The New Leaders of the Management Software Industry

Since the inception of the modern software industry in the mid-1980s, the management software industry has been led by the big four: IBM, BMC, HP, and CA. Due to the needs of the software-defined data center and the cloud, a new set of leaders and innovators has emerged. This post will cover the new leaders, and my next post will cover the new innovators.

The New Leaders of the Management Software Industry

This post addresses the operations management, application-aware infrastructure performance management, application performance management, automation, and cloud management segments of management. It does not cover security or data protection.

With the above scope in mind, here are the leaders of the new management software industry. Note that these vendors are listed alphabetically, not in any sort of ranking. These leaders were chosen on the basis of their market traction and their ability to deliver new technology to solve new problems in the software-defined data center and the cloud in new and appropriate ways:

  • AppDynamics: AppDynamics is a leader in the new application performance management business. AppDynamics’s key innovations have been a Java agent that could (and still can) be deployed directly in production with no configuration, and a system that automatically discovers business transactions and makes the focus of its monitoring the transactions, not just individual JVMs. AppDynamics is widely used by enterprises engaging in Agile Development and DevOps, since it works very well when applications are changing frequently (it does not have to be reconfigured when you change an application). AppDynamics has raised $206.5 million in six rounds, and the valuation of the company at the last round was reported to have been over $1B.
  • CiRBA: CiRBA is a leader in the business of applying automated analytics to operations management for the purpose of optimizing the capacity utilization of the data center and the placement of workloads within the data center. CiRBA has raised $32 million in three rounds.
  • ExtraHop: ExtraHop is a leader in collecting and analyzing “wire data” for the purpose of ensuring application performance and availability. ExtraHop’s key innovation is the ability to collect wire data from taps and span ports on switches at scale and at line rate. If you have a 64-port switch, a copy of all of the data from all of those ports is forwarded to the tap or span port. This produces more management data (20 million bits per second per switch) than any other form of data collection. ExtraHop can collect this data in real-time and, more importantly, perform analysis of the contents of the packets in real-time, providing real-time insights into how applications are working from the perspective of the network. The network perspective is a critical element here, as what ExtraHop provides is an analysis of the actual data flowing between the components of an application system, which is different and more valuable than a metric reported by an operating system. ExtraHop has raised $60.1 million in three rounds.
  • New Relic: New Relic got the new application performance management business started when it released the first support for Ruby, the first APM SaaS offering, and the first partnerships with cloud vendors. Today, New Relic has more than 200,000 users of its APM solution, monitoring more than 3 million applications, which is more than the rest of the APM industry combined. All of the data from these applications flows into the New Relic cloud-hosted back end. New Relic is now branching out into giving its customers insights gleaned from its data set, the largest cross-customer data set of APM data in the world. New Relic has raised $214.5 million in six rounds, and the valuation at the last round was reported to be over $1B.
  • Puppet: Puppet is a leader in deploying and configuring operating systems, middleware, and applications in a highly automated manner and then allowing you to ensure consistency in your environment across any mix of physical, virtual, or cloud infrastructure. Puppet works by allowing you to define the desired state of your environment with a powerful declarative configuration language. Puppet has raised $85.5 million in five rounds from investors.
  • SevOne – SevOne has taken a unique approach to managing large scale networks and systems with excellent performance from the management system. SevOne installs a series of hardware appliances in the customer environment which operate as peers. Each appliance collects data from a portion of the environment, but all of the appliances know about each other’s data. When a query or a dashboard update is launched against the system the query is distributed to the appliances that have the relevant data. This means that SevOne is uniquely able provide excellent performance of its system to its users as the customer environment and the SevOne environment scales out. SevOne currently monitors in excess of 100 million objects across its entire customer base. SevOne has raised a total of $152 million dollars from venture investors making it an extremely well funded company.
  • Splunk: Splunk got its start making it easy to collect log data, and then making it easy to get insights from log data. By making log data easier to collect and then making it more valuable, Splunk caused many more things to start being logged. Splunk now has a large number of different apps that Splunk wrote itself, and it has a large ecosystem of partners. It has branched out beyond logs and now collects the operational metrics from platforms like operating systems and VMware vSphere. In fact, the data-collection capabilities of Splunk and its ecosystem are so robust that it is possible to replace legacy management frameworks with Splunk and its ecosystem. See “Replacing Franken-Monitors and Frameworks with the Splunk Ecosystem,” our post that documents Splunk and its considerable ecosystem. Splunk is a public company and did $102 million in revenue in its most recent quarter. The total value of the company is $6.7B.
  • Virtual Instruments: Virtual Instruments is the leader in infrastructure performance management, which is the new business of understanding the performance of an infrastructure by deeply understanding the end-to-end latency of its response to requests for work from workloads. Virtual Instruments is the only company that can help an enterprise understand how Fibre Channel attached storage is impacting application performance on a continuous, deterministic, and real-time basis. Virtual Instruments has raised $66.5 million in five rounds.
  • Virtustream: Virtustream is a leader in the business of providing cloud computing services to enterprises—not just for “new” cloud-ready applications, but for the applications that the business depends on (like SAP). In fact, Virtustream is the only cloud computing platform that offers SAP customers a response-time guarantee for their SAP applications. Virtustream offers its cloud in its own data centers, on-premises through its xStream software, and through partners like IBM. Virtustream has raised $129.6 million in nine rounds.
  • VMware: VMware is a leader in the new operations management business (vCenter Operations), the new cloud automation business (vCloud Automation Center), and the brand-new business of managing IT like a business (IT Business Management Suite). All of these components are bundled together in the new VMware vRealize Suite. The key thing about the vRealize Suite is that it is not just a management suite for vSphere. It has full support for other hypervisors, like Hyper-V, and full support for Amazon and Microsoft public clouds. It is the only management solution that can tell you the operational state across these environments, automatically deploy new services through self-service into these environments, and tell you how much it is going to cost you to run workloads in these environments.
  • VMTurbo: VMTurbo is pioneering a new approach to operations management: the use of intelligence and control to automate many of the decisions that were previously approached with a combination of monitoring and manual actions by systems administrators. VMTurbo allows customers to automatically squeeze more density out of existing capacity while ensuring that workloads get the resources they need to perform well. The company’s key innovation is an economic scheduling engine that prices resources based upon their scarcity (scarce ones are more expensive) and then allocates scarce resources based upon priority and budget (more important workloads get more budget). VMTurbo has raised $10 million in two rounds.
The Blind Dinosaurs in the Management Software Industry

If these new vendors are now leading the management software industry, what happened to the old leaders, IBM, BMC, HP, and CA? The answer is that they have become blind dinosaurs. These vendors have lost their leadership position in the management software industry for the following reasons:

  1. These vendors all produced management frameworks and promised customers that their one framework could manage everything that the customer had. When this proved to be impossible to achieve with internal development, these vendors acquired startups that met needs that the frameworks missed. But those purchased solutions were never fully integrated into the frameworks, making the resulting conglomeration of products very difficult to deploy and to use. Then, the pace of innovation in the industry increased to the point where it became impossible to buy companies and integrate them quickly enough to keep up. So, the frameworks have fallen increasingly further behind and, at this point, stand no chance of catching up with current market requirements.
  2. Vendors in the new management software industry have figured out that they should build their products so that customers can download them, quickly install them, and get immediate value from them. The ability to quickly and easily deploy a management solution has become one of the key purchasing criteria for enterprises worldwide. Unfortunately for the blind dinosaur vendors of management frameworks, it is never going to be possible to quickly deploy a legacy management framework.
  3. Vendors in the new management software industry have figured out that customers want to try products in production before they commit to purchase, and that they then expect pricing to be simple, fair, predictable, and affordable. The blind dinosaurs are stuck with pricing models and business practices that require lawyers on the customer’s end to decipher and negotiate.

In sum, the blind dinosaur framework vendors would have to make a massive investment in rebuilding their technology portfolios only to end up with products that are priced at a fraction of what they are selling their current products for. It is therefore neither technically nor economically feasible for the frameworks to be modernized to meet the use cases of the software-defined data center and the cloud. Blind dinosaur frameworks should therefore be taken out to pasture and shot.

Blind Dinosaur

AppDynamics, CiRBA, ExtraHop, New Relic, Puppet, Sevone, Splunk, Virtual Instruments, Virtustream, VMware, and VMTurbo have become the new leaders of the new management software industry. These vendors address the new requirements of the software-defined data center and the cloud that are neglected by the blind dinosaur legacy vendors: IBM, BMC, HP, and CA.