It happened again. AppDynamics, one of the fastest-growing providers of application monitoring software, has raised another round of funding and is now valued at nearly $2 billion. The move comes as the company hosts a partner summit and AppSphere customer conference in Las Vegas. Is this the next generation of RMM (remote monitoring and management) -- or a technology bubble that's looking for profits?
First, a little background. AppDynamics specializes in cloud-based application performance management (APM) software. In my mind APM is a close cousin to RMM. While traditional RMM focused mostly on PC and server monitoring, APM shifts the emphasis to mission-critical applications -- whether they run on premises or in the cloud.
Demand for application monitoring is soaring. AppDynamics, which launched in 2008, now has 1,600 paying customers and generated $150 million in annual gross revenue as of February 2015, according to Reuters. The latest round of funding, announced this week, involves $158 million at a valuation of $1.9 billion, Reuters added. No doubt, AppDynamics is gearing up for a potential IPO.
Another key APM player, New Relic, saw Q2 2016 revenues grow 69 percent to $42.9 million. New Relic also acquired Opsmatic, an infrastructure monitoring company. However, the company had a GAAP loss from operations of $15.0 million.
And established enterprise IT players like CA Technologies have been promoting an App Economy-centric message to service providers.
Partner Programs?
New Relic and AppDynamics both have emerging partner programs.
The New Relic partner program focuses on (1) service providers that manage customer applications, (2) ISVs and OEMs that want to integrate with New Relic and (3) resellers that want to bundle, embed or sell the platform. Senior VP of Business Development John Gray launched the New Relic partner program in November 2015.
Somewhat similarly, the AppDynamics Partner Program focuses on (1) technology partners, (2) service and cloud partners and (3) solution providers. AppDynamics also held a partner summit yesterday during the company's broader AppSphere conference in Las Vegas.
Both companies and their respective partner programs sound very promising. But I'll be curious to learn if the companies have a "partner first" mindset, the way many traditional RMM software companies operate.
More Than MSP Solutions?
Therein resides the challenge as well. Many traditional RMM providers have enjoyed strong growth as independent companies. They helped to pioneer the MSP market as we know it. But that also means many RMM providers have hitched their futures almost entirely to an IT segment that hasn't really produced any major IPOs -- at least not yet.
Meanwhile, New Relic has already gone public -- and AppDynamics is on a similar path forward, though we're waiting to see if/when each company generates profits. Both companies have strong followings in enterprise IT and midmarket organizations -- with growing channel bases as well.
Don't Forget the Other RMM Niches
At least one or two additional RMM segments have emerged. LogicMonitor, for instance, has attracted somewhat larger MSPs in the midmarket with a solution that spans application, network, server and cloud monitoring. CEO Kevin McGibben described some of the trends during IT Nation. And Auvik has raised about $7.5 million for its RMM push at the network level. (We'll share more details on Auvik's strategy later this week.)
Bottom line for channel partners? ChannelE2E continues to emphasize that the MSP-oriented software market is evolving beyond standalone solutions. New players are also moving in -- up and down the IT stack.
On the one hand, integrated solutions allow MSPs and VARs to consolidate onto fewer dashboard. But on the other hand, new dashboards continue to proliferate as fast-growth companies like AppDynamics and New Relic engage the channel.
