Cisco has released the fifth annual Splunk State of Observability 2025: The Rise of a Business Catalyst report, which underscores how observability has evolved into a strategic business function. The research reveals that observability is now directly linked to business outcomes, influencing areas such as customer experience, employee productivity, and product innovation.
Based on insights from 1,855 IT operations and engineering professionals worldwide, the report shows that observability has moved beyond a purely technical role to become a boardroom priority. Businesses are increasingly relying on observability data to understand customer behaviour, forecast product roadmaps, and make decisions that impact revenue and brand perception.
According to the findings, 74% of respondents said observability improves employee productivity, while 65% reported that it contributes positively to revenue. Another 64% stated that observability plays a role in shaping product roadmaps. Most respondents agreed that observability is crucial for monitoring core business processes and understanding customer journeys.
Patrick Lin, Senior Vice President and General Manager of Observability at Splunk, a Cisco company, said, “Observability practitioners are becoming critical stakeholders to key business decisions in customer engagement strategies, product roadmaps and more. The full life cycle and workflow of observability – from data collection and analysis to deriving actionable insights and implementing improvements – provides not just better context, but also support for the achievement of better results, whether in customer satisfaction, product innovation or the safeguarding of AI systems at scale.”
Observability in the age of AI
The study highlights how observability is shaping the way organisations manage AI systems and digital operations. However, the growing complexity of AI workloads presents new challenges. Nearly half (47%) of respondents said that monitoring AI systems has made their jobs more demanding, while 40% cited a lack of expertise as a major barrier to AI readiness.
To overcome these issues, companies are integrating AI tools into their observability workflows. About 76% of respondents said they already use AI-powered observability tools to streamline troubleshooting and reduce downtime. This has allowed 78% of teams to spend more time on product innovation rather than maintenance. A further 60% believe AI will enhance troubleshooting and root cause analysis, while 58% expect improvements in detecting security vulnerabilities.
Despite these advantages, Splunk’s research suggests organisations need to invest more in upskilling observability practitioners to manage AI-driven environments effectively. Training employees to handle AI workloads could help businesses balance innovation with operational stability and cost control.
OpenTelemetry driving better outcomes
OpenTelemetry, an open-source framework managed by the Cloud Native Computing Foundation, has become the standard for collecting data such as traces, metrics, and logs. The report highlights that organisations using OpenTelemetry benefit from greater data quality and lower technical debt, which in turn improves generative AI performance.
Businesses adopting OpenTelemetry are seeing tangible results across operations. Around 72% reported improved revenue growth, and 71% saw better operating margins and brand perception. Companies identified as “power users” of OpenTelemetry achieved three times higher employee productivity and twice the improvement in customer experience compared with less frequent users.
The study also found that 57% of regular OpenTelemetry users apply observability-as-code principles, treating observability configurations like code to improve standardisation and scalability. In contrast, only 10% of less advanced users do the same, highlighting a clear gap between leaders and laggards in observability maturity.
Observability leaders driving ROI and resilience
The report identifies a group of “observability leaders” – organisations achieving above-average business results by investing in advanced observability frameworks and practices. These leaders see a 125% annual return on investment from their observability programmes, which is 53% higher than other respondents. The ROI stems from reduced downtime, lower employee turnover, and faster incident resolution.
Additionally, 78% of these leaders accelerate root cause analysis through code profiling, which helps pinpoint the exact source of technical issues. Strong collaboration between observability and security teams also sets leaders apart, with 59% reporting improved data sharing and 44% noting that their IT, engineering, and security departments work more effectively together.
Shannon Kalvar, Research Director at IDC, said, “For a modern business, built on digital experiences, observability is not just about error resolution; it is a foundational discipline required for making business-shaping decisions at speed and scale.”
As organisations continue to adopt AI technologies, observability is becoming central to achieving greater operational intelligence, innovation, and resilience.
