You are what you measure—Part III: the network is the best place to measure end-user consumption of IT services - The Bottom Line

Communications News, Feb, 2003 by Lenny Liebmann

So far in this series on metrics, we have discussed measuring the quality of network services and the cost of delivering them. Now, we are going to step up to a broader metric: the dollar-quantified consumption of end-to-end IT services.

First let's establish why quantifying end-user consumption of IT services in dollars is important. Companies spend a lot of money on information technology, but their intent is not to buy network capacity or server processing power--it is to deliver services. These services include ERP, CRM, e-mail and other key applications.

Unfortunately, despite the fact that they may spend 2%-5% of their budgets on IT, most companies do not have a good way of accounting for end-user consumption of services. They may know what their e-mail system costs, but they do not know if any individual user is eating up $20 of e-mail service per day while the average user only consumes $5.

Why is knowing something like this important? It is not necessarily to get the $20-a-day user to stop broadcasting 20-MB attachments to his entire address list, although that might be necessary in certain cases. If there is a legitimate business case for those broadcasts, however, then there is no reason to stop them.

Instead, the purpose is to accurately allocate costs to users, projects, departments or lines of business. That way, those costs can be properly incorporated into P&L statements. As technology expenditures rise, executives with P&L responsibility and other corporate financial managers need visibility into those expenditures. If they do not have it, then they cannot exercise any control over their consumption of IT services.

Of course, none of this really seems like a networking issue. Running a network is about ensuring application performance and maintaining uptime. The nuances of P&L accounting and the financial dynamics of delivering ERP applications are usually thought of as outside the scope of the networking team's core competencies.

It turns out, however, that the network is really the best place to measure service consumption. No one wants to install agents on every server and every desktop to measure utilization. More practical is to "listen" to traffic as it passes across the network and to then use that data to assess service consumption. In other words, if you can calculate what it cost you to run ERP across the enterprise for a year, then you can use network-based consumption statistics to distribute those costs appropriately to end-users. Even if the data you develop is somewhat imprecise, it is certainly far more accurate than simply pro-rating your costs based on total enterprise headcount.

This may sound like a somewhat complex exercise and one that is not as tightly linked to concrete ROI as, say, a money-saving VoIP implementation. In addition, with budgets tight, such a usage-metering initiative may not get the same priority as something with a more apparent near-term payback.

Without a good system for tracking service consumption, however, you will never really be able to tell whether your other projects actually have any impact on business-unit P&L. What if you go with VoIP and it turns out one department is hogging all your available WAN bandwidth? Are they still going to be able to make all those calls for "free?" Are you going to make the company, as a whole, pay for any additional capacity you need, even though the consumption driving your expansion is coming from a specific business unit?

So consider introducing the idea of a network-based service consumption mechanism to your company. As I've said before, almost every other business function--sales, manufacturing, marketing, facilities management--can account for its costs on a fairly granular basis. If the technology community is going to achieve the corporate credibility we need to do our jobs correctly, then we have to be able to account for our costs with that kind of granularity, too.

Liebmann is an independent consultant specializing in the application of networking technologies to strategic business challenges. Send comments for publication to liebmann@comnews.com.