The Ultimate Guide to Business Observability Software

Are you struggling to achieve your business goals?  

Not understanding what's happening in your organization?

Tired of deciphering meaning from your data?

If this sounds like you, you’re in the right place. What is business observability software, and why can it change your business? This guide will provide you with comprehensive principles, best practices, and first steps. You'll learn:

• A conceptual overview of business observability software
• Techniques for using data and insights in your software
• A direct path to achieving your business goals

Starting with business observability software, making the most impact with your data, and ultimately driving change in your business begins here. 

Business observability software allows companies to monitor and measure the performance of operational key performance indicators (KPIs) in real-time — quickly identify trends, issues, and make decisions based on the most up-to-date information.  

Observability involves collecting, analyzing, and interpreting data across different areas such as customer experience, sales/revenue, and marketing. This helps your business stay responsive and competitive in today's fast-paced, evolving market.  

By stepping beyond the capabilities of passive, general business monitoring, observability creates all-important context in your data — better context fuels better action, driving improvement and growth.

Why should you care about business observability software?

If we had to pitch business observability software in 30 seconds, this is how we’d do it.

Functionality: It provides a structured approach to making data functional and aligning your key metrics with priorities.  

Alignment: It consolidates data sources and systems, decreasing siloed activities to provide a comprehensive view of the organization.  

Responsiveness: It identifies and analyzes data issues, anomalies, and trends near real-time, as a result making well-informed, timely decisions a possibility for everyone. 

Business observability software at 30,000 ft

Business observability gives you a complete, actionable understanding of your organization’s everyday health and performance with four pillars:

1. Collect
2. Detect
3. Inspect
4. Act

Collection

Collect, store, and manage data from a variety of sources across the organization to define KPIs and input metrics.

Detection

Autonomously monitor KPIs in real-time and detect unusual behavior. Using artificial intelligence and machine learning models, immediately identify trends, issues, and opportunities across key metrics.  

Inspection

Comprehend the data and insights generated to draw the best fitting conclusions. Inspect and analyze the root cause of issues and anomalies with contextual information behind each phenomenon.  

Action

Alert the right stakeholders in a timely manner to act on the insights, issues, and anomalies identified. Enable this with real-time monitoring, smart alerting capabilities, and key collaboration and communication integrations.  

The first step in incorporating this process is about enablement. Business observability software requires certain capabilities to function properly. These include:

• Plans: Detailed outlines for support and maintenance
• Access: To relevant data sources and systems
• RCA: Quick root cause analysis and action capabilities
• Tools: Easy-to-use data analysis resources

To generate insights, a business observability software needs this enablement. The next step to business observability is to have a clear understanding of your desired outcomes.  

This involves three simple questions:

1. What are my goals?
2. What are my needs?
3. What are my use cases?

What are your goals?

"What am I trying to achieve with this investment?" is the first question to ask yourself in the context of business observability software.

Maybe you want to:

• Improve customer satisfaction with faster issue resolution
• Reduce the frequency and severity of incidents  
• Eliminate distractions from higher-value priorities
• Save valuable time and maximize productivity
• Expand awareness by informing the state of your business operations

These are all action-oriented goals observability software can achieve for your business.

Once you've identified your goals, attach quantitative or qualitative metrics to them and set a regular cadence for tracking progress (a system like OKRs is inherently well-aligned with business observability for this reason).  

These will help you evaluate and demonstrate the success of each initiative.

What are your needs?

"What requirements must be met for this initiative to be successful?" is the second question to ask yourself in the context of business observability software.

You need end-to-end visibility into your business operations to detect, investigate, and resolve operational incidents. It’s not enough to track one aspect of your business alone.  

At minimum, a vendor should integrate with key systems like your customer feedback platform, sales and revenue data, marketing metrics, etc.

When choosing business observability software, think about how it will fit into your current processes. If you use Slack to communicate with your team, look for a solution that integrates with it. The easier a software meshes into your existing workflow, the more likely your team will use it.

Finally, consider the resources you can dedicate to this initiative:

• A managed solution, if your team operates at or above capacity
• A quick adoption self-serve option, if you have spare time and want an immediate setup
• An enterprise business observability software, if you have the resources and want a professional walkthrough during the process

Different software should specialize in different needs.

What are your use cases?

"How could this create real impact for my organization?" is the final question to ask yourself in the context of business observability software. Usefulness comes in many forms:

• Which issues your team has faced
• How you currently solve them
• Where you could use the most help

While usefulness isn’t limited to these issues, most use cases gravitate toward past problems, current solutions, or future opportunities. Here are some examples:

Issue: Identifying customer experience problems

Solution: Connect your omnichannel data to a business observability software

Issue: Investigating operational incidents through root cause analysis

Solution: Connect your data warehouse

Issue: Managing revenue data

Solution: Set up alert processes to notify key stakeholders as regional sales dip in territories 

Business observability is a powerful way to gain insights into the performance and success of your business. However, like any new initiative, challenges and pitfalls can arise.

Prepare accordingly to ensure your business observability program succeeds — here are the seven most common challenges:

1. Barriers

Business observability requires strong collaboration, coordination, and the ability to integrate a variety of data and insights. Organizations with siloed teams and limited systems will inhibit the capabilities of your business observability software.

2. Complexity

Business processes and systems can be difficult, distributed, and dynamic, making it complicated to understand how they work.  

3. Context

Business observability software aligns data and insights in the context of business goals. Developing an understanding of your organization’s ecosystem and objectives is challenging.  

4. Data overload

As the amount of data (and the power needed to process it) increases, manual tools, automated processes, and hands-off monitoring all must identify what’s relevant and actionable.

5. Decision making

Driving consistent change requires overcoming two friction points — engaging all stakeholders and deriving clear, actionable insights.

6. KPI focus*

With so many KPIs available, it’s hard to identify insights from the noise — as a result, choosing the right KPIs and forecasting scenarios brings uncertainty.  

_{* We’ll explore the importance of KPIs more in the next section.}

7. Skills and expertise

Data analysis, visualization, and root cause analysis are a few specialties needed in business observability software — these skills aren’t always available or may require technical training to develop. 

When implementing business observability software, KPIs measure the success of your efforts. Your approach to KPIs is critical for driving sustained results.  

There are three key components in the relationship between business observability software and your KPIs:

• Identifying and prioritizing important KPIs and metrics
• Establishing KPI ownership and accountability
• Evaluating insights effectiveness and developing a feedback loop  

Defining successful KPIs

Good KPIs mimic SMART goals — specific, measurable, attainable, relevant, and timely. They should be aligned with your business goals and objectives to help inform decision making.

KPIs exist in business observability software to measure the performance and health of your business against its objectives and goals. Good KPIs are relevant, but not limited to, the following categories:

1. Finance: Key metrics that provide insight into financial performance, revenue generated, and track costs and expenses
2. Retention: KPIs that measure customer loyalty and satisfaction
3. Performance: Indicators that measure the quality, reliability, and perceived value of products and services provided
4. Operations: Key metrics that measure effectiveness, cost efficiency, and quality of business processes and systems

Avoiding wasteful KPIs

These vague, difficult to measure, unrealistic, irrelevant, or out of date KPIs are the antithesis of good ones. They distract you from your business goals and waste valuable resources.  

Some examples of bad KPIs include, but are not limited to:

• Vanity: The number of likes on a social media post that won’t affect business objectives  
• Headcount: The number of employees, which may not directly impact business performance
• Volume: The number of new customers, exclusive of each customer's lifetime value or impact on overall revenue
• Traffic: The number of website visits, which doesn't always reflect the quality of the website experience or successful marketing efforts

Ownership and feedback

Defining KPI ownership fosters accountability and minimizes confusion about who is responsible for what. With the right people tracking and managing the right metrics, your teams can focus on improving KPI performance.

Business observability software helps stakeholders thoroughly inspect KPIs and share insights, encouraging active feedback to improve their quality and relevance over time. Better feedback loops add detail to regular reporting and review processes.

It’s not enough just to have a channel for feedback — ensure team members engage through that channel by rating, commenting, and suggesting improvements. To ensure consistency of engagement, use their feedback to improve analysis and interpretation of the data.

An AI/ML powered system will enhance this process, if available. 

Sure, business observability software has many proposed capabilities and benefits for your business. But you need proof it can work in practical, everyday scenarios your business may encounter.

In this section, we’ll cover business observability software use cases in:

• Product analytics
• Cloud cost monitoring
• E-commerce
• Marketing
• Telecommunications

Product analytics

Measure product performance, while monitoring trends, issues, and opportunities for improvement. Here are specific use cases in product analytics with business observability software.

Product usage and adoption

By tracking how customers interact with your product, business observability software provides insight into usage patterns, adoption rates, and user engagement.  

Product performance and reliability

By monitoring product performance data, software can uncover up-to-date product quality and reliability. This helps address current and future performance issues before they worsen.  

Customer feedback

By collecting feedback on customer journeys and satisfaction, software can reveal if customers are happy with their overall experience. Pair this with product usage and adoption metrics for insights into product-driven customer retention and growth.  

Cloud cost monitoring

Optimize your cloud environment and reduce costs by promoting visibility into cloud spend and usage patterns.

You can get detailed data on live cloud costs by integrating cloud provider APIs, cost management tools, and other data sources into your business observability software. Additionally, control unexpected costs by identifying areas for optimization and setting cost control policies to trigger alerts.

Some relevant cloud cost monitoring KPIs include:

1. Total spend: Measured in different granularities, like service, region, or account.
2. Spend by service: Specific areas like compute, storage, or networking, measured by different granularities like region or availability zone.
3. Usage by service: Such as the number of hours computed or the amount of data stored, measured by different granularities like region or availability zone.
4. Spend by resource: Specific areas such as EC2 instances or S3 buckets, measured by different granularities like instance type or tag.
5. Usage by resource: Such as the number of EC2 instances or the amount of data stored in S3 buckets, measured by different granularities like instance type or tag.

E-commerce

From dialing in channel performance to understanding consumer behavior, here are specific use cases in e-commerce with business observability software.

Conversion rate

Measures the percentage of visitors who make a purchase, tracked by product, category, customer demographic, interest, channel, or source of traffic.  

Average order value

The average spend per customer per purchase online, tracked by product, category, customer demographic, interest, channel, or source of traffic.

Customer acquisition cost

The average cost of gaining a new customer online, tracked by product, category, customer demographic, interest, channel, or source of traffic.

Page load time

Calculates webpage load time, tracked by page, page type, customer demographic, interest, channel, or source of traffic.

Transaction processing time

Assesses processing time of a transaction on a payment platform, tracked by product, category, customer demographic, interest, channel, or source of traffic.

Shopping cart abandonment rate

Evaluates the percentage of customers who don’t complete a purchase with items in cart, tracked by product, category, customer demographic, interest, channel, or source of traffic.

Return rate

Computes the percentage of customers who return a fulfilled order, tracked by product, category, customer demographic, interest, channel, or source of traffic.

Marketing

Optimize platforms and improve marketing performance with specific use cases in marketing with business observability software.

Campaign performance

Use metrics such as:

• Number of clicks and impressions
• Level of engagement
• Conversions generated by each campaign
• Cost per click (CPC)
• Return on investment (ROI) for each campaign

These metrics can break down further into categories such as advertising platform, target audience, and type of content or offer. A business observability software will return these metrics in real time, flagging anomalies to inform real-time decision making.

Channel optimization

Compare the performance of different marketing channels — for example, Google AdWords vs. Facebook Ads. You can also compare performance based on medium, such as video or display ads.  

With this level of information, teams can identify the most effective channels and optimize tactics accordingly. Channel integrations may include data from, but not limited to:

1. Advertising platforms: Google AdWords, Facebook Ads, and LinkedIn Ads. This data might include clicks, impressions, and conversions, as well as targeting and bidding strategies used for each campaign
2. Marketing analytics tools: Google Analytics and Adobe Analytics. This data might include website traffic, page views, and conversions, as well as the sources of traffic and the behavior of individual visitors on the website
3. Customer relationship management (CRM) systems: Salesforce, HubSpot, etc. — this includes data about customer interactions, behaviors, product and service interests, and effective channels and tactics for engaging with them

Telecommunications

Maintain customer connections with autonomous monitoring. Keep up with key indicators that maintain revenue and reputation with specific use cases in telecom.

Managed services

Stay connected to customers and get automatic alerts when issues occur. Churn prediction, configure-price-quote effectiveness, and service-level agreement confirmation are all shifted to a proactive approach.

Fraud detection

Avoid chain reaction events from fraud — inconsistent billing, reputation damage, negative impact on customer satisfaction, and churn potential — with real-time disarming capabilities.

Revenue protection

Create hands-off monitoring systems for critical data points like voice minutes per region, data use per segment, and total volume. 

You've seen some of the capabilities of business observability software. You understand the challenges and the required steps for their success.  

But why should you make a change from traditional dashboards or other monitoring platforms?

After all, incorporating another solution comes with its own challenges — friction with the new process, proof of concept, and resource investments.

Sticking with the status quo may work, for now, but your data needs are only going to become more complex. You don’t want to be caught playing catch up to your competitors.  

AI and machine learning are just the beginning of modern business intelligence. We understand both the excitement and fear when thinking about it. But leaning into these solutions now:

• Prevents risk and resource burn in the long term
• Creates business and competitive opportunities
• Improves your decision making from strategy to execution

If you’re interested in taking the next step to evaluate business observability software, make sure to check our cheat sheet in the next section. 

As you’re evaluating business observability software, check for the following core capabilities. Keep in mind this list is not exhaustive, but a starting point for conversations you need to have when considering a vendor.

1. Approach to action

• Configurable alerting and notifications system
• Collaborative insight sharing with team members and stakeholders
• User feedback to improve quality of AI-powered data analysis

2. Data collection

• Consistent and reliable data collection from desired sources
• Accessible storage and management
• Data privacy and security

3. Data compatibility

• Compatible with existing systems and data sources
• Supports custom integrations
• Extracts and analyzes data within those systems

4. KPI setup

• Defines metrics and performance indicators  
• Establishes targets and benchmarks for each metric
• Aligns with business goals and objectives

5. Real-time detection

• Rapid identification of unusual KPI behavior
• High-level descriptions of phenomena detected
• Machine learning algorithms adapt with KPI trends

6. Performance

• Handles large volumes of data and transactions
• Adapts capabilities and performance at scale
• Provides real-time insights and notifications

7. Price and licensing

• Provides capabilities within budget
• Offers license deals for different deployment structures
• Flexible with support and maintenance

8. Privacy and security

• Robust controls for information control
• Support for data encryption, authentication, and access
• Compliance with relevant regulations/standards (GDPR, etc.)

9. Real-time detection

• Automatic root cause analysis of unusual KPI behavior
• High-level descriptions of phenomena detected
• Machine learning algorithms to address and resolve events

10. User experience

• User-friendly, human-first interface
• Clear documentation and accessibility
• Supports different deployments — on-premises, cloud, hybrid, etc. 

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