No matter the industry, whether retailing, auto manufacturing or enterprise IT, there is an overwhelming compulsion for vendors to expand their product lines to capture a greater share of the overall market and become a one-stop-shop for customers. Within IT, such horizontal integration is further encouraged by the desire of enterprises to reduce the infrastructure and vendor management complexity of their IT fleet and by reducing their number of suppliers and integrating administrative functions into as few software consoles as possible. The Elysian Fields of a single pane of glass (SPOG for short) management console has been a continual quest since enterprises shook off the hegemony of IBM mainframes and embraced the freedom, complexity and yes, frustration of distributed, disaggregated systems from a hodgepodge of vendors.
The quest for SPOG, single-vendor simplicity has only become more frenetic as enterprises have adopted cloud services, particularly since these are typically used to supplement, not wholly replace existing private infrastructure and applications. The result has been a growing jumble of management interfaces that have turned the single pane of glass into a mosaic.
Yet the desire for IT Xanadu continues and IT vendors, seeing the opportunity to gain the exclusive rights to a company’s operations budget have heightened their efforts to both organically and acquisitively expand their systems, service and application management portfolios to meet the demand. The result has been a frenzied binge in IT operations management (ITOM) spending and deal-making where niche vendors with point products are absorbed into larger firms, some of whom previously had only a tenuous connection to the ITOM market.
An expanding market with deals galore
When the IT sentinels at IDC train their sights on what they term system and service management, they see a $22 billion market that grew at a healthy 13 percent last year. Gartner, which is wont to define markets slightly differently than its well-known competitor, expects the market for ITOM software to hit $37 billion in annual revenues by 2023, which, if we take IDC’s 2018 figure as a baseline (and assume the definitional differences aren’t significant) yields a 5-year CAGR of 11%.
As the IDC chart below illustrates, the market remains fragmented, with the top 7 vendors accounting for 52% of total revenues. However, 5 of these are growing at or greater than the rate for the market as a whole, while the nameless collection making up the other 48% are limping along with half the market’s growth rate. From this, one can infer that the named vendors’ growth isn’t entirely organic and that some is due to the big fish eating the little ones.
Quantifying ITOM market consolidation
The marketing department at OpsRamp, a company that addresses the desire for operations management unification via an extensible third-party product, set about quantifying the deal-making in the ITOM market. It’s unclear whether the company sees itself as a big or little fish and views the acquisitions trend as an opportunity or threat, but whatever its motivation, the company has compiled a handy list of ITOM-related deals over the past few years from which we can glean some interesting trends.
According to OpsRamp’s collection, there have been more than 80 acquisitions in the ITOM software market since January 2015, in five categories:
- Cloud monitoring
- Cloud management platforms
- Cloud cost optimization
- Network performance monitoring
Of these, 22, or more than a quarter, targeted vendors specializing in cloud monitoring and management addressing the generational shift in enterprise infrastructure provisioning from self-managed, on-premises hardware to cloud services. Another 11 covered an equally significant technological change within the ITOM market by acquiring startups focused on AIOps, namely applying machine/deep learning to the problem of system optimization and automation, troubleshooting and data correlation and analysis.
While terms of every deal aren’t available, according to OpsRamp’s research, there were 10 deals of a billion dollars or more and several others of nine-figures. Deal activity has also increased over the past two years, with 2019’s projected total more than the number in 2015 and 2016 combined.
The elusive quest for a single pane of glass
A significant motivation for larger firms to fill out their ITOM via acquisition is the desire for users to put their burgeoning inventory of operations management consoles on a diet and unify around the mythical single pane of glass (SPOG) interface. By horizontally integrating both home-grown and acquired management functions into a unified console, vendors believe they can finally deliver on this promise. Sadly, the track record of the many previous SPOG efforts does provide a sense of optimism about today’s efforts. Indeed, these quotes from an OpsRamp blog sum up the sad state of SPOG ambitions:
Single pane of glass application monitoring is an IT myth on par with Bigfoot: frequently mentioned, constantly sought after and equally as elusive.” — Brian Kirsch, IT Instructor, Milwaukee Area Technical College
Single pane of glass is the single most oversold vendor myth in the history of IT.” — John Willis, VP of DevOps and Digital Practices, SJ Technologies
The OpsRamp blog also offers some opinions on the reasons SPOG has failed so far and why the odds are stacked against today’s attempts working any better. Some are marketing speak, however, two are underappreciated factors that will sabotage most enterprise efforts to unify around a single management console.
- DevOps Tool Proliferation resulting from the adoption of rapid development cycles and integrated operations-applications organizations in which projects often consist of what Amazon calls “two pizza” teams that are responsible for the entire product lifecycle. Such teams, and in a large organization there might be hundreds, typically optimize their development and delivery processes around a set of automation tools. The result is little tool consistency and poor integration with the legacy technology stack.
- Decentralization Without Oversight, which particularly strikes large organizations and stems from IT organizations customizing services for individual business lines or geographic regions. Such decentralized service development and delivery is at odds with central IT strategies to standardize on a single management tool.
Since its earliest days, the IT industry writ large has followed a cycle of vendor consolidation, eventual calcification and product stagnation, followed by independent, aka disruptive, innovation and customer adoption. Consequently, some pickup in acquisition activity in the highly fragmented ITOM software market is expected and sure to continue. Whether these result in any significant and lasting benefits to customers is less certain, but count me skeptical that today’s efforts at ITOM simplification and product minimization will work much better than those previously espoused by the likes of BMC, CA, HP/Micro Focus or IBM.
Should organizations eventually succeed at standardizing on a single platform, there will always be pressure from developers, users and product managers to deploy a new product or cloud platform that uniquely solves a problem better than existing systems, but must nevertheless be integrated into them. These rogue products inevitably don’t neatly plug into a pristine SPOG environment, thus restarting the cycle of centralization and disaggregation. There is no reason to see why the ITOM market should be immune to this dynamic even as Wall Street M&A advisors rake in generous fees for every acquisition. However, IT operations teams can take comfort in the fact that the continued chaos provides job security.