BigData is expected to be multi-$B market. Why? Well, I can tell you that it’s not about how you get the data, it’s what you do with the data. Yahoo doesn’t talk about logging on their quarterly investor calls, but you can be sure they’ll get a question about their recent spin-off of their Hadoop team.
It’s not rocket science – the analysis is where the magic happens. Yet, when we look at the market for application performance management we don’t see a lot of players in this space despite its roots in analytics.
Well that’s half true. What we see are two kinds of players: Ones that are transparent and leverage a network tap and thus can operate transparently and the other instruments the client to collect data. The former requires special access to network data to operate on whereas the latter is a pure software play. This split says something very interesting about the market.
The network hardware based solution has a small handful of companies in the space whereas the software based solution has a much larger list of number of companies including Citrix (by way of the EdgeSight for NetScaler product). This should be no surprise; when a footprint becomes generic and differentiation happens at software, the number of players in a given space becomes significantly larger and the customer gets much better choice.
The difference in the two approaches has to do with how impactful the resulting data is. The network hardware based solution achieves true end to end visibility because it is able to see the subtle activity in the network that can have an significant impact on the end user experience. The client software based solution has value but is limited by the data it has about the network itself. Thus, despite the available choice in the market with the client software based solutions, the network hardware solution market continues to grow.
And in case you missed it earlier, access to data is what can reshape the way money flows. AppFlow is all about democratizing access to data, and that is shaking up the Application Performance Management (APM) market. In a big way.
The underlying technology is simple: existing network infrastructure that actively tracks information about the application data that flow through it can now emit data about those application transactions in a standards compliant way. The standard? AppFlow of course! Citrix NetScaler, a product with a significant network footprint in the largest ecommerce and cloud providers in the world, is now able to generate data in this standard and unlock the stream of data.
The resulting change produces 3 specific changes:
Big Change 1: The Data is Democratized
As the data being generated by existing network footprints becomes broadly available to any software vendor that wants to consume it, the market landscape starts to change. In essence, the democratization of data means that anyone with a cheap computer and the know-how to perform analytics can enter the market.
The resulting market shifts for two reasons: (1) There will be more players in the market as the barrier to entry is reduced, (2) There will be greater differentiation in the market as vendors move up the analytics value chain to bring more meaningful value to their respective markets. The latter is especially significant because we are no longer competing for footprint in the network but rather are competing for value based on industry-focused analytics.
You’ve been studying up on your math skills, right?
Where we have already seen a significant motion is in the network monitoring vendors that have adopted their software driven products to start analyzing the application. For the APM market, these are completely net-new players. Some of these players come complete with huge customer basis that are approaching 100,000 points of presence in the SME and Enterprise network food chain.
Big Change 2: APM Becomes a First Class Citizen of the Cloud
The hardware vs. software problem has carried with it serious ramifications as customers adopt virtualization and cloud technology in droves. Software based APM has been able to make the move with the market shift. Their change of course remains that they have a limited vantage point in terms of available data.
Hardware based APM players by comparison have had a harder time. Can you imagine the conversation with a cloud provider when their customer asks to install hardware in their network? It just doesn’t happen. If I can’t get a custom hardware footprint in the cloud, at what point do I stop buying new hardware based APM solutions?
AppFlow turns what was a hardware problem into a software problem and we’re already seeing the impact. Some large ecommerce players that have been looking for a software solution for years are coming out of the woodwork with great interest in this solution. It removes the expense of buying network taps and solves the problem of APM in their networks that have been structured like private clouds for years.
To appreciate the significance of this market, we have to keep in mind that large ecommerce buyers buy by the palette. When a 19″x 3.5″ x 20″ box sitting on that palette holds a list price of US$75,000, there is a lot of money at stake. What ecommerce does this year, the enterprise eventually adopts in 2-3 years. Even more interesting, a service that was once outside of the domain of cloud providers now becomes possible – so when do cloud providers start selling AppFlow data by the hour?
Big Change 3: The CIO Budget
The growth of companies like Autonomy, IBM’s demonstration of high value analytics in Watson’s win on Jeopardy, and the corresponding IBM M&A splurge over the last two years in the data business is telling. Getting data out of the network is a growing concern for CIOs and it reflects in their budgets.
AppFlow presents in an interesting shift.
We were seeing CIOs spend millions of dollars to extract data out of the network only to be primarily used by operations tools for keeping the network alive. The potential to turn this data into information that feeds growth on the top line has always been present, but we are only now seeing the start of the analysis needed to make something really come of that. One vendor in the APM space has even started making strategic moves away from how they capture the data to what they do with the data.
For CIOs, this means a big line item that started as a nuisance but was necessary can move to being a forward looking spend in analytics and improvements in the customer experience. (NetScaler, in case you weren’t keeping track, is a key part of improving the customer experience.) In other words, AppFlow has the potential to move dollars out of that “80% Keep the Lights On” budget to the “20% move the business forward” budget.
And for a CIO, that’s not just interesting news, it’s a big change.
Tying Things Up…
Sorry for a bit of a long blog, but in the excitement of standards and technology, it sometimes takes an extra word or two to get the market ramifications down. And AppFlow has some non-trivial ramifications.
So when you see me speaking about the IT value of “Democratizing Application Visibility” at Interop next week (2:15p on Tuesday in room Mandalay Bay K) keep in the back of your mind why I’m so excited. It’s not just the technology, it’s the market shift. Taking all the data and democratizing it via software instead of hardware changes what we can do in the cloud and what it means for CIO spend.
And seriously… You’re going to want to start getting your math skills in order if you want to keep track of this market shift.