5 stages to observability maturity
When CIOs talk about observability, they may refer to log dashboards, real-time causal graphs, or AI agents that surface business risk before customers feel an impact. The term has become so overloaded that even seasoned analysts sometimes flinch when they hear it.
One of them is Forrester’s Carlos Casanova, who says the industry has misused and abused the term to cover everything from application performance monitoring (APM) tools and network telemetry, to full-blown platform intelligence. Beneath the confusion, however, something more important is happening. Observability is evolving through a series of distinct stages toward a future where systems not only detect and diagnose issues, but autonomously resolve them based on business impact.
Interviews with three technology leaders reveal a clear five-stage maturity model. Movement through the different stages isn’t just a change in tooling. According to Michael Woodside, director of global DevOps at e-commerce advertising and optimization platform Pacvue; Jeremy White, VP of engineering at technology provider SpotOn; and Khushboo Nigam, Oracle principal cloud architect, progress in observability reshapes how enterprises protect revenue, ensure customer experience, and govern the AI systems they increasingly rely on.
## Stage 1: Monitoring — a reactive view of what already broke
Traditional monitoring was built around thresholds, metrics, and dashboards. It alerted teams when something crossed a predefined boundary like CPU spikes, error rates, or latency thresholds. Monitoring was reactive by design as it told you something had gone wrong after it went wrong. In its day, that was enough. When systems were monolithic and on-prem, and failure domains small, incident chains were relatively predictable.
But those days are gone. Distributed systems now generate vast volumes of telemetry, and a failure in one microservice may ripple through dozens of dependencies. A threshold-based alert offers little guidance on why something happened, or whether leadership should treat it as a minor nuisance or a million-dollar emergency.
CIOs need something more sophisticated — something forward-looking, contextual, and tied to business impact.
## Stage 2: Technical observability — seeing across the stack
The shift from monitoring to observability introduced a deeper, richer understanding of system behavior. Modern observability platforms ingest logs, metrics, traces, and configuration context; map service dependencies; and provide engineers with the means to reconstruct how incidents unfold.
But this explosion in data brought on a new problem. At SpotOn, which serves restaurant and hospitality businesses, White and his teams run core services and infrastructure to keep payments, ordering, and in-store systems operational across highly distributed environments. He describes how the company’s initial experience with observability platform Grafana Cloud created a signal-to-noise overload. “We went from not enough data to too much data,” he says. Engineers had the granular telemetry they asked for, but lacked ways to discern what mattered. Observability solved the “what happened” problem but not the “what does it mean” problem.
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Jeremy White, VP, engineering, SpotOn
SpotOn
Technical observability accelerates diagnosis, but without a business frame, it still overburdens humans. This naturally leads to the next stage of connecting telemetry to revenue, customer experience, and risk.
## Stage 3: Business observability — when technical signals meet money
Business observability is where observability becomes a strategic CIO concern rather than an engineering concern. In this stage, organizations move beyond telemetry and ask more consequential questions: What transactions are at risk? How does latency affect conversion? What’s the revenue impact of this degradation? Which customers should receive proactive outreach? How do we prioritize incidents during peak business windows?
CIOs want to know not only what’s happening, but what it costs. Pacvue, which helps brands manage and automate campaigns across marketplaces, provides a clear demonstration of this shift. Woodside’s team analyzes how operational metrics correlate with business outcomes, especially churn. “When your MTTR [mean time to resolve] drops, your churn rate drops,” he says. Similarly, reducing bugs in production increases retention rates. Automated observability feeds the CI/CD pipeline, reducing bug counts, stabilizing features, and improving customer retention. For Woodside, this is bottom-line impact — not theoretical, but measurable.
Oracle’s Nigam, who works directly with enterprises designing cloud and observability architectures, explains the structure behind this linkage. SLIs (service-level indicators), such as latency or error rates, feed into SLOs (service level objectives), which in turn support SLAs (service level agreements). “Leadership and customers see SLAs,” she says, “but SLAs come directly from baseline telemetry.” When that telemetry isn’t collected, or worse, collected inconsistently, organizations can’t quantify business risk.
SpotOn’s White adds a customer-experience dimension. His team now proactively identifies restaurants with network issues, often before the restaurants themselves are aware. The shift is dramatic. “When service providers contact you because they see something wrong, it flips the whole experience,” he says. Customers feel supported rather than frustrated, even when the underlying issue is identical.
Business observability transforms observability from a technical safety net into a business resilience system. But to operate at scale, it requires a new partner: AI.
## Stage 4: AI-assisted observability — context, correlation, and copilots
The arrival of AI doesn’t replace observability, but takes it to another level. With telemetry volumes skyrocketing, human interpretation becomes the bottleneck. Teams lack time, context, and cognitive bandwidth, not data. AI copilots are starting to bridge that gap.
Casanova likens AI to a storm forecaster. A local engineer might understand conditions in Paris or London, he says, but no one sees the massive meteorological system forming across the Atlantic. AI stitches together signals across domains, identifies patterns no single team monitors, and predicts cascading effects before they manifest as incidents.
Nigam notes that AI copilots excel at parsing hundreds of thousands of log lines, summarizing causal chains, and offering hypotheses about what’s broken. This accelerates mean time to detect, and mean time to understand.
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Khushboo Nigam, principal cloud architect, Oracle
Oracle
Woodside observes that AI explainability — breadcrumbs, as he calls them — has become crucial for trust. When an AI-generated diagnosis shows precisely how it reached its conclusion, engineers adopt it faster and hesitate less. One outcome for his DevOps organization is engineers spend far less time babysitting logs and more on cost optimization and architectural improvements.
But here, observability takes another evolutionary leap. AI doesn’t simply augment observability, it becomes yet another system that must be observed since AI models drift, degrade, produce variable answers, and occasionally hallucinate. Today’s observability pipelines must incorporate new kinds of telemetry: drift indicators, data freshness checks, variability metrics, hallucination monitoring, and guardrails for trustworthy action. The enterprise that relies on AI must ensure that the AI itself remains reliable, auditable, and stable.
In this stage, observability becomes a two-way system. AI strengthens observability, and observability strengthens AI.
## Stage 5: Autonomous operations — from insight to action
The final stage of the evolution isn’t just about detecting or diagnosing incidents, but autonomously resolving them. This is already happening in pockets across the enterprises interviewed.
At Pacvue, Woodside describes a production workflow increasingly driven by AI agents. One agent performs the investigation and another handles potential remediation. For low-risk scenarios, actions can be executed automatically. For others, such as persistent data stores, his teams maintain human approval loops. This balance allows them to scale automation while maintaining safety.
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Michael Woodside, director, global DevOps, Pacvue
Pacvue
The key innovation here is the emergence of agent-to-agent protocols, which allow AI agents to pass full context to one another, much like microservices exchanging messages. Once context is machine-readable, machines, not humans, become the primary operators for many tasks.
At SpotOn, White sees the impact in the collapse of escalation chains. New engineers historically depended on a handful of veterans who knew the system’s hidden dependencies. But with AI providing contextual explanations, junior engineers join incident calls with confidence and effectiveness. This also reduces bus-factor risk, the danger that critical systems depend on the knowledge of one or two individuals, creating fragility if they’re unavailable.
Autonomous operations elevate humans, not eliminate them. Organizations begin by automating investigative steps, then remediating for low-risk scenarios. Over time, as trust, transparency, and governance mature, automation will expand steadily into higher-value workflows.
## How to advance along the five-stage maturity model
Organizations can’t reach autonomous operations simply by adding more dashboards or turning on select ML features. Autonomy requires observability in two dimensions: business observability and AI observability. Both demand a level of discipline few enterprises have yet achieved.
The first requirement is coherence. Companies must move away from fragmented tooling and build unified telemetry pipelines capable of capturing logs, metrics, traces, and model signals in a consistent way. For many, this means embracing open standards such as OpenTelemetry and consolidating data sources so AI systems have a complete picture of the environment. Without this foundation, even the most sophisticated AI copilots have little reliable context to work with.
The second requirement is business alignment. Enterprises that successfully evolve from monitoring to observability, and from observability to autonomous operations, do so because they learn to articulate the relationship between technical signals and business outcomes. Leaders want to understand not just the number of errors thrown by a microservice, but customers affected, the revenue at stake, or the SLA exposure if the issue persists. Business observability is the discipline that makes such conversations possible, and it provides the economic rationale for moving toward automation.
A third element is AI governance. As Nigam says, AI models change character over time, so observability must extend into the AI layer, providing real-time visibility into model behavior and early signs of instability. Companies that rely more heavily on AI must also accept a new operational responsibility to ensure the AI itself remains reliable, auditable, and secure.
Finally, organizations must learn to construct guardrails for automation. Casanova and Woodside both say the shift to autonomous operations isn’t an overnight leap but a progressive widening of the boundary between what humans review and what machines handle automatically. Mature organizations begin by automating investigative steps, then remediation steps for low-risk scenarios, and eventually more complex workflows once confidence and traceability are established.
Collectively, these elements form the scaffolding for the next era of digital operations. They make it possible for observability to represent business reality rather than engineering noise, and for automation to become not a risk but a strategic advantage.