OpenStack Continues to Grow Both Public and Private Cloud Deployments

Four years ago, in October 2013, 451 Research reported that OpenStack cloud revenues were approximately $600 million in 2013. In April 2016, 451 Research reported that 2015 OpenStack ecosystem revenues came in at $1.2 billion, with a forecast to grow to $3.37 billion by 2018.

Now in November 2017, 451 Research is out with it latest OpenStack market sizing report, estimating 2017 OpenStack ecosystem revenue at $2.6 billion. Looking forward, 451 Research is forecasting that OpenStack market revenues will reach $6.7 billion by 2021

Source: OpenStack Continues to Grow Both Public and Private Cloud Deployments

Appian and tech IPO’s for horses

Appian raised just $48m as a private company, compared with $163m for Alteryx, $220m for Okta, $259m for MuleSoft and more than $1bn for Cloudera. In fact, all four of the unicorn IPOs raised more in a single round of private-market funding than Appian did in total VC funding.Not having done an IPO-sized funding in the private market meant that Appian could come public with a more modest raise. (It took in just $75m, compared with this year’s previous IPOs that raised, on average, $190m for the four unicorns.) And, probably most importantly, the Appian offering showed that these types of IPOs can work, both for issuers and investors. (Appian created about $900m of market value, and saw its shares finish the first day of trading up about 25%.) So when it comes to IPOs for the second half of this year, the ‘Appian way’ could help a lot more startups make it to Wall Street. “Will the ‘Appian way’ lead more startups to Wall Street?”
Brenon Daly

Put another way: maybe you don’t have to be unicorn class to IPO now? Who knows really, it’s always a bit of a mystery.

Pretty RAD, customer count and profile

That said, what exactly does Appian do? Seems like one of those SaaS workflow/RAD companies. Nuthin’ wrong with that:

Appian provides app development software for its business and government customers. “With our platform, organizations can rapidly and easily design, build and implement powerful, enterprise-grade custom applications through our intuitive, visual interface with little or no coding required,” the company explained in their S-1 filing…. Appian acknowledges that its biggest competitors are Salesforce and ServiceNow. IBM and Oracle are also in related spaces.

More from Duncan Riley:

Founded in 1999, Appian offers a software as a service platform that helps business people create enterprise applications, especially for managing business processes, without needing programming expertise. The company is known for its “low-code” approach that allows non-programmers to create applications using building blocks and data, but managed and deployed by developers in a company’s information technology department, all on the same technology platform.

And:

  • “…booked $135 million in sales for the 12 months ended March 31, albeit at a loss of $12.5 million.”
  • “The company’s client base includes the U.S. Department of Agriculture, Sprint, Ryder, Dallas-Fort Worth Airport, BUPA North America, CenturyLink and the Department of Homeland Security.”

Meanwhile, Gartner’s magic quadrant on this space (“Enterprise High- Productivity Application Platform as a Service”), says of Appian:

Appian is an hpaPaaS vendor with strong business process management (BPM) and case management capabilities. Appian has been delivering its Appian Cloud platform since 2007. It has taken a uni ed-platform approach that enables a single application de nition to be accessed on a range of devices without additional development. Appian applications can be developed and executed both on-premises and on its aPaaS offering. Appian has positioned its Appian Cloud platform for general-purpose application development, which includes robust process orchestration, application life cycle management and integration capabilities that compete with both hpaPaaS and high-performance RAD vendors, with a common per-user or per-application-and-user pricing model.

And a few more interesting items from Gartner:

  • “There are more than 400 customers using Appian Cloud”
  • “90% of the reference customers delivered applications in less than three months, which is a much higher proportion than average.”
  • “With a predominantly direct selling effort and higher price point, Appian’s focus has been at the higher end of hpaPaaS market and not on small or midsize businesses (SMBs).”
  • It uses OSGi!

HSBC’s Google Cloud use

A brief note, from William Fellows at 451, on HSBC’s use of Google Cloud’s big data/analytical services:

They have lot of data, that’s only growing:

6PB in 2014, 77PB in 2015 and 93PB in 2016

What they use it for:

In addition to anti-money-laundering workloads (identification and reducing false positives), it is also migrating other machine-learning workloads to GCP, including finance liquidity reporting (six hours to six minutes), risk analytics (raise compute utilization from 10% to actual units consumed), risk reporting and valuation services (rapid provisioning of compute power instead of on-premises grid).

As I highlighted over the weekend, it seems like incumbent banks are doing pretty well wtih all this digital disruption stuff.

Source: HSBC taps Google Compute Platform for Hadoop, is ‘cloud first’ for ML and big data

PE tech acquisitions rising, while corporate deals slow

The dramatic surge in PE activity is primarily due to the ever-deepening pool of financial buyers. In the history of the industry, there have never been more tech-focused buyout shops that have had access to more capital, collectively, than right now. New firms have popped up while existing ones have put even more money to work in the tech industry, which is becoming even more ‘target rich’ as it ages. For instance, both Clearlake Capital and TA Associates announced as many deals in Q1 2017 as each of the firms would typically print in an entire year. Additionally, both Vista Equity Partners and Thoma Bravo averaged almost two transactions per month in Q1, if we include deals done by their portfolio companies as well.

From Brenon at 451, and with some charts too:


Link

Kubernetes as the hybrid cloud magic maker

From 451’s report on Google Next:

Google believes that a hybrid architecture will persist in the coming years as enterprises continue to migrate workloads to various clouds. Its hybrid cloud architecture revolves around its virtual private cloud. Google VPC is an instantiation of GCP that can dedicate compute, storage and network resources to an enterprise. It is built upon Google’s proprietary private global network designed for high reliability, low latency and hardened security. Kubernetes acts as the orchestration and operational backplane for hybrid implementations. Elasticity and scale are achieved by linking to Google public cloud services.

It also has many numbers on market-share, SI/channel development, and geographic foot-print.

Source: Google Cloud Next 2017: Slow and steady race to greater enterprise public cloud adoption

Webinar Recording: Understand the What, Why & How of Digital Transformation Featuring 451 Research

Earlier this month I did a webinar with Nick at 451. He does a great job summarizing all the digital hoopla going around and I finish up with, predictably, why and how Pivotal can help out there, along with a few customer examples. Check it out!

The laundry list of AWS’s ITIL/ITSM stuff

From William Fellows at 451:

 > AWS Managed Services (AMS) includes change management, provisioning and configuration management, event and incident management, security management, patch management, continuity management (backup/restore), and reporting, supported via APIs and AWS services. AWS Managed Services infrastructure building blocks include managed VPC within a specific AWS region; isolation of applications via subnets and security groups; shared services, such as authentication, collaboration and intranet; DMZ access to the internet; and DirectConnect for internal connectivity and access management via corporate AD/Auth systems versus native IAM. (AWS says IAM does not work for the data plane, and is only for the AWS control plane. It uses IAM for the AWS components – the customer can also do an ADFS-to-IAM integration to use their AD credentials for control/data plane access.)

Source: ITIL for cloud: AWS reaches for the soul of the enterprise

451: Mesosphere momentum, container usage

From Jay Lyman:

Mesosphere says it is adding enterprise customers and building up deal sizes. The company has also grown its number of employees to 200, up from 150 in March. Mesosphere declined to comment, but 451 Research estimates its annual revenue is in the $25m range.”

And, from a recent survey on container usage:

Our Voice of the Enterprise (VotE) Software-Defined Infrastructure, Workloads and Key Projects survey, conducted in April and May, indicates that out of 718 enterprise IT decision-makers polled 23.7% have implemented containers. By comparison, 25.1% have implemented Software-Defined Networking, 26.7% have implemented Software-Defined Storage and 92.9% have implemented server virtualization.

Source: Mesosphere rises where containers and big data come together in the enterprise

451: Container market to be $2.7B by 2020, from $762m in 2016

451-container-market-2017-01-09

451 Research estimated this week the application container segment reached a robust $762 million in 2016 and is forecast to grow at a 40-percent compound rate over the next four years to $2.7 billion.

And, on usage, from an April/May 2016 survey:

451 Research’s Voice of the Enterprise: Software-Defined Infrastructure Workloads and Key Projects survey conducted in April and May 2016 showed that of the roughly 25% of enterprises we surveyed who use containers, 34% were in broad implementation of production applications and 28% had begun initial implementation of production applications with containers.

I’m somewhat suspicious that there’s $762m in container software and services sales, but who knows, really?

I haven’t read through their entire cloud enabling technologies market sizing yet, from Dec 2016, (basically, private cloud software and services, any things used by *aaS vendors, not the actual public cloud services, which are another market) , which is more than just containers. That market is pegged at $23bn in 2016, going to $39bn in 2020:

2016 CET Market Monitor - Public Cloud vs. CET.png

More on 451’s blog.

Source: “Container Market Pegged at $2.7B by 2020”

When to go private cloud

As represented with the star in the map above, according to CPI data, at labor efficiency of 1,000 VMs per engineer and 66% utilization, these enterprises are poised to beat public cloud on price regardless of whether they use a commercial orchestration software package, an OpenStack distribution or the OpenStack source.

And, on IaaS pricing:

But price still does matter: In a 451 Research custom study commissioned by Microsoft earlier this year, the biggest reason to change primary provider was price, cited by 34% of respondents. Consumers don’t necessarily want the cheapest cloud service, but they don’t want to feel ripped off. If there is a cheaper option elsewhere, it appears end users will take it into consideration.

Announcements on price cuts gather attention, and are a great publicity and discussion tool for service providers. We think cloud prices will continue to come down through 2017, and may spread beyond virtual machines into object storage, and perhaps even databases – virtual machines came down 7% globally in 2015, but the cost of our small application only came down 2.4%. The fact that margins are still healthy suggests providers aren’t sacrificing huge amounts of gross margin to give such cuts. If they are, it might be a few nickels and dimes here and there, but it’s more likely that they are reducing costs through better procurement and management. If we are in a cloud price war, we’ve yet to see it really get off the ground.

And, see more commentary on the topic of IaaS pricing.

Source: Cloud gross margins: The price war has yet to really kick off