The vast majority of CIOs expect to deploy new technology stacks in the next 12 months. Most CIOs said they are already using or are planning to deploy microservices (88%), containers (86%), serverless computing (85%), PaaS (89%), SaaS (94%), IaaS (91%) and private cloud (95%) in the next 12 months.
CIO responses captured in the 2019 research indicate that lost revenue (49%) and reputational damage (52%) are among the biggest concerns as businesses transform into software businesses and move to the cloud.
.As they mature, digital startups are now turning their attention from customer acquisition to becoming profitable. With no branch networks and legacy IT systems, digital challengers have a substantially lower cost-to-serve than incumbents of £20-£50 per account compared to £170. Meanwhile, deposit balances for challengers have increased from £70 to £350 per customer. However, this is still dwarfed by the £9000 average for incumbents.However, the majority of new entrants are still not profitable, with the average digital bank losing £9 per customer
“We estimate that FY 4Q 19 was the first time MSFT generated as much revenue from running software in its own data centers, including cloud offerings like Azure and Office 365, as well as LinkedIn, Bing, GitHub and Xbox-Live, as it did from software licenses and upgrades, hardware and professional services,” according to the note from CFRA’s John Freeman.
When you browse select posts from those brands, you’ll now see a blue “Checkout on Instagram” call-to-action. Click it, and you can select your size, color, billing and shipping details. Instagram will take an undisclosed cut of sales.
Makes a whole lotta sense:
For fashion brands in particular, Instagram shopping adoption has jumped from 12% to 42% year-on-year, proving that the industry is ready to leap at the opportunity to link content and commerce. It’s not just lower price points that are getting in on the action, with adoption rising to 25% among high-end prestige price-point brands. Notably, Louis Vuitton was one of the first fashion brands to leverage shoppable stories during the World Cup in 2018.
“We have moved Google Cloud from having only two significant customers and a collection of startups to having major Fortune 1000 enterprises betting their future on Google Cloud,” Greene said.
Original source: Greene steps down as Google Cloud CEO, to be replaced by Thomas Kurian
“The market has really heated up this year, and clearly that is what’s driving the acquisitions,” Williams said. “I’ve had a half-dozen customers tell me in the last month they see containerization and Kubernetes as the single most strategic project/platform in their company, and the future of their cloud strategy. It is certainly not surprising that companies are acquiring teams with strong container knowledge.”
Williams understandably passed on offering any insight into Rancher Labs’ own future. But he did note that Rancher Labs alone added 27 new customers during the third quarter, with nearly all part of the Fortune 500.
Original source: Rancher Labs Ropes Tencent, Alibaba, Huawei Support Into Containe
“being used in production by more than 125 companies.”
Original source: Mesosphere’s Investors Bet on Multicloud
A lengthy profile of Puppet.
Original source: Recruiting The Puppet Masters Of Infrastructure
“Our ability to close a customer when Cisco is involved is up to 50 percent faster.”
One of the best advantages of being part of a big, tech company.
Original source: AppDynamics touts the agility of a startup with the pocket of a global giant
“The subscription e-commerce market has grown by more than 100 percent a year over the past five years. The largest such retailers generated more than $2.6 billion in sales in 2016, up from a mere $57.0 million in 2011.1 Fueled by venture-capital investments, start-ups have launched these businesses in a wide range of categories, including beer and wine, child and baby items, contact lenses, cosmetics, feminine products, meal kits, pet food, razors, underwear, women’s and men’s apparel, video games, and vitamins.”
Original source: Subscription businesses, McKinsey
“Full fiscal year subscription revenue hit $2.6 billion, up 21 per cent year-over-year”
Original source: Red Hat is in the pink: Cracks $3bn revenue run rate as subs take off
“Versus prior year, our online sales grew 21% in the fourth quarter and 21.5% in fiscal 2017, now representing 6.7% of our total sales. While we are seeing significant growth in our online sales, these online shoppers see the relevance of our stores as approximately 46% of our online U.S. orders are picked up in our stores”
Original source: ‘Amazon-proof’ Home Depot builds on its DIY digital foundations
In terms of raw figures, not growth, Azure is still a way behind. Even a generous assumption of Azure’s share of that US$5.3 billion intelligent cloud revenue figure for the quarter would put it well behind the US$5.1 billion AWS racked in over a similar period. Dave Bartoletti, a principal analyst at Forrester estimates AWS revenue at US$18 billion and Azure, excluding Office 365 and other non-platform revenue, at US$12 billion for the calendar year. “Azure has been growing faster on a smaller base, yes, but in our view, AWS’s growth is still very strong even at their size,” he added. “Azure is giving AWS a run globally, and is close to feature parity on many services. “Azure has also aggressively built out global regions and is on par with AWS for global data centre locations. It’s a healthy and exciting market, and Azure’s doing quite well.”
Original source: Is Microsoft Azure really making up ground on AWS?
“The company reported 98% Azure revenue growth this quarter and commercial cloud revenue growth of 56% year-on-year to $5.3bn. The shift to Office 365 recurring revenue is also beginning to pay off, with the company reporting a 41% increase in Office 365 commercial revenue from installed base growth.”
Original source: Microsoft results show a distributed computing future
“Oracle’s positioning is that its later start to the cloud has provided the chance to learn all the lessons of the first-generation providers.”
Good, deep (for word count) overview of Oracle’s cloud stuff.
Original source: Oracle to market: We’re Cloud 2.0
“Since the App Store launched in July 2008, iOS developers have earned over $86 billion.”
Link to original
‘I’ll tell you something that’s not fantasy. In the next few years, Red Hat will become the first billion-dollar-a-quarter open-source company, and that’s real money… Here’s how. First, as Jim Whitehurst, Red Hat CEO, said in the earnings call, “We anticipate exiting the fiscal year with an annualized run-rate of approximately $3 billion for total revenue.”’
The enterprise collaboration software vendor said it earned 12 cents a share, three cents ahead of the consensus estimate. Revenue climbed 41.7% year over year to $193.8 million, also above the $185.8 million analysts had forecasted.
You know what they say: developers don’t pay for anything.
Someone either needs to acquire Atlassian, it has to start acquiring companies, or if the private cloud thing becomes cemented, they need to work with the public cloud three to build out the private cloud toolchain. IBM and CA are the traditional ALM/SDLC acquirers (with occasional raids by the Microsoft barbarians), but that doesn’t seem likely anymore?
Here, maybe Oracle if they double down on appdev for their new PaaS: retaining their existing Java+Oracle DB empire, feeding it into PaaS? That’s a bit too ornate of a strategy for such as big asset as Atlassian, though.
There’s always PE for big bundling plays, but what would the PE exit strategy be?
Source: At Last! Atlassian Surges on Strong Earnings, Forecast
Oracle reports its PaaS and IaaS revenue together, which makes understanding its IaaS growth difficult. FY16 to FY17 revenue increased from $0.9bn to $1.4bn, equivalent to 60% YoY growth. The company claims to have added 14,000 IaaS and PaaS customers to OCI since its inception, almost all of them existing customers of its licensed software. Oracle’s overall revenue in 2016 was $37bn, so IaaS and PaaS still represent a small slice of the pie.
The report has, of course, more detail on the portfolio, e.g.:
A challenge Oracle faced from the beginning was its tardiness to the market. Sure, it could copy and perhaps improve upon existing public cloud offerings, but it would have to do it faster than the rest of the market. AWS, for example, has over 70 services, so there is a lot of ground to cover. Over the past year, Oracle has released 50 services and features – starting from bare-metal compute and storage, the company has added virtual machines, databases, database clustering, load balancers, audit capability, compliance, monitoring, logging, authentication and new images. From a single datacenter in Phoenix, it has expanded to Ashburn, Virginia, and Frankfurt; it is targeting London for early 2018 and APAC further down the line. It has also released and open-sourced a new serverless capability called Fn and a Docker-native platform called Fn Flow for composing serverless applications. The company hopes to distinguish its serverless offering by making it cloud-agnostic, although Java is first among equals in terms of supported languages. Oracle realizes that its capability isn’t as broad as AWS’s, but its rate of development shows it can achieve a lot in a short amount of time.
In 451 Research’s Voice of the Enterprise: Hosting & Cloud Managed Services, Organizational Dynamics 2017 report, 44% of 515 respondents stated that they would pay a premium for an enhanced SLA on performance/uptime; 34% stated that they would pay a premium for enhanced customer support. The median premium for these enhancements was about 20%. Buyers see value in services way beyond just the basics. The challenge for Oracle is convincing customers that it offers the best capability for the best price – there are others in the market with stronger credentials and reputations. stronger credentials and reputations.
Source: Oracle stays the course on IaaS
The company targets very large users, with 60% of its customers being MSPs, followed by enterprises at about 30%, and the rest coming from government agencies. It doesn’t report the number of direct customers, but its website boasts 47,000 organizations as users, many of them employing ScienceLogic via service providers. Average annual contract value for direct customers is $125,000.
Some momentum updates.
There’s a few stories out about Canonical, likely centered around some PR campaign that they’re seeking to IPO at some time, shifting the company around appropriately. Here’s some highlights from the recent spate of news around Canonical.
Testing the Red Hat Theory, competing for the cloud-native stack
Why care? Aside from Canonical just being interesting – they’ve been first and/or early to many cloud technologies and containers – there’d finally be another Red Hat if they were public.
Most of the open source thought-lords agree that “there can never be another Red Hat,” so, we’ll see if the Ubuntu folks can pull it off. Or, at the very least, how an pure open source company wangles it out otherwise.
That said, SUSE (part of HPE/Micro Focus) has built an interesting business around Linux, OpenStack, and related stuff. Ever since disentangling from Novell, SUSE has had impressive growth (usually something around 20 and 25% a year in revenue). All is which to, the Red Hat model actually is being used successfully by SUSE, which, arguably, just suffered from negative synergies (or, for those who don’t like big words, “shit the bed”) when it was owned by Novell.
As I’m perhaps too fond of contextualizing, it’s also good to remember that Red Hat is still “just” a $2.5bn company, by revenue. Revenue was $1.5bn in 2014, so, still, very impressive growth; but, that’s been a long, 24 year journey.
All these “Linux vendors,”like pretty much everyone else in the infrastructure software market, are battling for control over the new platform, that stack of cloud-y software that is defining “cloud-native,” using containers, and trying to enable the process/mindset/culture of DevOps. This is all in response to responding to enterprises’ growing desire to be more strategic with IT.
Shuttleworth said “in the last year, Ubuntu cloud growth had been 70 percent on the private cloud and 90 percent on the public cloud.” In particular, “Ubuntu has been gaining more customers on the big five public clouds.”
Its OpenStack cloud division has been profitable, said Shuttleworth, since 2015
Al Sadowski has an extensive report on Canonical, mentioning:
[Canonical] now has more than 700 paying customers and sees a $1bn business for its OS, applications and IT operations software. Time will tell if this goal is realized.
Canonical claims some 700 customers paying for its support services on top of Ubuntu and other offerings (double the 350 it had three years ago), and to have achieved more than $100m in bookings in its last financial year…. [Overall, it’s] not yet a profitable business (although its Ubuntu unit is). We estimate GAAP revenue of about $95m.
On focusing the portfolio, shoring it up for better finances for an IPO:
we had to cut out those parts that couldn’t meet an investors’ needs. The immediate work is get all parts of the company profitable.
To that end, as Alexander J. Martin reports:
More than 80 workers at Ubuntu-maker Canonical are facing the chop as founder Mark Shuttleworth takes back the role of chief executive officer…. 31 or more staffers have already left the Linux distro biz ahead of Shuttleworth’s rise, with at least 26 others now on formal notice and uncertainty surrounding the remainder
Back to Al on the Job to Be done, building and supporting those new cloud-native platforms:
Rather than offering ways to support legacy applications, the company has placed bets on its Ubuntu operating system for cloud-native applications, OpenStack IaaS for infrastructure management, and Docker and Kubernetes container software.
And, it seems to be working:
Supporting public cloud providers has been a success story for Canonical – year-over-year revenue grew 91% in this area…. Per Canonical, 70% of the guest OS images on AWS and 80% of the Linux images on Microsoft Azure are Ubuntu. Its bare-metal offering, MaaS (Metal as a Service), is now used on 80,000 physical servers.
On OpenStack in particular:
Canonical claims to be building 4,000 OpenStack deployments a month at some 180 vendors…. It claims multiple seven-figure deals (through partners) for its BootStrap managed OpenStack-as-a-service offering, and that the average deal size for OpenStack is trending upward.
The Vaughan-Nichols piece outlines Shuttleworth’s IPO plans:
Still, there is “no timeline for the IPO.” First, Shuttleworth wants all parts of the slimmed down Canonical to be profitable. Then “we will take a round of investment.” After that, Canonical will go public.
However, Al’s report says:
It is not seeking additional funding at this time.
Probably both are true, and the answer as Shuttleworth says is “well, in a few years once we get the company to be profitable.
- Al’s report is really good and, as always for him and most 451 reports, thorough as shit. Check it out for lists of customers and more analysis of Canonical’s business mix.
- If you’re into Shuttleworth, Barton George does frequent video interviews with him.
There’s lots of opinions on Cloudera’s IPO today. Here’s some that I’ve collected in my notebook.
Not valued high enough?
The chipmaker paid up for the privilege, putting a ‘quadra unicorn’ valuation of $4.1bn on Cloudera. Altogether, Cloudera raised more than $1bn from private market investors, making the $225m raised from public market investors seem almost like lunch money.
And then there’s the small matter of valuation. In its debut, Cloudera is only worth about half of what Intel thought it was worth when it made its bet.
“Much has been made of the huge valuation of that Intel-led round, but that’s all misguided noise,” according to IPO Candy, a website founded by Kris Tuttle, the director of research at Soundview Technology Group. “Intel didn’t make the investment for a financial return so the valuation isn’t relevant.”
Back in 2014, Intel was still smarting from missing the shift to mobile computing and Big Data was a favorite as the next big thing. The Santa Clara chip giant’s bet was placed chasing a strategic return, not so much banking a direct return on investment.
You know, all of this is a little bit of ¯_(ツ)_/¯. As I recall, Facebook’s IPO was all wiggly-woggly. If Cloudera makes a lot of money, gets bought for a lot of money, etc., no one will care to remember, just like with Facebook. Success is the best deodorant.
Their business, finances
Also from 451, earlier this month, a profile of their business:
Cloudera is nearly one-third bigger than Hortonworks, recording $261m in sales in its most recent fiscal year compared with $184m for Hortonworks. Both are growing at roughly 50%.
Since 2008, the company has grown steadily. As of January 31, it reports more than 1,000 customers. However, Cloudera is currently emphasizing and banking its success on what it calls the Global 8,000, which are the largest enterprises worldwide. The company notes that its number of Global 8,000 customers increased from 255 as of January 31, 2015, to 381 as of January 31, 2016, and 495 as of January 31. For the year ended January 31, the Global 8,000 represented 73% of Cloudera’s total revenue, while a further 10% of total sales came from the public sector. The company reports 1,470 fulltime employees as of January 31, a slight increase from its headcount of 1,140 the prior year.
More from Katie Roof at TechCrunch:
Cloudera’s market cap is now about $2.3 billion, significantly less than the $4.1 billion valuation Intel gave in 2014. This increasingly common phenomenon is now nicknamed a “down round IPO.”
In an interview with TechCrunch, CEO Tom Riley insisted that this was not a problem for the company because of the “growth prospects ahead of us.” If it performs well in the stock market, it could ultimately achieve the $4 billion-plus value. Square, which went public in 2015 at half its private market valuation, has since seen its share prices more than double.
(Side-note: comparisons of companies, Square and Cloudera, that have nothing to do with each other except being “tech” – and Square is payment processing, not “pure tech,” at that! – drive me a bit crazy, as listeners know.)
And a quick revenue/spend write-up from her:
Cloudera’s revenue is growing, totaling $261 million for the fiscal year that ended in January. The company brought in $166 million at the same time last year.
Losses were $186.32 million, down from $203 million in the same period the year before.
And, according to Jonathan Vanian: “Cloudera spent $203 million on sales and marketing in its latest fiscal year, up 26% from the previous year.”
I don’t really follow this space well enough anymore to quickly figure out the TAM: I suspect Cloudera operates in several data and BI related ones.
Cloudera isn’t only Hadoop, but 451 put the Hadoop market at $1.3b in 2016, growing to $4.4b in 2020, with a CAGR of 38.3% between 2015 & 2020.
If you throw data warehousing, BI, analytics, and an injection of the mega-databases TAM together, you get a really big TAM, anyhow. Keep in mind though that one of the traps of (definitionally orthodox) disruptors in this space is lowering the TAM of their respective markets, a la Red Hat in operating systems. I don’t get the sense that Cloudera is on that game plan, but others in the market might be.
Buyers’ plans & needs
With respect to what people would do with Cloudera and others in this space (including Pivotal), here’s a good ranking of the information infrastructure priorities Gartner recently found in enterprises:
Also of public/private cloud interest from the summary of that survey: “Based on survey responses, plans for on-premises deployments for production uses of data will drop from today’s 45% to 14% in 2018.”
People in the tech industry care a great deal about IPO’s like this. We’re all curious what The Market’s read on valuation of enterprise IT business models is for our own benefit, and just a general sense of the health of the sector. There’s also usually people you know at the company, so “yay” for people you know.
One day isn’t long enough to tell anything, though, cf., in a completely different space, that Facebook debut weirdness. People got all excited about Cisco buying AppDynamics because that seemed to show some “healthy” signs that money valued this kind of software/SaaS.
At any rate, people still seem to love the Big Data and such. From Cloudera’s CEO, Tom Reilly: “We’re competing with IBM and Watson, so our customers seeing the strength of our finances allows us to do more.” Think of all the free marketing!
The ensuing years have been remarkable. Our company has grown with the market. The original technology has morphed almost beyond recognition, adding real-time, SQL, streaming, machine learning capabilities and more. That’s driven adoption among some of the very biggest enterprises on the planet. They’re running a huge variety of applications, solving a wide variety of critical business problems.
Our early bet has proven correct: Data is changing the world. In applications like fraud detection and prevention, securing networks against cyberattacks and optimizing fleet performance in logistics and trucking, we’re delivering value. We’re helping to address big social challenges, improving patient outcomes in healthcare and helping law enforcement find and shut down human trafficking networks.
Against that background, an IPO takes on a more appropriate scale. We started Cloudera because we believe that data makes things that are impossible today, possible tomorrow. There’s more data coming, and there are plenty of impossible things to work on. Our journey is only well begun.
I admittedly don’t know Cloudera’s business model too well, but my sense is that they align well with the “have something to sell” model that many open source companies in the enterprise space forget to put in place.
Pivotal had a pretty major milestone this last quarter, over a quarter-billion dollars in 2016 bookings, up 130 percent year-over-year. The momentum with Pivotal in terms of digital transformation is white hot. Pivotal is now engaged in a third of the Fortune 100, and I would say the strategy so far has been to only go after the tallest buildings in the city. The opportunity to take Pivotal Cloud Foundry into Fortune 2000 and beyond is enormous. That’s going to represent a big opportunity for partners.
From a a recent interview.
In 2014, more than 93% of our transactions took place in stores, less than 7% digital. That season we had just started shipping from a small number of stores. In 2015, that same timeframe, digital sales reached almost 10% of our total sales. We more than doubled our ship-from store-capability to nearly 500 stores. We fulfilled 41% of all our digital orders inside of a store.
For 2016, just a few months ago, just last year, digital sales climbed to 14%, more than twice what we did two years earlier. We double ship-from-stores again, more than 1,000 stores. Our stores were fulfilling 68% of our digital orders. We finished December with record digital growth, including record-breaking days on both Thanksgiving and Cyber Monday.
Always nice to see multi-year numbers.
- Video: “In 2017 Amazon is expected to spend $4.5bn on television and film content, roughly twice what HBO will spend. But it has a big payoff.”
- Prime momentum: “Mr Nowak reckons the company had 72m Prime members last year, up by 32% from 2015.”
- Cloud: “Last year AWS’s revenue reached $12bn, up by more than 150% since 2014.”
- Anti-trust, in the US: “If competitors fail to halt Amazon’s whirl of activities, antitrust enforcers might yet do so instead. This does not seem an imminent threat. American antitrust authorities mainly consider a company’s effect on consumers and pricing, not broader market power. By that standard, Amazon has brought big benefits.”
Mobile Order & Pay has gone from making up 20% of total transactions at only 13 stores a year ago to nearly 1200 this year
Gotta get those stars.
Growth, in terms of customers and revenue, appears to be significant. About 34,000 companies use Puppet’s software to automate data center operations, with 6,000 added last year, Kanies said. The company is approaching $100 million in annual sales and is expanding its headquarters in Portland, Ore. In January, it secured $22 million in financing from Silicon Valley Bank to fuel further expansion.
And then a stray container momentum/penetration number from Forrester:
Stroud sees promise in Puppet’s container support, despite his observation that only about 8% of companies are using containers for production workloads. “It gives current Puppetized work the ability to be containerized,” he said.
Re-reading Nick’s piece on “digital transformation,” I like how he explains what’s new and different from past waves of IT innovation (lik ERP and econmerce), e.g.:
“Going digital results in an explosion in the amount of data you have. New channels of engagement between customers and organizations have resulted in new sources of information coming into the organization at speeds not seen before. In the past, customer interaction was mostly one-way – from the organization to the customer. Now it is about customer-directed, on-demand two-way engagement anywhere on any device. Customers want to communicate on their terms in their preferred channels. That causes organizations to have to transform the way they handle such information, since having a large call center may not be enough – or even that relevant in the future, given that so much communication will come via social media, in messages or increasingly via video. Add to that the explosion in information from Internet of Things (IoT) devices, and it’s pretty clear that the days of management by gut-feel and hunch are over, and data-driven decision-making is the only way to go.
And also, some numbers:
- “Less than 25% of organizations that participated in a recent 451 Research survey (451 Research VoCUL, April 2016) said they had a well-defined formal digital transformation strategy. So we’re in the early stages of digital transformation, and there’s lots of work to be done.”
- “Erik Brynjolfsson, Lorin Hitt and Heekyung Hellen Kim from MIT and University of Pennsylvania found that companies with data-driven decision environments have 5% higher productivity, 6% higher profit and up to 50% higher market value than other businesses.”
- “Our research shows about 65% of IT decision-makers using agile methods and about 40% adopting DevOps today (VotE Software-Defined Infrastructure Q4 2015).”
From Nancy Gohring:
In 2015, Dynatrace recorded $466.6m in revenue, including $30m from services and $60m from SIGOS, the mobile network-testing company that Keynote acquired in 2006. Dynatrace’s APM revenue was $376.6m, representing 15% growth over the previous year, and making it twice as large by revenue as two of its primary competitors – New Relic and AppDynamics.
She writes fine reports.
More than 80 percent of India is reached by a new 4G mobile network called Jio — bankrolled by India’s richest man — which will be free to use until the end of the year. The price will jump to at least $2.25 per month next year, but the rock bottom price is a play to undercut competitors for the market.
Per VMware, cloud management is now a $1 billion business. It claims 1,700 NSX and 5,000 vSAN customers. It end-user computing business also has $1 billion in sales to more than 63,000 customers, including 1,300 of the Global 2000. It further states that 20,000 customers use vRealize. According to the company, 8 out of 10 of its largest deals included both NSX and vSAN management. While the company reports strong growth from these products, adoption is among a fraction of VMware’s 500,000 total customers.
Agatha over at 451 visits Indian outsources, commenting on how they’re changing to do more cloud related work:
Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.
Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.
Wipro reported that public cloud partners serve as a key building block of its hybrid cloud migration strategy. For public cloud deployments, it has teamed up with AWS, Microsoft Azure, SoftLayer, Oracle and vCloud Air to provide managed public cloud offerings. Meanwhile, public cloud partners increasingly represent an important sales and marketing channel for HCL Technologies, with a number of deals having significant public cloud roadmaps. There are a few providers that focus on building vendor-specific expertise and credibility, such as Infosys, which is the premier consulting partner for AWS, and CMI industry advisory group. CMI at TCS claims to have more than 120 certified AWS architects and over 800 trained associates.
Campari seems thrilled — if a bit startled — by the attention Mr. McConaughey has been lavishing on Wild Turkey, which the company bought for $575 million in 2009 and where it has since poured $100 million into operations upgrades.
For the fiscal first quarter, which ended in March, domestic sales of Wild Turkey increased 7.6 percent from the same period a year earlier.
“After two years in business, Casper is on track to book $200 million in sales over the next year, but its success isn’t ensured.”
Also, a new category phrase: “the digitally native vertical brand.”
We’re replacing people staring at spreadsheets all day long.
For a long time ServiceNow has been angling to move beyond it’s initial IT service desk market into new markets that use workflow management at their core. By “workflow management” I mean business processes that have a multistep, often multi-person process of solving some “problem.” Solving IT problems like password resets and on-boarding new employees fits here, but you can also imagine how HR departments would use it on-board new employees for their needs (adding benefits, pay, etc. all with approvals from various staff through-out).
At the last ServiceNow conference, they used drivers license renewal as a good example: there’s a request (I want a new drivers license or to renew one) and a workflow associated with it (verify the requester’s identity, check that they have car insurance, sundry other additional updates and integrations to the government systems, finally, submit some request to another workflow to print and mail a new drivers license).
You get the idea: at the core, there’s pretty much the same software to enable workflows. To grow the TAM they operating in and also their revenue by selling into these new use cases, ServiceNow has aspired to move into these markets for many years (maybe since around 2011 or 2012?).
Momentum expanding out of IT Service Desk
- “Emerging products defined as, everything except ITSM, represented 40% of our net new ACV, up from 24% in Q2 2015.”
- Customer service management: 40 customers, 31% G2,000.
- Security operations: 32 customers. They recently acquired BrightPoint here.
- HR: no numbers, but they signed a “$1.4 million HR-led deal for a new public sector customer in Australia.” This was through a Capgemini partnership.
In the most recent quarter, the company reported $341m in revenue, predicting it’d reach “$4 billion in revenue by 2020, a big leap from its $1 billion in 2015 sales.”
The company sells a public cloud platform, mostly based on OpenStack, to service providers who want to stand up their own clouds. A sampling of customers thus far from Agatha’s recent report:
the group claims to have deployed more than 1.4 million virtual machines for customers across the board, and enabled the commercial deployments of public cloud (T-Systems’ Open Telekom Cloud), hybrid cloud (Vodafone’s Vodaplex Hybrid Cloud Platform) and HPC (University of Warsaw’s Top500 HPC project’s HPC cluster).
Number of customers:
- 2014: 250
- 2015: 297
- 2016YTD: 315
- 2016E: 365
IDC’s IaaS forecast is out, tragically, I don’t have access to it. However, here’s some highlights from the press release:
- Public IaaS is in wide use “A recent survey of over 6,000 IT organizations found that nearly two thirds of the respondents are either already using or planning to use public cloud IaaS by the end of 2016.”
- Public IaaS is a large, fast growing market – the overall IaaS market is forecast to grow from $12.6bn in 2015 to $43.6bn in 2020, a CAGR of 28.2%.
- Yup, fast growing – growth from 2014 to 2015 was 51%
- People use more than one IaaS, and probably “cloud” – “[H]ybrid cloud infrastructure is already a common pattern at several large enterprises and IDC predicts that 80% of IT organizations will be committed to hybrid architectures by 2018″ – notice they say “large enterprises,” which suggests a cut of the data by company size: last I recall, IDC defined “large enterprise” as 2,500+ people, which may or may not be the case here.
- A few cloud providers dominate – Amazon is still king, and there’s an fat-head of marketshare: “In 2015, 56% of the revenue and 59% of the absolute growth went to the top 10 IaaS vendors.”
Contrast that 60% IaaS usage with the 45% use in a recent Morgan Stanley CIO survey. I don’t think that’s a huge difference, but it does show the fiddliness of these kinds of surveys. To be fair, the Morgan Stanley survey has public IaaS usage at ~90% by 2019. I’d trust IDC a lot more, esp. with 6,000 surveyed vs. 100.
Also, while I can’t verify this: I’d assume this public IaaS is not to the exclusion of private cloud/on-premises. To be sure, some, or even much, of it must be public cloud gobbling up on-premises usage and revenue. However, I wouldn’t take it as a zero-sum game between the two.
The idea behind this consolidation is to give organizations system-wide insight across all their applications and their supporting environments, be they in the cloud or within private data centers.
Also, some momentum updates:
More than 80 percent of Chef’s revenue now comes from enterprise deployments, consisting of more than 900 commercial customers.
See also Tim Anderson’s coverage at The Register.