New Relic once again partnered with ETR to produce its third annual Observability Forecast, the most robust survey of its kind on the state of observability, drawing insights from 1,700 IT decision makers. Now, a new cut of that data has been released as the State of Observability for Retail, which looks at the data from the 173 respondents in the retail/consumer industry. Facing a challenging macroeconomic environment with high inflation and supply chain disruptions, retail organizations need full visbility into their IT operations and e-commerce presence. The report covers the frequency and cost of outages in the retail environment, the trends that are driving the adoption of observability technologies in the industry, the number of observability tools retail organizations have, and many other topics.
Outage Frequency and Costs
Retail/consumer organizations experienced high-business-impact outages at a higher frequency, with 37% reporting these outages at least once a week, compared to the average of 32% among all respondents. This finding means that retail/consumer organizations had the third highest outage frequency across industries.
More than half (55%) of retail/consumer respondents said it takes at least 30 minutes to detect high-business-impact outages, and 21% said it takes at least an hour. About three in five (61%) also indicated that it takes at least 30 minutes to resolve them, and 28% said it takes at least an hour. Given the relative frequency of these outages, this adds up to considerable downtime for retail/consumer organizations.
Nearly a third (31%) of retail/consumer respondents said critical business app outages cost more than $500,000 per hour. Almost a quarter (23%) estimated they cost their organizations more than $1 million an hour.
Retail/consumer organizations also reported a median annual outage cost of $9.95 million, which is notably higher than the $7.75 million annual outage cost across all industries and fifth highest overall compared to other industries.
Trends Driving Retail Observability Adoption
The top technology strategies and trends driving the need for observability among retail/consumer organizations were an increased focus on security, governance, risk, and compliance (43%) and integration of business applications into workflows such as ERP or CRM systems (38%). Two trends tied for third place: an increased focus on customer experience management and the adoption of the Internet of Things (IoT) technologies (both 36%).
The retail/consumer industry put a greater emphasis on IoT technologies driving observability than among all respondents, where it ranked seventh at 33%. IoT can take on multiple forms for retailers, including inventory tracking and tracking salespeople in the store.
Number of Observability Tools in Retail
Retail/consumer organizations were more likely than average to use multiple monitoring tools for the 17 observability capabilities included in this study. More than two-thirds (69%) used four or more tools for observability compared to 63% overall. And 23% used eight or more tools.
The proportion of retail/consumer respondents using a single tool has decreased slightly since last year, dropping from 4% to 3%. However, the average number of tools has gone down by almost one tool, from an average of six tools in 2022 to five tools in 2023.
Retail Observability Spend and ROI
Retail/consumer organizations tended to spend more on observability than most other industries—almost half (49%) said they spend $500,000 or more, and 31% said they spend $1 million or more per year on observability. Just 8% said they spend less than $100,000 per year on observability.
As far as business outcomes enabled by observability, nearly half (47%) of retail/consumer respondents said observability improves revenue retention by deepening understanding of customer behaviors—which was considerably more than all other industries and 38% more overall.
When we asked them how much total value their organization receives from its observability investment per year, 57% said more than $500,000, with 43% saying the total annual value is $1 million or more. A fifth (21%) estimated they receive $5 million or more per year in total value. Retail/consumer organizations reported a somewhat higher total annual value received from observability than average and more than all other industries except energy/utilities.
Based on annual spend and annual value received estimates, retail/consumer organizations receive a 2x median annual return on investment (ROI).
These data highlights only scratch the surface. Read the full report on the State of Observability for Retail to learn more.
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