Network Documentation Calculating Your ROI

If you are having issues that you think will be solved with network documentation and network mapping software then this article is for you.

A report on the positive effects network mapping software implementation has had with two trivial IT issues which are not enough IT visibility and too much downtime. Network mapping software provides a profitable investment for years on end and previously you learned how our software can individually help.

In this part, our make believe company, “Acme”, will get some actual calculations done. The only cost-cutting opportunities are downtime and poor IT visibility. There are other places an organization can acquire cost savings and benefit from but these are harder to measure. Some examples are lowered costs in auditing, increased reputation with better quality of service, lowered documentations costs, etc.

We’ll need to make certain assumptions for these calculations.

Assumption 1: Implementation

We’ll start by assuming that implementation is successful. I know this sounds a bit too obvious, however it will need a definite quantity of effort and commitment to urge any network mapping code to be properly enforced and running.

How does netTerrian project succeed?

Graphical Networks appoints every project a manager. Once the order is received from a new client, we immediately begin the onboarding process: installation and training is finished quickly with the installation typically taking one or two hours. From here we proceed with an agile data migration method from your existing date sources. From the beginning, we synchronize catalog dashboards and reports, including personalized reports for you, to ensure you have access to the information you require. This service is included at no additional cost. After onboarding is the steady-state supervision that typically lasts for a couple of months. A PM is in charge of ensuring that the projects are implemented on time and to the client’s requirements. Adoption is essential for success.

Assumption 2: Company type

To calculate the return on investment, assumptions about the firm deploying the technology must be made. We’ll use a yearly IT value as a percentage of Acme’s revenue in this example (we’ll assume Acme is a mid-sized firm with $500 million in revenue).

Assumption 3: Current efficiency

Finally, before beginning the project, we must make an estimate of the company’s waste and downtime, which will be a conservative amount.

With all this now set, we can move forward with the ROI calculation and estimate the net savings and payment per year.

1. Inefficiency calculation

Let’s figure out the costs of inefficiency that our company Acme is supposed to get each year.

• Assumption for IT inefficiency calculation: 4% of revenue
• The percentage assumption for Acme’s IT and efficiency is 10%. (half the average for large US companies).
• The assumption for calculating the cost of downtime is that there will be 40 hours of outages each year (less than half the average for Fortune 500 companies).
• Cost-per-outage assumption = $20,000 per hour (half of the estimated North American average).

Now, let’s plug in the numbers:

• $1.5 million wasted dollars per year is equivalent to 10% of Acme’s budget which is the yearly IT inefficiency
• 40 hours multiplied by $20k = $800k = downtime costs

Although these are just theoretical calculations for a make believe company it can still help you understand how to make your own calculations for your own companies. Keep in mind that the actual cost savings from fewer inefficiencies and outages will very certainly be far higher.

2. Savings calculation

Below well figure out the savings Acme should attain yearly

• We’ll use a 5% increase in IT utilization to save $200,000, which can be easily accomplished by finding a few dozen underutilized servers among what is likely to be well over 1000 network devices and servers.
• Then there are the rack units, which you would wish to upgrade in areas like density, cables, ports, power, and other IT aspects and factors. Easy-peasy
• We’ll anticipate another modest 20% improvement in mean-time-to-repair (MTTR) for a total savings of $160K per year during our downtime. This is almost hilariously simple, as 20% of the time can be saved merely by having the right network diagrams in place prior to troubleshooting — much alone the dynamic circuit layout records, dependency diagrams, and other features that a good network documentation software can give.

3. Software implementation cost calculation

Next the software calculations will be made

We must make additional assumptions because creating network mapping software is obviously not free:

• For our hypothetical corporation Acme, we’ll suppose they require a large netTerrain Logical license with 20000 objects and 10 editors, as well as the Outside Plant module.
• We’ll also assume $100K in annual personnel costs to manage the documentation process, though this figure is debatable: netTerrain typically reduces, not increases, personnel costs — but, just to be safe, we’ll assume the organization decides to hire another part-time resource to work on the software.
• Finally, we’ll add $15K in third-party software and hardware fees, bringing the total yearly costs to $160K. This is an exaggerated figure that would be more in line with a DCIM implementation, in our opinion.

When we look at the savings versus the costs, we can see that our hypothetical company Acme will save $120K per year in MTTR and IT asset optimization alone (and we’ve even assumed an extra resource that is probably not needed). The repayment period is 15 months in this scenario (including 6 idle months just for ramp-up time).

As you can see, network mapping tools such as netTerrain can help you save a lot of money. While not as easy to calculate as downtime and poor IT visibility, there are many other areas where efficiency gains benefit the bottom line (meeting SLAs, reduced auditing costs, improved reputation, reduced documentation costs, fewer consultants, faster onboarding, and so on), and while these aren’t as easy to calculate as downtime and poor IT visibility, they should still be taken into account when evaluating the ROI of a potential network mapping solution. Do you want to know how much ROI DCIM can provide?

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