AppDynamics gets rich on its living map of business IT ops
Business Management

AppDynamics gets rich on its living map of business IT ops

Anytime that technology changes there are some highly visible software winners: Microsoft in the PC productivity era, Google on the web and so on. Less obvious are the makers of picks and shovels – the infrastructure players that write the code and programs you never see unless you’re a techie but without whom the front-end stuff wouldn’t be of too much value. On the first-generation web we had BEA’s middleware, Tibco’s integration layer and the LAMP stack. Today, as digital transformation turns from conference chatter to real action, some of the sharpest tools are coming from AppDynamics.

Previously fairly obscure outside its specialist area, the San Francisco-headquartered company made business headlines early this year when it was acquired by Cisco for $3.7bn, a remarkable multiple on revenues and a deal that happened as the firm was days away from an IPO pegged at under $2bn.

Why did Cisco make such an audacious move? In short because nine-year-old AppD, as staff and fans refer to it, has become one of the world’s fastest growing software companies by providing what some still call application performance monitoring but is really something more than that. Measuring the speed of an application is a mature business but AppD added the ability to inspect all related infrastructure and also provide the context of business impacts such as revenue or conversion rate, and make changes on the fly. That means that business managers can see what’s stopping their progress and IT gains access to a living map of what’s going on in their estates: the dependencies, systems, databases, message queues, third-party suppliers and the bottlenecks, together with the chance to drill down all the way to configurations, log files and lines of code to fix matters. And users have a strong chance of avoiding the “spinning wheel of doom” that is the World Wide Wait so they’re less tempted to walk away into the arms of a rival.

 

Sweet spot

AppD occupies a sweet spot where DevOps, software-defined networking, agile architecture, microservices and business analytics converge. This positioning appears to have helped to create a cult-like phenomenon, analogous to companies like Splunk, Slack or Salesforce.com, where customers have become passionate advocates for the provider. At the AppD Summit in early May attendees packed out a large auditorium in London’s O2 Intercontinental Hotel in the shadow of what used to be called the Millennium Dome and is now the O2 arena. Big brands queued up to testify on its behalf.

The big picture is that as companies transform and increasingly rely on digital marketing and transactions they will become dependent on their software and their apps will become the customer-facing experience – as the boss of RBS has said, its “busiest branch is the 7.01 train from Paddington”. The app becoming the front door of the business means that it’s essential not just to avoid downtime but also to provide snappy performance that keep users interacting rather than abandoning their shopping carts and visits.

For David Wadhwani, AppD’s CEO and a former Oracle and Adobe executive, “It’s all about that single touch to that millions of lines of code [but the challenge is that] the more seamless life gets … the more complex it gets for technologists.”

The performance bar that governs user expectations, he says, is now Google, Facebook and Uber. Services are becoming more distributed and loosely coupled but the demand set by unforgiving users is that even as services become more complex they also need to be dynamic and fast. Older approaches to inspecting applications in isolation can only provide a partial solution, hence the market opportunity and the space that Cisco paid such a fat premium to play in.

 

IQ everywhere

“Every decision we make is through the lens of the business and the user,” says Wadhwani, and AppD’s claim is that it has connected the traditionally separate worlds of what a business person might want to look at and what an IT person would view, “switching the lights on” to reveal a superior view.

It’s a formula that has seen buyers flock to the company with all the top five banks, four out of the biggest five telcos, major retailers and others on board: UBS, CERN, Waitrose, Jaguar Land Rover, Sony, Vodafone, Lloyds Banking Group, Tesco and more.

Wadhwani is surely right to stress the impetus of digital transformation. IT spending on customer engagement is up from 20 to 50 per cent of budget, he suggests, and “this is a tectonic shift that underscores [the fact] that every company is a software company”.

An example close to home is Lloyds where, at the London event, Mitchell Nova, head of digital operations improvement, provided a line that tech marketers dream of: “Before AppDynamics we were paramedics and with AppDynamics we’re brain surgeons.” In other words, IT and the business can become proactive rather than reactive.

The digital transformation challenge presents a dilemma, however. These companies need to change but, with Lloyds overseeing 13,000 logins per minute and the world moving to more open transparent and social banking, the flipside, as Nova’s colleague and Lloyds head of digital banking operations Stefan Dieni puts it, is that “the best way to break something is to change it.” Lloyds views AppD as a way to make changes without decelerating.

An old baking rival to Lloyds has a related challenge. Jim Korchak, a managing director of Barclays, says, the next banking challenger could be a Google or an Uber and it will be very difficult to replicate the feel of an internet giant unless you have high-quality infrastructure.

A big bonus is usability: Jamie Norburn, head of Barclays UK estate management, told an approximately 200-strong audience in a breakout session, that AppD is so usable even senior management can use it. “I have a problem,” he quips. “They won’t come off it.”

 

What’s missing?

AppD clearly has a grip on a swathe of people who are responsible for making their brands sing through fast, adaptive infrastructure but what would customers like to see more of though? I asked that direct questions to two CIOs over lunch at the London event.

Phil Pavitt, CIO of retail opticians Specsavers, said that he has deployed AppDyamics “two or three times” in his career and is currently working on a project to use AppDynamics as part of a plan to put Specsavers’ infrastructure purely in the cloud. “If you’ve got a mess, get AppDynamics,” he prescribes.

However, he says that, as with all strategic vendors, he would welcome a tighter working relationship with the company. “Vendors need to be closer to us and join us more on the journey,” he adds, as “the days of the system integrator are pretty much dead” and as CIOs change their roles to become the “broker rather than the provider of technology”.

Another customer, Andrew Kretschmer, head of multichannel development for South Africa’s Standard Bank, says he would like to see more flexible pricing to expand his use of the product to smaller operations and “make the rand go further across Africa”.

 

Speed is of the essence

Wadhwani says that trillions will be spent on transformation but whatever the number is we know it’s very big and he is probably right to say that “velocity wins” – those that take the steps to transform now and execute on their plans will survive and prosper. The rest… not so good.

“The app is the business,” Wadhwani says. “We see a world where app ownerships and business ownership converge. [The challenge is to] move fast without breaking things.”

The way technology works it’s a fair bet that it won’t be decades before AppD’s technology today is itself “legacy” and either it or somebody else will build the services to deal with whatever technology, business and society throw at us next. But for now this is a tools maker that is to use a Geoffrey Moore term from Web 1.0 days, inside the tornado and enjoying and enjoying the wild ride.

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Martin Veitch

Martin Veitch is Editorial Consultant for IDG Connect

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