AppDynamics Raises an $11M Series B Round – Confirms APM 2.0 Opportunity

When J2EE applications servers became a mainstream applications platform for implementing business critical web applications back in the 2002/2005 timeframe, the need to address the performance of applications built to these applications servers was addressed by several startups, all of whom were eventually purchased by Mercury Interactive (who later was purchased by HP), IBM, Compuware, Quest and CA. The leader of this generation of Applications Performance Management (APM) solutions was Wily Technology which was purchased by CA on March 7, 2006 for $375M – signaling an end to the days of startups targeting this space.

Since the 2006 time frame, some very significant changes have occurred to how applications are built and deployed. These changes have lead to a new set of requirements for how applications get managed which in turn has lead to a new set of startups who are addressing these needs. But first to the changes:

  • Virtualization and Cloud Computing have become mainstream considerations in how one manages the performance of applications. Simply put, if the application is important and the desire exists to put it on virtualized or private cloud infrastructure then an APM solution that is virtualization and cloud competent is required. Virtualization creates the requirement that the APM solution be able to look at an application system as a whole and map it from end to end in a continuous manner as virtualization causes the location and network dependencies of the components of the application to be dynamic as VMotion events occur. Cloud Computing requires that the agents in the APM system be able to communicate back to the management system for the APM solution over HTTP/S protocols so that monitored application can live on a totally separate network from the management system itself.
  • The economics and physics of how these applications are deployed have radically changed. In the 2005 timeframe J2EE applications were principally deployed on expensive middleware (BEA (now Oracle) WebLogic and IBM WebSphere) with large complex applications running in relatively few servers on relatively expensive hardware. Over the last few years, many of these applications have been broken up into smaller pieces which are then scaled out to multiple servers. The choice of deployment platform has also migrated towards inexpensive open source solutions like JBoss and Tomcat. Taken together these changes mean that applications have moved from a small number of very expensive servers to a much larger number of much more inexpensive servers. This scaled out nature of the applications deployment again creates the need for very good, dynamic and continuous applications topology mapping so that the owners of the application can understand their application in its entirety in one view.
  • Agile Development techniques have replaced yearly code releases into production with monthly and sometime weekly releases. So now new code is going into production on a large number of scaled out servers that are themselves subject to dynamic operations initiated by the underlying virtualization and cloud software layers. This creates a premium for out-of-the-box functionality and a need for minimal ongoing management and tuning.
  • Platform as a Service (PaaS) clouds like VMforce will further reduce the time, effort and money required to move an application into production. This plays into the same economics that are driven by open source middleware, and also reinforces the need for APM solutions that can handle dynamically changing deployments across public and private clouds.

Taken together, the above dynamics have come together to create a new market opportunity for APM 2.0 vendors. The key vendors leading this charge are:

  • AppDynamics (founded by Jyoti Bansal, an ex-Wily architect)  who yesterday announced that they have closed on an $11M Series B round of financing from Greylock and Lightspeed. This is on top of an earlier $5.5M A round. This level of investment from top tier Silicon Valley venture investors indicates both awareness of and confidence in this new market opportunity. AppDynamics includes application topology mapping, “zero-configuration” out of the box functionality, and cloud aware communications approaches in its product and offers it product both for onsite purchase and deployment and as a SAAS hosted offering.
  • New Relic (founded by Lew Cirne the founder of Wily) got this party started a couple of years ago with a SAAS based offering that focused on Ruby-on-Rails applications. New Relic now also supports Java based applications and is the clear leader in this space in terms of customers and production deployments with over 3,500 customers over 1,500 of whom have their monitored applications deployed in clouds.
  • BlueStripe (another startup founded by ex-Wily executives) is not focused on just Java applications, but rather any application that communicates with other components of the application over TCP/IP. BlueStripe is unique in that it is the only solution currently on the market that provided an end-to-end response time with a hop-by-hop breakdown of that response time number for all applications running on any combination of a physical, virtual, or cloud based infrastructure.
  • In May 2008, VMware acquired B-hive Networks and has subsequently productized the technology acquired from B-hive as VMware AppSpeed. AppSpeed is a virtual appliance that sits on the virtual mirror port on the vSwitch in the VMware host. AppSpeed is able to see all of the interactions between the guests on a host and between the guests on a host and other guests or physical computers from this vantage point. AppSpeed can decode and understand web, Java and database protocols and can as a result provide a dynamic topology map and and end-to-end response time picture for the application. However since AppSpeed is not based upon Java Byte Code Instrumentation as are AppDynamics and New Relic AppSpeed cannot provide the code level diagnostics provided by these two solutions. AppSpeed is also (at least not today) architected to handle portions of applications deployed in public clouds.

The table below compares the solutions from these four vendors:

Feature/Capability AppDynamics BlueStripe New Relic VMware AppSpeed
Data Collection Method Agent in the application that uses J2EE Byte Code Instrumentation Agent in between the OS and the application Ruby-on-Rails and Java agent that resides in the monitored application. Virtual Appliance on virtual mirror port in each vSphere host
Application Topology Mapping Yes Yes No Yes
Support Mixed Internal/Cloud Deployment Yes Yes Yes No
Suited for Agile Development (works out of the box) Yes Yes Yes Yes
Location of Management System On premise, or hosted by AppDynamics On Premise SAAS Solution – hosted by New Relic On Premise
Scope of Applications Support Java All TCP/IP based applications Ruby-on-Rails and Java Any HTTP, Java, or database based application
Code Level Diagnostics Yes No Yes No