The content in this blog is outdated and we cannot reliably say it is still accurate with the speed in which the cloud industry moves. But don’t worry—below are more recent, up-to-date blogs.
by Dan Phillips
Several months ago I wrote an article on the emergence of a new market focused on cloud management – The Cloud Management Market Emerges. The blog discussed the rapidly increasing adoption of public cloud, infrastructure-as-a-service (IaaS) by enterprise class organizations and the challenges they would face in the absence of cloud centric tools.
Enterprise companies have long relied on the robust services and tools offered by traditional IT service management (ITSM) suites. But cloud computing introduces new variables like; self-service provisioning of services and assets, on-demand elasticity, and highly variable, usage-based pricing. What is now evident is that, in order to effectively manage their cloud environment, traditional ITSM tools just won’t work. The cloud requires a new breed and suite of services.
There’s a new ecosystem developing of IT management tools that is focused on cloud management. This market of cloud centric vendors continues to expand as opportunities emerge in this highly disruptive environment. We now see market demand across the full suite of traditional ITSM services: configuration management, performance management, cost management, event management, security management, and incident/change management. What has also become clear is that companies prefer to create their own ITSM for the cloud suites. They want open and extensible API-based integration with best-of-breed point solutions versus monolithic platforms from one vendor.
When I wrote my earlier blog, CloudHealth Technologies and other vendors in this cloud management ecosystem were on a very nice trajectory, riding Amazon Web Services (AWS) growth, along with that of IBM Softlayer, Google Compute Engine (GCE), and Microsoft Azure. The majority of customers moving to and using the cloud at scale were fast growing tech companies. All indications pointed to a market still in the early adoption stage.
But things have changed over the past six months. Our business has experienced several strong indicators that the market has significantly accelerated and entered the early majority adoption stage:
- 100% quarter over quarter revenue growth in Q3 and Q4
- 9% month over month cloud spend increase from AWS customers
- Traditional enterprise customers as a % of total customer base increasing from 20% in the first half of 2014 to nearly 40% in the second half of 2014
- Business metrics and process integration required for onboarding and training new customers
In addition to what we have witnessed, we see the market continue to evolve and expand with venture capital backed newcomers and funding. The following illustration highlights what this ITSM cloud market looks like today.
Growth, acceleration, and market potential are further emphasized by the venture capital pouring into these companies and the broader ecosystem. You can see from the following tables there has been significant funding for vendors in the cloud management market across the ITSM suite:
- Puppet Labs – 2005 – Triangle Peak Partners, VMware, Cisco, Radar Partners, Kleiner Perkins, True Ventures - $85.5 mil total - ($40 mil Series E June 2014)
- Chef – 2008 - Amplify, Battery, Ignition Partners, Scale Venture, Citi Ventures, Draper Fisher - $65 mil total
- Rightscale – 2006 – Tenaya, DAG, Benchmark, Index, Presidio - $62.1 mil total
- Docker – 2010 – Greylock Partners, Sequoia Capital, Trinity Ventures, Insight Venture - $55 mil total – ($40 mil Series C September 2014)
- Ansible – 2013 – MenloVentures, e.ventures - $6 mil total
- SaltStack – 2011 – $685k total
Fault & Performance Management:
- New Relic – 2008 – Fidelity, Wellington, T. Rowe Price, Benchmark, Trinity Ventures, Tenaya Capital, etc. - $214 mil total – IPO November 2014
- Zenoss – 2005 – Boulder Ventures, Grotech Ventures, Intersouth Partners, - $45.6 mil total
- Datadog – 2010 - OpenView, Index, Amplify, RTP Ventures - $22.4 mil total – ($15 mil Series B February 2014)
- StackDriver – 2012 – Bain Capital, Flybridge Capital - $15 mil total – Acquired by Google May 2014
- Librato – 2011 – Harrison Metal, Baseline Ventures. Cowboy Ventures - $5.1 mil total
Cost & Usage Management:
- CloudHealth Technologies – 2012 - .406 Ventures, Sigma Prime Partners, Scale Venture Partners - $19.7 mil total - ($12 mil Series B January 2015)
- Cloudability – 2011 – Trinity Ventures, Walden Venture Capital - $9.8 mil total
- Cloud Cruiser – 2011 – Wavepoint Ventures, Onset Ventures - $8.5 mil total
- Cloudyn – 2011 – RD Seed, Titanium – $5.5 mil total – ($4 mil Series A September) 2014
- Newvem – 2011 - $4 mil total – Acquired by DataPipe November 2013
- Cloudchkr – 2011 – Genesee Capital, Garrison Capital - $2 mil total
- Cloudamize – 2012 - $1.2 mil total – MissionOG, Gabriel Investments
- Sumo Logic – 2010 - Sutter Hill Ventures, Greylock Partners, Accel Partners, Sequoia, - $75mil total – ($30 mil Series D May 2014)
- Loggly – 2009 – Data Collective, True Ventures, Cisco, Trinity Ventures. Matrix Partners, Harmony Partners - $43.3 mil total – ($15 mil Series C October 2014)
- Logentries – 2010 – Polaris Partners, RRE Ventures, Frontline Ventures, Floodgate - $11.1 mil total
- CloudPassage – 2009 - Shasta, Meritech, Musea, Benchmark, Tenaya - $53 mil total – ($25.5 mil Series C February 2014)
- Threat Stack – 2012 - 406 Ventures, Atlas Venture, $9 mil total - ($5 mil Series A December 2014)
- Dome9 – 2010 – Opus Capital - $4.5 mil total
- Conjur – 2011 - Avalon Ventures – ($2.6 mil Seed December 2014)
- PagerDuty – 2009 – Andreesen Horowitz, Baseline Ventures, Bessemer Venture, Harrison Metal - $39.8 mil total – ($27.2 mil Series B July 2014)
- CloudHealth – 2012 - .406 Ventures, Sigma Prime Partners, Scale Venture Partners - $19.7 mil total - ($12 mil Series B January 2015)
The traditional enterprise is now moving their IT infrastructure to the cloud at scale. The market is poised to take off. We’re moving at warp speed from the early adopter, technology innovator to the traditional mainstream enterprise. As big as the market has been so far, (AWS at $6 billion in 2014?), we’ve only seen the tip of the iceberg - roughly 5% of the overall IT infrastructure market. The remaining 95% of the market is now ready and open for business.
For those of us that remember the 90’s, when the world moved from mainframe to network based infrastructure, get ready for world disruption #2. And hold on tight for an incredible next 5 years.