The economic downturn has precipitated a wave of mass layoffs and cost-cutting measures among the companies, particularly in the tech sector. In this episode of TFiR: T3M, Swapnil Bhartiya sits down with Kit Merker, Chief Growth Officer at Nobl9, to talk about the trends he has seen happening in terms of cost cutting and cost effectiveness and how Nobl9 can facilitate these initiatives.
Key highlights of this video interview:
- The Nobl9 platform provides a common understanding of reliability across an organization by defining service level objectives (SLOs).
- Merker states that cost cutting is a particular concern because one company’s cost cutting is another company’s revenue cutting — it affects the entire ecosystem. The trick to running a sustainable business is finding the balance between excellent service with efficient delivery.
- Layoffs create a very specific kind of pressure, especially on technology teams, where they no longer have the “slack” in their environment, i.e., the free time to work on projects.
- Cost cutting changes the calculus for build-versus-buy decisions. Merker explains that with an increase in availability of mature open-source solutions and cloud solutions, it becomes harder and harder for companies to justify DIY solutions.
- Open source is low cost in the sense that it’s free, but it is very expensive in terms of opportunity cost. Merker notes that you have to question the dollars that you’re spending in terms of opportunity cost versus the free software you’re getting now that the ecosystem has become inundated with open-source solutions from cloud providers.
- Consumers of open source have to be smart about the tradeoffs in terms of opportunity costs, as well as making sure that people maintaining the project get paid in some way.
- Customers are getting sophisticated about demanding from their vendors that they open APIs and let them take their data and that they make migration off of their platform straightforward.
- Incident management is essential but very expensive for organizations. Not everything that looks like an incident is necessarily an incident that needs to be dealt with right now. If they can reduce the temperature and frequency of emergencies and try to find ways to be more proactive, it would be a huge cost improvement.
- Business stakeholders need to understand the cost of reliability. If you’re working on features and new innovation, but your service is burning down because of technical debt, that’s not a good decision. SLOs can bring visibility to this.
- With the volume of data generated from observability systems, companies do not really have the time to analyze them, especially if services are running properly. Merker recommends that companies use SLOs to define the interesting times, e.g., a software release, an outage, and use that to drive their data retention policy. By doing this, they can dramatically reduce the amount of data storage they need. They keep the interesting moments, keep the annotations, and history of changes to the system, but they don’t need to store all the logs.
- Merker’s biggest advice for companies is to make sure they have the context of whatever cost-cutting activity they’re doing. If they want to serve their customers at a certain level, there’s a cost associated with that. So, they need to get down to those unit economics and truly understand the value. Being aggressive about cost cutting is important, but it has to be tempered with an understanding of what’s going to break the business as opposed to just removing excesses.
This summary was written by Camille Gregory.