One of the emerging trends in IT performance management is that the proliferation of SaaS and cloud computing technologies are changing how organizations go about using and managing IT services. These trends are adding a new dimension to service level and performance monitoring and organizations are increasingly expecting a similar level of flexibility from their management tools as they are getting from their SaaS and cloud deployments. This also opens up new opportunities for management vendors to differentiate themselves from the competition and increase their presence in new markets by acquiring technologies that are well positioned to address new management challenges.
Our recent article highlighted two technology companies that are likely acquisition targets based on their technology, alignment with key market trends and the ability of their solutions to fill in technology and go-to-market gaps that larger vendors currently have. In part two of this series, we are covering two additional companies that meet the same criteria.
Again, this listing is not based on any inside information.
One of the key trends in the IT performance management market is that the mid-market is driving new demand, but at the same time changing some of the key market dynamics. Mid-market companies have traditionally been underserved. The robustness of leading management products, inflexible pricing models, resources required to deploy and operate solutions and high pricing points made these solutions unattractive for the mid-market. Some of the key attributes of IT management solutions that mid-market companies are particularly interested in are: the ability to monitor entire infrastructure through a single platform, ease of deployment and management, flexibility of pricing models and the ability to manage new dynamic environments (eg. virtual infrastructure, public and private cloud services, etc.). The IT performance management market has been predominately served by the so-called "Big 4" vendors (HP, IBM, CA Technologies and BMC) and none of these companies can claim that the capabilities in which the mid-market is requesting fall under their biggest strengths. At the same time, Nimsoft experienced good success in this market, but the majority of their enterprise customers fall into the higher end of the mid-market.
Each of the large IT performance management vendors have expansion to the mid-market very high on their agendas for 2010, and it is expected that at least some of them will acquire a technology that would enable them to have success in this market.
Uptime Software is a good example of a company that is having good success in the mid-market while AccelOps is offering a solution that was built to address all the key pain points and solution gaps that mid-market companies are currently experiencing. Both of these companies would be good acquisition targets and, if I had to pick one, I would go with AccelOps for its flexibility of delivery methods.
AccelOps offers two delivery methods for their solution, virtual appliance and on-demand, both of which resonate with organizations that are looking to simplify the processes for deploying and managing this type of technology. Also, they provide a single platform for monitoring data center, network and applications for performance, availability, security, business service and change management. The same platform can be used for monitoring virtual and physical as well as on-premise managed and cloud environments. Additionally, since the founders had originally created Cisco's foray into security information management (MARS), it creates additional opportunities for conducting upgrades of MARS install base. These capabilities would enable potential acquirers not only to enter the mid-market faster, but it would give them a set of capabilities that would resonate with growing the service provider market as well.
Potential suitors: HP, Quest Software, Oracle, IBM, Citrix
Back in October of 2009, when Compuware acquired Gomez, there were a lot of questions about why one company that is providing solutions for end-user monitoring is acquiring another. It was easy to see the drivers behind this acquisition, as the only real overlap between the technology solutions of these two companies was the messaging that they used to promote their products, while there were many synergies between the Gomez platform and Compuware's Vantage solution. Even though both companies are providing solutions for monitoring application performance, they are doing it by using completely different technology approaches and are measuring different aspects of performance.
In light of all major acquisitions in the IT performance space (eg. CA acquiring Nimsoft and NetQoS, Oracle acquiring AmberPoint, etc.), it can be argued that, from the technology perspective, Compuware made the best move. Traditional systems management vendors understand that monitoring server, network or even applications themselves doesn't give them full visibility into how end-users are interacting with these applications and what they are really experiencing. Additionally, the emergence of cloud computing and SaaS applications, as well as the impact that website performance has on a company's business goals, is driving the need for monitoring application performance from the outside of a firewall. Organizations are also looking to monitor not only how their infrastructure is performing, but also measure the impact of other parts of the application delivery chain, such as carrier networks and the type of web browser used, on the quality of end-user experience. With the acquisition of Gomez, Compuware positioned itself to address all of these needs of end-users and, therefore, significantly improved its position in the market. With that said, it is expected that other major IT management vendors will make a move and try to put themselves in a similar position.
The bad news for companies that are looking to add capabilities for outside of firewall monitoring of application performance through acquisitions is that they have to move quickly because the list of independent vendors that can provide this type of capability is fairly short. The list includes vendors such as Keynote Systems, AlertSite, Coradiant and UK-based Triometric. The best two acquisition targets out of this group are Keynote Systems and Coradiant, and if any of the big players are going to make this move it is expected that they will go after Keynote Systems due to the breadth of their capabilities and the position of the leader in this market. This could be a very interesting race to follow, as the role of outside of firewall monitoring solutions is becoming increasingly important and it is one of the critical components of managing the performance of cloud services.
Potential suitors: BMC, IBM, HP, CATags: management, performance, technology, vendors, technologies, cloud, organizations, trends, companies