Calculating the ROI of DevOps Transformation

As leaders in custom software development, adopting DevOps principles and practices is key to delivering quality solutions efficiently. But transforming development and operations requires investment. How can we demonstrate the ROI to justify DevOps improvements?

Analyzing industry research sheds light. According to a Google Cloud whitepaper, calculating ROI requires looking at both value generated and costs reduced. Here are the key insights we’ll apply:

Value from Faster Delivery

The faster you can release new features, the more revenue opportunities you create. DevOps transformation enables more frequent deployments. The research shows elite performers deploy on-demand, while low performers deploy just once every 6 months.

More deployments mean you can experiment and learn from users faster. Elite performers run 730 experiments per year per product line. For a $100 million product portfolio, this can generate up to $48 million in value annually.

Reduce Rework to Invest in Innovation

Unnecessary rework consumes 19-20% of engineers’ time. By applying DevOps practices like test automation, you can reduce rework closer to 18% like elite performers.

For a 250-person engineering team, that 1-2% recouped time adds up to 4,000 hours per year. Valued at the fully loaded average salary, it equates to $1 million in recovered value. This can be reinvested in developing new capabilities.

Mitigate the Costs of Downtime

The whitepaper estimates downtime costs as high as $500k per hour for mission-critical apps. Slow, unreliable deployments increase downtime risk.

Elite teams deploy 2x per day with just 0.5 hours to restore service. Low performers deploy every 6 months and need 120 hours to recover. Doing DevOps right could save us $220 million in downtime costs annually.

Document the Full Investment

When calculating ROI, remember that investment includes more than just tools. Training, lost productivity, re-architecting, and labor all add cost.

For example, a $6.8 million DevOps transformation budget could entail:

$400k for assessment and planning
$1M for test automation software
$1.35M for new SRE headcount
$200k for training and coaching
$3.86M for existing staff time spent on the initiative

A Worthwhile Investment

For a $100 million software product, the research shows DevOps transformation can generate $80 million in value per year. Against a $6.8 million investment, that’s over 10X ROI and a payback period of just 31 days.

While exact returns will vary based on your organization, the potential is staggering. We’re eager to partner with you on mapping out the ROI for transforming your software delivery capabilities.

By implementing leading practices, we can help you:

Reduce deployment lead times from months to hours
Enable faster experimentation to drive innovation
Minimize costly downtime events
Quantify productivity gains from less rework

Let’s connect to assess your current processes and build a business case for DevOps improvement. With the right strategy, you can achieve elite performance and ROI. Now is the time to get started.

Calculating the ROI of DevOps Transformation