10% impact of the
outage on those affected employees.
Approximately $305M in annual revenue over 2,080 working hours with a 10% impact of
network downtime on annual revenue.
Estimated reduction in network downtime of 10% by deploying SolarWinds NPM
17% Weighted Average Cost of Capital, 35% effective tax rate, and a 3-year depreciation for
software.

Now, let’s calculate the NPV and ROI for SolarWinds NPM
12

Calculating the ROI for SolarWinds NPM
(contd.)
USD

Start Up

SL2000 (up to 2000 elements) + Additional Polling
Engine x 0 – License and 1st Year Maintenance

$14,975

Year 2

Year 3

$2,995

Annual Maintenance

Year 1

$2,995

$2,995

Total Annual Cost

$14,975

$2,995

$2,995

$2,995

Annual Cost Savings (Includes 3 Year
depreciation@35% tax rate

$0

$55,014

$55,014

$55,014

Discounted (17% WACC) Net Cost Savings

{$14,975}

$44,461

$38,001

$32,479

Discounted (17% WACC) Cumulative Cost Savings

{$14,975}

$29,486

$67,486

$99,865

ROI Measures
Discounted (17% WACC) Cumulative 3 Year Net Cost Savings

$99,965

Net Present Value (17% WACC)

$71,064

Internal Rate of Return (Based on discounted Benefit Flow)

267.59%

Payback (in Years)

13

0.29

Cost Benefit Analysis for SolarWinds NPM

14

See How SolarWinds NPM
Increased the ROI for Customers

15

Rightsizing your Network Management Solution

"Features and capabilities aside, the best way to
understand both product fit and Total Cost of
Ownership (TCO) advantages of replacing an existing
network performance management solution with
SolarWinds NPM is to learn from the experiences of
those who have made the switch."
- Enterprise Management Associates

16

SolarWinds ROI Case Studies by EMA®
New Whitepaper by EMA® with 4 Case Studies on how SolarWinds NPM has
been selected by organizations to rebalance capabilities, cost
effectiveness, and ROI for network performance management and beyond.

Cloud Service

Financial

Provider

Institution
SolarWinds
NPM

Healthcare

International

Organization

Airline

17

What did our Customers say?
“By deploying SolarWinds NPM
and related products, this provider
found their management tools’
TCO was greatly reduced from
both a licensing and maintenance
point of view.”

“Substantial improvements in TCO
while using SolarWinds because
they have reduced training
costs, extended usage to a broader
audience, and have been able to
achieve integration and
customization, allowing the
organization to eliminate the need
for costly professional services.”

– Cloud Service Provider

– Financial Institution

18

What did our Customers Say? (cont…)

“The licensing cost for the
SolarWinds products, including
annual maintenance contract, is
only 10 percent of what the
organization was previously
spending for its management
tools – all while delivering much
greater functionality and visibility.”

“SolarWinds has allowed us to
achieve significant license and
maintenance cost savings over
prior products. They have
customized SolarWinds products
to meet specific needs, speaking to
the less tangible, but no less
important benefits of flexibility
and extensibility.”

– Healthcare Organization

– International Airline

19

Industry Study on Network Management ROI
Learn how your organization can achieve compelling TCO benefits with
SolarWinds network management solutions.

Download the white paper to get started!
EMA White Paper
Rightsizing Your Network
Performance Management
Solution: 4 Case Studies
See how four organizations
made the switch to SolarWinds
and are now realizing the
benefit of lower total cost of
ownership.

20

NPM Improves Your ROI with Cost & Time Savings

Instead of building a complicated spreadsheet to
calculate your ROI, check out our ROI Calculator!
Click HERE to Calculate the ROI for your Organization >>

and see just how financially beneficial NPM can be in
your environment.
21

NPM – Awards & Accolades
Awards

See What Our Happy Customers Are Saying…..

22

Thank You!

23

How to Calculate ROI for Network Management & Monitoring

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