THE NEED FOR SPEED: RESEARCH IN ACTION VENDOR SELECTION MATRIX - DEEP APPLICATION TRANSACTION MANAGEMENT

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1 THE NEED FOR SPEED: RESEARCH IN ACTION VENDOR SELECTION MATRIX - DEEP APPLICATION TRANSACTION MANAGEMENT Scope: Global 2013 EXECUTIVE SUMMARY With Cloud becoming the global number one investment area for IT managers of large enterprises in 2013, ever increasing application complexity and end-users demanding proactive troubleshooting, the market for IT operations and service management solutions which help IT managers and service providers to manage their IT environments is again becoming a focal point of buyers, vendors and analysts attention. One particular part of that market, solutions for Application Performance Management and more specifically Deep Application Transaction Management, is hot - because it offers important insights into this growing application complexity. That s why Research In Action decided to evaluate the top 10 players in this market with our Vendor Selection Matrix - Deep Application Transaction Management. A balanced, 360 degree evaluation of the vendors capabilities in the market. What did we find out? The winner with the overall most balanced solution, and a comfortable margin, is Compuware. The two runner-ups with only a small difference between them in the overall results are CA Technologies and AppDynamics, a new player in the market. Also very close together in terms of overall results are the next three companies, namely Dell, New Relic and ServiceTrace. Deep Application Transaction Management Page 1

2 Table of Contents Executive Summary... 1 Market Overview... 3 Evaluation Criteria... 5 Vendor Selection Matrix - Results... 7 Appendix Deep Application Transaction Management Page 2

3 MARKET OVERVIEW The market for tools, helping internal IT departments and external IT service providers to manage their increasingly complex production environments, has always been a dynamic one. Ever since the mainframe days, we have seen wave after wave of innovation in the IT management tools space. Most recently (in the last 10 years or so) topics like ITIL 1, application auto-discovery, the CMDB 2 and BSM 3 have re-energized the market. And now the Cloud phenomenon has again accelerated the need for IT management tools. If, only 12 to 18 months ago, it was still a question whether the Cloud hype was there to stay, today in 2013, Cloud has become the number one investment area for IT managers of large enterprises around the globe 4. Consequently, IT management tools and services 5 and IT Service Management (ITSM) 6 are again on the forefront of IT managers concerns. Additionally, application complexity has increased significantly. Today, most enterprises face the challenge of managing not only legacy client-server or even mainframe systems, but also a huge variety of Web-apps and also private, hybrid and public Cloud services. Furthermore, users now demand proactive IT service management, focused on the end-user experience. All these factors combined lead to the rise of Application Performance Management (APM) solutions. 1 IT Infrastructure Library, see 2 A Configuration Management Database (CMDB) is a repository of information related to all the components of an information system. It contains the details of the configuration items in the IT infrastructure. Although repositories similar to CMDBs have been used by IT departments for many years, the term CMDB stems from ITIL. See 3 Business Service Management (BSM) is a strategy, approach and methodology for aligning IT elements to the goals of the business. BSM is about communicating the right message at the right time to the right level within IT and the business in business terms or IT terms as appropriate for each audience. See 4 The Research In Action IT Trends Survey 2013 reveals additional interesting results on budget and spending trends in Cloud, virtualization, performance management as well as ITIL and general IT operational benchmarks. 5 The global IT operations and service management market has more than 1,000 players. It is one of the markets with a very long tail of competitors. This is primarily due to the fact that the customer requirements are diverse, large in number, sometimes local and specific and forever changing, as the application landscape progresses. 6 IT Service Management (ITSM) is a discipline for managing IT systems, philosophically centered on the customer's perspective of IT's contribution to the business. ITSM stands in deliberate contrast to technology-centered approaches to IT management and business interaction. See Deep Application Transaction Management Page 3

4 Market Definition Research In Action defines APM as the monitoring and managing of performance and availability of software applications 7. Today, the APM market is roughly $5 billion in software licenses, maintenance and Software as a Service (SaaS) 8 revenues. The annual growth is between 10 15%, which makes it one of the most dynamic markets in the IT industry 9. Therefore, it should be no surprise that a market as attractive as APM, has entered into a period of intense competition of technology and strategy with a multitude of vendors and viewpoints 10. New vendors, many of which seemingly unrelated to APM, have entered the APM marketplace. As a result, the term APM has become diluted and clients are confused about this now hugely crowded market. A generic evaluation of companies that position themselves in the ever increasing complexity of the APM market is therefore less and less meaningful. Consequently, Research In Action has decided to look at a subset of the APM market. In this report, we will evaluate solutions for Deep Application Transaction Management that monitor and manage the flow of the application transaction from the application origin to the end-user. For our evaluation, we decided to use a balanced set of evaluation criteria, reflecting how enterprise IT buyers reach their buying decisions in real life. Let us now look at the evaluation criteria in a bit more detail before we interpret the results of the evaluation. 7 See 8 SaaS (Software as a Service) sometimes referred to as "on-demand software", is a software delivery model in which software and associated data are centrally hosted on the Cloud. SaaS is typically accessed by users using a thin client via a web browser. See 9 The overall global IT budget spending grows typically at a two percent to three percent rate annually. 10 APM Convergence: Monitoring vs. Management - See Deep Application Transaction Management Page 4

5 EVALUATION CRITERIA The 10 companies Research In Action chose to evaluate, were selected based on market presence and growth, proven innovation capabilities, customer mindshare and customer feedback. The first obvious choices were the traditional global players in the overall Deep Application Transaction Management market 11, namely CA Technologies, Compuware and Quest (now part of Dell) 12. Next, we decided to include the already established market contenders Correlsense, Fluke, OpTier and Opnet Technologies (now part of Riverbed) 13. We also included high profile new players AppDynamics and New Relic. Finally, we added a smaller player with a unique view towards Deep Application Transaction Management to the mix ServiceTrace. We could have evaluated many more companies for this Research In Action Vendor Selection Matrix, however, these 10 companies reflect the key aspects of the Deep Application Transaction Management market best and should be considered as the top 10 leading players 14. How We Evaluated Any sensible evaluation needs to follow a rigorous evaluation methodology. For our Vendor Selection Matrix Deep Application Transaction Management, Research In Action uses a two dimensional representation with the two most intuitive dimensions: 1. Strategy 2. Execution We then divide the two dimensions into five sub-criteria each. For the Vendor Selection Matrix - Deep Application Transaction Management, Research In Action uses the following detailed list of evaluation criteria (See Figure 1). Apparently, price is only one element in the balanced mix of evaluation criteria. This is exactly how enterprise IT buyers reach their decisions in real life it is a mix of many different factors and facets, all of them important. 11 We decided to exclude big APM players BMC Software, HP and IBM, since all three of them lack market leading capabilities in the specific Deep Application Transaction Management space. 12 Dell to Acquire Quest Software, see 13 Riverbed to Acquire OPNET Technologies, see 14 In this market, pure Open Source tools are not leading in the innovation game and are therefore not included. Deep Application Transaction Management Page 5

6 Research In Action - Vendor Selection Matrix Deep Application Transaction Management By Dr. Thomas Mendel Ph.D. Scope: Global Strategy Vision & Go-To-Market Innovation & Partner Ecosystem Company Viability & Execution Product Strategy & Roadmap Differentiation & USP Execution Features And Functions Product Architecture & Scalability Market Share & Growth Customer Satisfaction & Mindshare Price Versus Value Does the company have a coherent vision in line with the most probable future market scenarios? Does the go-to-market and sales strategy fit the target markets and customers? How innovative is the company? How is the partner ecosystem organized and how effective is the partner management? How likely in the long-term survival of the company? Does the company have the necessary resources to execute the strategy? Is the product strategy & roadmap in line with current and future market trends? Does the solution have a Unique Selling Proposition (USP) and clear differentiators? Does the solution cover all necessary features and functions expected by the customers? How is the product architected? Does the architecture fit the needs of the customers? Can the solution scale to the needs of very large enterprises? How big is the market share and is it growing above market rate? How satisfied are customers with the solution and the vendor? How do customers rate the relationship between the price and perceived value of the solution? 2013, Research In Action GmbH Reproduction Prohibited Figure 1: Evaluation Criteria One criterion, however, requires some further explanation. For the Features And Functions criterion, we decided to evaluate a set of functionality that most closely reflects the customer requirements for Deep Application Transaction Management: 1. Application Tracking: Capabilities in discrete transaction following (BTM 15 ). 2. Application Portfolio: Ability to support application lifecycle management, in particular the link between application development and production. 3. Application Complexity: Support for all enterprise workloads and applications, namely mainframe, client-server, distributed, Web and Cloud. 4. Customer Experience: Capabilities to measure end-user experience and SaaS as a deployment option. 5. Automation: Ability to auto discover application and infrastructure components as well as a CMDB integration. 15 Business Transaction Management (BTM) is the practice of managing IT from a business transaction perspective. It provides a tool for tracking the flow of transactions across IT infrastructure, in addition to detection, alerting, and correction of unexpected changes in business or technical conditions. See Deep Application Transaction Management Page 6

7 This diverse set of requirements represent the complex nature of enterprise and service provider Deep Application Transaction Management challenges today. VENDOR SELECTION MATRIX - RESULTS What did we find out? The winner with the overall most balanced solution in Deep Application Transaction Management is Compuware (See Figures 2 and 3). Figure 2: Vendor Selection Matrix Deep Application Transaction Management Page 7

8 Figure 3: Evaluation Results Let us now comment on the individual vendor assessments in more detail: The Market Leaders 1. Compuware: The Global #1 in Deep Application Transaction Management. Compuware is a well-established player in the overall APM market. Acquisitions of Gomez 16 and dynatrace 17 further strengthened the company s position. These acquisitions also helped to accelerate Compuware s global presence and to appear less Detroit-centric, which is very much appreciated by customers and prospects alike. In fact, in this evaluation, Compuware has the highest customer satisfaction and mindshare score of all 10 competitors. Compuware s APM business is growing very strongly, well above the market average. Compuware today covers all aspects of the Deep Application Transaction Management market extremely well, underpinned by their all-transactions always-on PurePath technology. PurePath is still the only Deep Application Transaction Management technology in the market that fully supports all performance lifecycle use-cases in development, test and production. Compuware also allows customers to choose between 16 See 17 See Deep Application Transaction Management Page 8

9 traditional deployment methods and SaaS. Consequently, the outlook for Compuware is positive. 2. CA Technologies: Leveraging The Portfolio Player Card. CA Technologies is the largest company in the IT operations and service management market, well ahead of other major competitors like BMC Software, HP and IBM. CA Technologies became a serious competitor in the APM and Deep Application Transaction Management markets with the acquisition of Wily Technology in Over the years, CA Technologies managed to ride on the success of the Wily technology while broadening their portfolio through additional acquisitions and own development. At the same time, former leaders of Wily Technology founded competitors AppDynamics and New Relic. Today, CA has an extensive portfolio of capabilities in what the company calls Service Assurance, a deliberately broad term, but is starting to fall behind in Deep Application Transaction Management. The reasons seems to be a lack of focus on innovation in this specific area. CA Technologies has most success when it can sell on the strength of the overall portfolio, frequently losing out in bids (or not even being considered) by non-ca customers or simple point deals where the portfolio strength is irrelevant. Hence, the outlook for CA Technologies is neutral. 3. AppDynamics: The Best Of The New Kids On The Block. Founded in 2008 by former Wily leaders, and well-funded indeed 19, AppDynamics is one of the rising stars in the Deep Application Transaction Management market. The company s technology can be deployed on-site, or purchased in a SaaS or even an embedded way. AppDynamics solution is based on incorporating a transaction sampling approach, rather than capturing all transactions all the time. From a technological viewpoint, this is a shortcoming, but makes the solution easy to deploy which is important for many customers today. Riding the easy and fresh wave through savvy marketing, the company has managed to become considered on many organizations shortlists for Deep Application Transaction Management over the last three years. AppDynamics is growing rapidly, but of course still far behind current market share leaders Compuware and CA Technologies. With a current company valuation that is high, 18 See 19 AppDynamics has received four rounds of funding totaling $86.5 million. See Deep Application Transaction Management Page 9

10 an IPO 20 is more likely than an acquisition. Therefore, the outlook for AppDynamics is positive. 4. Dell: Trying To Capitalize On The Quest Legacy. Quest Software has also been a highly regarded competitor in APM in general and Deep Application Transaction Management specifically, with particular strength around ease-of deployment, management but also technical features. Quest Software was acquired by Dell in Since then, Dell has been relatively quiet as far as the future roadmaps and innovations in the application management portfolio are concerned. Not surprisingly, Dell has started falling behind in the Deep Application Transaction Management market and is today not always considered in competitive bids and shortlists anymore. Nevertheless, in our evaluation, Dell is still positioned as a market leader. In order to keep this position, Dell needs to focus more aggressively on the Quest legacy and its technology strength. Consequently, the outlook for Dell is neutral to negative. 5. ServiceTrace: A Big Surprise Worth Checking Out. ServiceTrace was founded in 2004, is privately held and something of a hidden secret when it comes to Deep Application Transaction Management. The patented technological approach of the company is unique in the market. Inspired by the manufacturing industry, the company s credo is simplicity and continuous service quality improvement. This powerful combination is very much appreciated by clients looking for support in their quest for more ambitious service management and fits in very well with ITIL standards. Despite the current lack of geographical coverage, the company managed to force its way into the market leader quadrant in our evaluation. The international expansion of the business has already started this year with high priority. With its proven capabilities, ServiceTrace should have no problems in further strengthening its position in the future. Hence, the outlook for ServiceTrace is positive. 20 An initial public offering (IPO) or stock market launch is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. See 21 See Deep Application Transaction Management Page 10

11 The Contenders 1. New Relic. Well Positioned For Future Market Leadership. Ahead of ServiceTrace as far as the overall score is concerned, but below the magic 3-mark for Execution, hence New Relic did not make it in the market leader quadrant. Nevertheless, New Relic is well positioned to become a market leader for Deep Application Transaction Management in the near future. Founded in 2008, also from former Wily Technology leaders, and, like AppDynamics well-funded 22, New Relic is unique amongst the companies evaluated in this study, with its pure SaaS deployment model. With the success of ServiceNow 23, this model is also starting to gain traction in other parts of the IT operations and service management market. New Relic is already capitalizing on this with a fast growth rate. Again, an IPO is likely. Consequently, the outlook for New Relic is positive. 2. Riverbed: Opnet Technologies integration challenges. Opnet Technologies used to be one of the strong competitors in the APM market. Since the acquisition by Riverbed 24, however, it has become quiet and buyers of Deep Application Transaction management technology do not often mention Riverbed/Opnet anymore. The capabilities are still there, but Riverbed s core markets, namely WAN optimization 25 and application delivery are not closely connected to APM. In addition to that, there seems to be serious integration issues. It seems unlikely that Riverbed will re-enter the market leader quadrant any time soon. Hence, the outlook for Riverbed is negative. 3. Correlsense. A good acquisition candidate. Founded in 2005 and an early player in the BTM space. It has a broad, rather than deep approach that is attractive for many clients that are lower on the IT service maturity scale. The company partners successfully with ASG 26, an acquisition by ASG seems not unlikely. Like a number of the established BTM 22 See 23 See 24 See 25 A Wide Area Network (WAN) covers a broad area using private or public network transports. See 26 For ASG Software Solutions see Deep Application Transaction Management Page 11

12 players, Correlsense lacks the spark of some of the newer market entrants. Therefore, the outlook is neutral. 4. Fluke Network Systems. Still too network-centric. Over the years, there has been some changes and ultimately confusion about the name and the overall vision of what used to be Visual Network Systems. Now, back again under the umbrella of Fluke Network Systems, the company will continue to struggle to regain momentum. The functionality is still more network-centric than that of the competition and Fluke Network Systems does little to change that perception. Unfortunately, the market is moving away from a network-centric towards a service centric view of the world and Fluke Network Systems needs to take that into consideration at the very least in the way the company markets its capabilities. Consequently, the outlook for Fluke Network Systems is negative. 5. OpTier. A stalled pioneer. Founded in 2003, OpTier is one of the companies that pioneered BTM. The company has not managed to participate in the growing market at the same level as newer competitors. Today, OpTier s vision seems dated and is in need of a refresher. Provided this happens, Optier has all chances of future growth. Hence, the outlook is neutral. Deep Application Transaction Management Page 12

13 APPENDIX Research In Action uses an adjusted weighting scheme across 10 criteria. While clearly not every criterion is equally important, the individual technology user company performing their own evaluation may have other priorities. We therefore encourage you to adjust the weightings to your own needs. For the detailed evaluation results see Figures 4 and 5. Figure 4: Detailed Scores And Weightings (I) Figure 5: Detailed Scores And Weightings (II) Deep Application Transaction Management Page 13

14 The Research In Action GmbH Vendor Selection Matrix Methodology: The Research In Action Vendor Selection Matrix does not evaluate every single vendor in a given market. Rather, the model examines the most important competitors for a given set of challenges. We conduct primary research to develop a list of most important vendors in a given market. The final list of companies to be evaluated is then created based on market presence and growth, proven innovation capabilities, customer mindshare and customer feedback. We disregard startups with no or few referenceable customers and vendors that do not fit the solution requirements. The set of evaluation criteria are then reviewed and if necessary adjusted. The same is done for the weightings. We then score the vendors on a scale from 1 to 5. We finally provide future guidance through a positive, neutral or negative overall outlook score. Vendor Selection Matrix Disclaimer: Research In Action GmbH does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings. The information contained in this research has been obtained from both enterprise as well as vendor sources believed to be reliable. Research In Action GmbH s research publications consist of the analysts opinions and should not be considered as statements of fact. The opinions expressed are subject to change without further notice. Research In Action GmbH disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Author: Dr. Thomas Mendel Ph.D., Managing Director Research In Action GmbH, tmendel@researchinaction.de Research In Action GmbH is a leading independent information and communications technology research and consulting company. The company provides both forward-looking as well as practical advice to enterprise as well as vendor clients. 2013, Research In Action GmbH reproduction prohibited. Deep Application Transaction Management Page 14