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Counting The Real Cost of a DIY Network Monitoring Solution

John McArdle| February 20 2018

| monitoring

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It can be tempting to build your own DIY Network Monitoring solution, but what's the real cost of building and maintaining such a tool at scale?

For many start-up IT services organizations, Managed Services Providers (MSPs), and even in-house IT departments, it can be very tempting to build your own monitoring solution. This can be for a variety of reasons of course: there could be no budget available to procure a Commercial-Off-The-Shelf (COTS) solution, or maybe there’s an organizational belief that the team has the skills to build exactly what your organization needs to serve your internal and/or external customers.

A DIY build of a monitoring tool is usually not formally planned—it just starts and evolves as your customer’s requirements dictate. Over time, it usually becomes the responsibility of a very small number of people, or even a sole individual, within the organization who becomes the owner for the home grown tool. Having met with many different organizations, ranging from large System Integrator organizations, to mid-sized boutique IT services organizations, small MSP companies, and in-house IT organizations, one thing they all agreed is that ongoing maintenance of such tools can consume a considerable amount of at least one, but usually a few people’s time. We cannot ignore the old adage that time equals money. What initially started as a good initiative—build a tool to automate and manage repetitive IT monitoring tasks—can quickly turn into a constraint on your organization. Smaller organizations have reported that, on average, one of their skilled IT operations personnel needs to spend up to 40% of their time maintaining their home grown tool.

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So let’s think about the “whole-of-life” costs of building an in-house tool. There are at least 3 cost elements that need to be factored in: build cost, maintenance cost, and opportunity cost. There's also a transition cost—more on that later. 

Calculating Build Cost For DIY Network Monitoring 

The cost of building the initial version of the tool is often not pre-calculated, but let’s assume for a small IT services organization they allocate one experienced IT operations engineer for 50% of his or her time to develop a tool over a period of 6 months. If that engineer has a $50k salary/benefits cost. The initial Build Cost is therefore $12,500 ($50,000 x 0.5 x 0.5).

...The Cost of Maintenance 

 Given the constant rate of change in the technology sector, it’s reasonable to assume that up to 30% of an engineer’s time will be needed to maintain and update the in-house monitoring tool—which would include adding new functionality to meet ongoing customer needs. The annual maintenance cost would therefore conservatively be $15,000 ($50,000 x 0.3).

And the Opportunity Cost

This is usually a “hidden” cost that many organizations fail to factor in at all. IT services organizations and many in-house IT departments charge their customers a fixed hourly or daily rate for their qualified engineers. So again, let’s assume that one of the IT engineers is spending 30% of their time annually maintaining the in-house tool.  We can make the following additional assumptions based on what would be typical industry norms

  • The engineer’s Daily Charge Out Rate is $400/day
  • The number of billable days per annum per engineer is 220

The opportunity cost, or “lost revenue” that your business has missed out on because of your engineer maintaining your in-house tool is $400 x 220 x 0.3 = $26,400

So let’s stop here and reflect for a moment on the actual costs so far.

Initial tool build cost

 

$12,500

 

Annualised ongoing cost for the tool

(Maintenance cost + Opportunity cost)

$41,400

 

Many organizations fail to factor in the true cost to their business of maintaining a home-grown tool. Enlightened organizations, when they realise this, usually make a decision to procure a COTS solution. But this again introduces yet another cost – what we have referred to as a TRANSITION cost. This needs to consider items such as

  • Vendor evaluation and section process (which could include an RFP phase) for a new COTS solution
  • Installation, configuration of the chosen COTS solution and user training.
  • Migration / transition of customers from the in-house tool to the COTS solution.
  • Ongoing administration of the COTS solution.

There will always be a healthy debate about whether to build or buy a tool. However, it is important to bear in mind that whilst it might appear cheap to build your own home grown monitoring tool – the true cost can be much higher than you expected.

 

Topics: monitoring

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THIS POST WAS WRITTEN BY John McArdle

John has worked in the technology industry for almost 30 years. During that time he has seen at first hand technology movements from mainframe to client/server to the Web and more recently to the Cloud. He has been a software engineer, a QA engineer, a Project Manager, an Agile consultant, an IT Services Manager and to his own great surprise currently works in a Sales role. His current passion is helping IT people communicate better with their finance counterparts and business budget holders to get their project tooling and infrastructure needs funded.

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