Current landscape
Our changing world
As the world constantly changes around us, CEOs are transforming and reinventing their businesses in response to regulatory expectations, economic and geopolitical challenges, technological leaps – particularly AI, climate risk and evolving customer preferences. The imperative for transformation is amplified by a shifting regulatory landscape, where regulators worldwide (including Australia's APRA) are increasingly demanding operational resilience be on par with financial resilience. This has led to new policies and guidelines aimed at strengthening critical systems and processes, underscoring the need for businesses to prioritise operational resilience to better serve their stakeholders.
The Survey indicated that over 44% CEOs consider that Technological Change and Government Regulation will significantly drive changes in the way their company creates, delivers, and captures value in the next 3 years.
The pressures of the current landscape are forcing organisations to transform and reinvent or risk obsolescence. And the reinvention imperative is widely accepted. PwC’s 27th Annual Global CEO Survey revealed that 45% of global CEOs doubt their companies' long-term viability if they continue their current path, highlighting an understanding of the need to reinvent their business to ensure future viability. Leaders are acutely aware that urgent and transformative change is essential for survival.
Observability in the current landscape
At PwC, we believe firmly in the power of observability to navigate today’s business world.
An inherent ability of an entity to allow exploration and analysis through immutable externalized outputs. Exploration of its characteristics and behavioral patterns provides real-time visibility; real-time and historical analysis interprets and infers the internal state and operations to provide insights and actionable information.
Forresteron 'Observability' 1Observability’s importance is heightened by the growing complexity of modern IT environments and the increasing demands for operational resilience. This enables organisations to:
Proactively identify and mitigate risks
By detecting anomalies and patterns in telemetry data, organisations can address potential issues before they escalate into major incidents, minimising the impact on business operations.
Respond to incidents more quickly and effectively
Observability data provides valuable context and insights into the root cause of incidents, enabling faster diagnosis and resolution.
Optimise system performance and resource utilisation
By identifying bottlenecks and inefficiencies, organisations can fine-tune their systems to improve performance and reduce costs.
Make data-driven decisions
Observability data can be used to inform decision-making across the organisation, from IT operations to business strategy.
Establish the foundation for AIOps
Observability provides rich, real-time data that fuels AIOps, enabling intelligent automation, anomaly detection, and predictive insights for proactive IT operations.
Have a steel thread across business transactions
Observability acts as the connective tissue across complex systems, providing end-to-end visibility into customer journeys, service dependencies, and performance bottlenecks. This holistic view is essential for optimising business processes, ensuring SLA compliance, and delivering superior customer experiences.
While the promise of observability is compelling, the path to implementation is often fraught with challenges. These obstacles often stem from the inherent complexities of the contemporary IT environments, the limitations of traditional monitoring approaches, and the evolving nature of technology itself. Challenges for observability in the modern IT environment include:
Data silos: Modern IT landscapes are often fragmented, comprising a multitude of disparate systems, applications, and infrastructure components. Each of these generates its own telemetry data, often in different formats and stored in separate locations. This creates data silos that impede a holistic view of system behaviour, making it difficult to correlate events, trace root causes, and identify emerging patterns.
Data overload: The sheer volume of telemetry data generated by today's systems can be overwhelming. Metrics, logs, and traces are produced at an unprecedented rate, making it challenging to collect, store, and analyse this data effectively. Traditional monitoring tools and manual analysis methods simply cannot keep pace with this data deluge, leading to valuable insights being lost in the noise.
Skills gap: Observability requires specialised skills and expertise. Organisations need individuals who understand the intricacies of telemetry data, can interpret complex system interactions, and are adept at using observability tools and platforms. However, there is a significant shortage of skilled professionals in this field, hindering the adoption and effectiveness of observability solutions.
Cost and complexity: Implementing and maintaining a comprehensive observability solution can be a substantial investment. It requires financial resources for tools and infrastructure, and a commitment to ongoing training and development for IT staff. The integration of observability into existing systems and workflows can also be complex, requiring careful planning and execution.
Evolving technology landscape: The technology landscape is in constant flux, with new tools, platforms, and methodologies emerging at a rapid pace. This makes it challenging for organisations to keep up with the latest trends and best practices in observability. Additionally, the dynamic nature of modern systems, with frequent updates and changes, can make it difficult to maintain observability over time.
Despite these challenges, achieving observability is not an insurmountable task. By adopting the right strategies and leveraging the latest technologies, organisations can overcome these obstacles and build more resilient, agile, and efficient IT infrastructure, to drive ongoing value long-term.
How observability makes a difference
In the intricate web of modern business operations, where digital transactions traverse a complex landscape of interconnected systems, applications, and infrastructure, observability emerges as the indispensable linchpin and casts a spotlight on the entire customer journey.
The cost of inaction
As highlighted in PwC’s survey, CEOs perceive significant inefficiencies in their companies' routine activities, with an estimated cost equivalent to a substantial tax on productivity. In the context of operational resilience, the inability to achieve an appropriate maturity level in observability can lead to:
Increased downtime and service disruptions: Undetected issues can escalate into major incidents like what we saw in a well published event in the financial services sector, resulting in prolonged downtime and service disruptions, impacting customer experience, trust, and revenue.
Reputational damage: A lack of operational resilience can damage an organisation's reputation, eroding customer trust and loyalty, as we have seen in the wake of the recent privacy and data breaches impacting millions of customers.
- Regulatory non-compliance: In regulated industries, failure to meet operational resilience standards can result in fines and penalties, and we are now witnessing significant penalties being explored by Australian regulators as a consequence of not adhering to operational resilience standards.
- Financial losses: Downtime and service disruptions can lead to significant financial losses due to lost productivity, revenue, and customer churn.
Observability the steel thread, connecting systems, applications, infrastructure
However, for those who achieve observability, it acts as a steel thread weaving through every layer of business operations. It provides the end-to-end visibility crucial for understanding, tracking, and optimising every step of a business transaction - from the first customer interaction to the fulfillment of service level agreements (SLAs). The obligations of service providers, while enabling regulatory compliance.
By instrumenting customer-facing applications, digital channels and the entire service backbone, businesses can track user interactions, monitor engagement patterns, and identify pain points, and ascertain gaps. This enables businesses to proactively address issues, personalise experiences, and ultimately, enhance customer satisfaction and remain compliant to regulatory needs.
Also, observability extends its reach beyond internal systems. Today, organisations often rely on multiple third-party service providers for critical functions, and observability enables businesses to monitor the performance and reliability of these external dependencies. By tracking key metrics and service level obligations (SLOs), organisations can ensure service providers meet their contractual obligations and maintain agreed levels of service. This not only safeguards business operations but also fosters accountability and transparency within the service provider ecosystem, mitigating the risks associated with third-party dependencies. This leads to improved system reliability, reduced downtime, and cost savings, directly impacting the bottom line. In the current climate where CEOs identify inefficiency as a significant concern, observability offers a tangible solution for optimising resource utilisation and improving productivity.
Observability is not just about maintaining the status quo. It acts as a catalyst for innovation and agility by providing a comprehensive view of system behaviour and an ability for organisations to experiment with new technologies and approaches, confident in their ability to monitor and manage risks.
Building business resilience, responding and adapting swiftly to change
In the face of escalating cyber threats, complex regulatory scrutiny, and the constant pressure to innovate, operational resilience is no longer a luxury but a strategic imperative. Observability, with its ability to provide deep insights into system behaviour and performance, has emerged as a critical tool for building and maintaining this resilience. Observability supports strengthened operational resilience through:
- Proactive issue detection and faster incident resolution
- Risk mitigation and compliance
- Capacity planning, performance optimisation, and cost efficiency
- Business continuity and disaster recovery
Proactive issue detection and faster incident resolution
Observability enables organisations to shift from reactive to proactive IT operations. By continuously monitoring telemetry data, businesses can identify anomalies and potential issues before they escalate into major incidents. This early warning system allows for swift intervention, minimising downtime, reducing the impact on customers, and safeguarding brand reputation. In the event of an incident, observability data provides valuable context and insights, enabling faster root cause analysis and resolution. This translates to reduced mean time to resolution (MTTR), improved service availability, and enhanced customer satisfaction.
Risk mitigation and compliance
Observability plays a crucial role in risk mitigation and regulatory compliance. By providing a comprehensive view of system behaviour and performance accountability, it enables organisations to identify vulnerabilities, assess potential risks, and implement proactive measures to mitigate them. Observability insights demonstrate compliance with industry standards and regulations, such as those mandated by GDPR in Europe or APRA in Australia. This not only helps avoid costly fines and penalties but also builds trust with regulators, stakeholders and customers.
Capacity planning, performance optimisation, and cost efficiency
Observability data provides valuable insights into system reliability and performance, resource utilisation, and capacity trends. By analysing this data, organisations can make informed decisions about capacity planning, ensuring their systems can handle peak loads and unexpected spikes in demand. Additionally, observability can help identify performance bottlenecks and optimise resource allocation, leading to improved efficiency and cost savings.
Business continuity and disaster recovery
A robust and expanded observability strategy could have played a pivotal role in mitigating and resolving the recent - well publicised - extended outage experienced by a prominent Australian FSI client. By providing real-time visibility into system status and performance, observability enables organisations to quickly assess the impact of the disruption, identify critical systems and processes, and prioritise recovery efforts. This can significantly reduce the time it takes to restore normal operations, minimising financial losses and reputational damage. The ability to recover quickly from disruptions is a key aspect of operational resilience, and observability plays an increasingly important role in enabling this capability.
Implementing observability: a strategic roadmap
Implementing observability is a strategic initiative that requires careful planning, execution, and ongoing refinement. It involves a cultural shift towards proactive monitoring, data-driven decision-making, and continuous improvement.
Key considerations: what we recommend
Best practices for Implementing Observability
Start small and iterate: Resist the urge to implement observability across your entire organisation overnight. Start with a pilot project focused on a specific system or application. Learn from your successes and failures, and gradually expand your observability efforts over time.
Prioritise critical systems: Focus your initial efforts on the systems and applications that are most critical to your business operations. This will help you maximise the impact of your observability initiatives and demonstrate value to stakeholders.
Foster a culture of observability: Observability is not just about technology; it's also about people and processes. Encourage collaboration between development, operations, and security teams. Promote a culture of continuous improvement, where data-driven insights are used to identify and address issues proactively.
The future
Observability and the transition to AIOps
The future of observability is intrinsically linked to the rise of Artificial Intelligence and AI enabled Operations (AIOps).
A practice that combines human and technological applications of AI and machine learning, advanced analytics, and operational practices to business and operations data. AIOps enhances human judgment, proactively alerts on known scenarios, predicts likely events, recommends corrective actions, and enables automation. It is fuelled by coalescing and transforming sensory data into AI-enriched actionable information
Forresteron 'AIOps' 1The transition to AIOps is a journey requiring a phased approach. It starts with the implementation of basic observability practices and gradually incorporating AI and machine learning capabilities. Organisations should start by identifying the areas where AIOps can have the most significant impact and then select the right tools and platforms that align with the specific needs and objectives.
While AIOps offers significant benefits, it can only do so with high-quality data. Models rely on accurate and comprehensive telemetry data to make accurate predictions and recommendations. Organisations must ensure their observability practices are mature enough to provide the necessary data quality. AIOps requires expertise in both IT operations and data science, and organisations may need to invest in training and development programs to upskill their existing staff or hire new talent with the required skill sets when necessary.
With the right foundations in place, the potential benefits of AIOps are too significant to ignore and can radically help transform IT operations, improve operational resilience, and gain a competitive edge in the digital age.
What PwC can do
Observability is not just about technology; it's about leaping ahead of the competition in an increasingly complex and unpredictable environment. By harnessing the power of observability, organisations can unlock new opportunities for growth, innovation, and success.
Are you ready to unlock the full potential of observability and transform your business or make it more resilient?
PwC can help you in your observability journey, providing the following expertise to align observability with your business goals and deliver tangible results:
Observability and business resilience assessment: A review of your observability and business resilience capabilities against our leading resilience framework. This helps you assess the relative maturity of your resilience capabilities and obtain recommendations and roadmap for how to improve.
Building your resilience capabilities: Our experts work with your resilience teams, business stakeholders, and capability owners to set up a fit for purpose resilience function, identifying your critical business services, mapping resources, setting impact tolerances and running scenario assessments to identify areas needing investment to uplift resilience.
Digital twin for operational resilience: We will work with you to develop a digital twin to objectively assess your operational resilience through scenario analysis and stress testing.
Now is the time for reinvention by harnessing the power of observability to build business resilience into the future.
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