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In application and IT infrastructure monitoring, the Big Four still competing strongly

July 19 2019
by Nancy Gohring, Yulitza Peraza


Introduction


451 Research's Market Monitor & Forecast has begun assessing and tracking the size and competitive dynamics of the application and infrastructure performance monitoring market. We have divided the market into nine sectors: APM, infrastructure monitoring, log management, performance testing, synthetic monitoring, real-user monitoring, alerting, event correlation, and database and big-data monitoring. As part of our analysis, we are tracking important trends across these sectors including market size, number of vendors and projected growth. We plan to update our analysis with a predictable cadence, calling out important trends that emerge, including changes in the top 10 vendors, the merging of sectors, and vendor count, indicating the level of competition in the market.

The 451 Take

In our inaugural Market Monitor analysis of the application and infrastructure performance monitoring sector, we were most struck by two things: the legacy Big Four remain firmly planted in the top 10, and many of the leading vendors have the potential to compete head to head, where they used to occupy separate sectors. It is a very competitive market, not only because these established vendors now may go head to head with each other, but because startups continue to emerge primarily with hopes of delivering novel approaches to solving challenges associated with operating in cloud-native environments. We anticipate solid growth in this market, with a five-year CAGR of 14% through 2023 combined across the nine sectors we are tracking.

New competitive fronts


While we regularly track new vendors entering the application and infrastructure performance monitoring market, as they have been for more than the past decade, none have yet managed to knock the legacy Big Four – BMC, Broadcom (CA Technologies), IBM and Micro Focus (by way of its HP assets) – out of the top 10. The market remains top-heavy, with five vendors (including two of the legacy vendors) generating 38% of revenue, and 10 vendors generating nearly two-thirds of the total market revenue in 2018.

Where once this top 10 list might have felt like a mix of apples and oranges because it includes vendors that originally offered just one function, such as APM or infrastructure monitoring, in fact, they all conceivably could be competing for the same spending dollars. Nine of the top 10 offer APM, and all of the top 10 now have infrastructure monitoring offerings.

Many of the top 10 vendors that started out in one sector tend to be considered strongest in that sector. But they have necessarily expanded their reach horizontally, in part to boost sales to existing customers but also because cloud-native technology environments benefit from monitoring tools that can correlate data across, for instance, APM, infrastructure monitoring and logging. We expect to see vendors, particularly those at the top of their sectors, continue to expand horizontally through both organic development and M&A.

Figure 1
Figure 1: Application and infrastructure performance monitoring taxonomy Market Monitor & Forecast: Cloud-Enabling Technologies – Application and Infrastructure Performance Monitoring

The most commonly combined set of performance monitoring offerings by the top 10 vendors includes infrastructure monitoring, APM and synthetic monitoring.

Rather than resting on their laurels, the leaders must keep a close eye on emerging competition, with a crowded midmarket and small market that we expect to continue to swell. We are tracking 42 vendors in the midmarket that generate $5-50m in revenue and combined represent 12% of 2018 market revenue. There are also plenty of startups just trying to gain material traction, with 27 accounting for just 1% of the total market revenue.

Double-digit growth


Through 2023, we expect each of the sectors we track to experience double-digit growth. In the coming year, we anticipate 14% CAGR, with the market growing from $6.29bn in 2018 to $11.87 in 2023. Of the nine sectors we track, we expect log management to experience the top growth rate, with performance testing growing the slowest.

Figure 2
Figure 2: Aggregate application and infrastructure performance monitoring market sizing revenue ($bn) Market Monitor & Forecast: Cloud-Enabling Technologies – Application and Infrastructure Performance Monitoring

The transition to the cloud and cloud-native technologies is driving the growth and activity in this market as businesses of all sizes grapple with monitoring these new environments. Since legacy approaches don't aptly perform in cloud-native environments, existing vendors are investing in development of new approaches to monitoring and IT operations. At the same time, new players are emerging.

In the midterm, the sectors we track might change. We track startups that don't fit neatly into existing sectors of the application and infrastructure performance monitoring sector because these new companies seek fresh approaches to solving challenges in cloud-native environments. Also, we're keeping a close eye on developments in automation technologies that we anticipate will have a close relationship to monitoring tools as organizations look to more efficiently resolve performance problems.

That said, we don't anticipate adding artificial intelligence for IT operations (AIOps) as a sector. While we are closely tracking the development of features and capabilities built on artificial intelligence and machine learning capabilities, we don't see value in tracking an 'AIOps' sector at this time, given the very wide array of non-competing vendors calling themselves such.