DDI – Measuring Real-World ROI

This week’s blog (originally published Feb 2017) is courtesy of guest author Kevin Tolly, Founder of The Tolly Group, an award-winning analyst, author and speaker with 30 years of experience in the Information Technology industry.

Although almost always invisible to users, there would be no network communication at all without the humble IP address. Not only does every device – server, desktop and laptop PC, Mac, tablet, smartphone – have to have an IP address but those devices need also be configured to know the IP addresses of gateways and name servers that are essential to communications. With so many mobile devices added to the traditional corporate desktop/laptops, even relatively small organizations can find themselves managing hundreds – if not thousands – of IP addresses. As it is now expected that customers will be provided Internet access as well, companies like retailers that have high foot traffic can find themselves with thousands more IP addresses to deal with every day.

Managing these addresses manually can quickly become a significant burden as well as become a huge time drain on IT support staff. Worse, manual procedures are error-prone. Typically, the more boring the task, the less attention is paid and the higher the error-rate. Ask anyone who has had to do this task and they will confirm that it is boring.

Fortunately, the IT vendor community has recognized these challenges and IP Address Management – or IPAM – products provide a way for IT customers to automate address management. Recently, Tolly completed a study, commissioned by EfficientIP, that focused on how the economic benefits of DNS, DHCP and IP address management – DDI for short – can be quantified.

You owe it to yourself to download and review the detailed white paper, but I will share a few highlights. You can find the full paper here.

Based on customer data, the Tolly paper analyzed tasks that were required to complete in their manual management of IP addresses – the ‘before” scenario. The time required and the frequency of the tasks was estimated and labor costs calculated. The “after” scenario brought EfficientIP’s Smart DDI into the picture. Again time/effort calculations were made.

Our paper looked at two scenarios. One involved a customer with some 60,000 IP addresses to look after. In this scenario, we estimated a 3-year savings of more than $400,000 with an ROI of 281% and a payback period of just eight months.

The other scenario looked at a customer with 8,800 IP addresses. In this scenario, we estimated a 3-year savings of more than $50,000 with an ROI of 72% and a payback period of 16 months.

The benefits of automated DDI

The anecdotal evidence of the benefits of automation are clear – less labor intensive, better documentation, fewer mistakes… I could go on. Anecdotal evidence is nice, but empirical evidence is your best approach when looking to convince your CFO of the benefits of migrating to an automated IP address management solution. Fortunately, the benefits are so significant that even rough calculations of your IP address management task load will be sufficient to demonstrate the raw economic benefits of automation.

In our white paper, we list the management tasks that were relevant to our example customers. Chances are good that your tasks lists will be similar. So, you can start with what you find in our paper and modify to reflect your environment. Find out from the people who do the work roughly how many times each month they perform a given task. The information you have so far will allow you to estimate the time involved.

You can contact your finance department to get an approximate “loaded” hourly cost of the staff tasked with IP management. A little quick math and you can estimate the cost of your manual management. (Of course, this doesn’t factor in the cost of fixing mistakes made when managing IP addresses manually.)

Don’t forget to consider growth. A growing organization means more IP addresses to manage. Given that you are likely going to want to estimate a 3-year ROI, you will want to apply a growth factor for years two and three. After your quick math, you might be surprised to see how much it costs you to do this work.

This last part is easy. Tell your EfficientIP representative about your current needs and your projected growth. Let them tell you the investment needed to gain the benefits of automation. Put your numbers together with their numbers. It should be readily apparent that there is much to be gained from moving to DDI.