Jonah Kowall

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Jonah Kowall
Research Vice President
2 years with Gartner
18 years IT industry

Jonah Kowall is a research Vice President in Gartner's IT Operations Research group. He focuses on application performance monitoring (APM), event correlation and analysis (ECA), network management systems (NMS), network performance management (NPM), network configuration and change management (NCCM), and general system and infrastructure monitoring technologies. Read Full Bio

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Two rise, and two fall : The story of application performance monitoring (APM)

by Jonah Kowall  |  May 23, 2014  |  31 Comments

Prior to Gartner as an end user I watched the rise of companies like Precise software (I was a customer), and Optier. I’m not going to rehash all of the interesting twists of Precise you can read them here : http://en.wikipedia.org/wiki/Precise_Software the company was once worth well over $500m with some superb technology. With a successful $140m IPO in 2000, they were a high flyer. Through the changes of being bought twice after the IPO the business execution and leadership began to suffer. This was something they did not recover from, eventually resulting in a fire sale of the technology, where it was picked up for pennies on the dollar by Idera last year. We have high hopes Idera can rebuild the Precise technology and meld it with CopperEgg to create a compelling APM solution (of course SaaS and on premise).

Similarly Optier, another great technology innovator in APM, pioneered the use of advanced analytics in the space, didn’t suffer from vision or technology. The issues were once again the leadership outside of the technical parts of the organization. Having raised well over $100m in the last 9 years the company never kept pace with the changes in the market. Optier has finally closed their doors as of yesterday, really sad to see that the transformation from on premise heavy enterprise software to SaaS was not happening fast enough to fix the cash situation. Hopefully someone will acquire some of these great assets and possibly see the transformation through.

I’m starting to see yet another story follow in this similar path, but nothing I can write about yet… We shall see.

It’s certainly been an interesting 3 years at Gartner covering the APM space. Upon joining the company there was some innovation happening and the rise of two of the most well regarded and asked about companies in the APM space. Both AppDynamics and New Relic have been major disruptors in terms of making APM easy, inexpensive, and effective. Regardless of the depth and technical expertise of the companies (which they both clearly do have) it was about the delivery model and execution from a sales, marketing (which matters quite a bit), and senior management vision perspective. These two companies are both young, but the experience and leadership speaks for itself. Both having valuations well over $2b, and a path towards IPO, when they should they need the funding, they are the new generation of APM companies pushing the envelope.

I’m not discounting the technology and size of Compuware, they are going through a pretty drastic transformation themselves, and truly focusing on APM as a core business. Fixing some of the prior mistakes on the business side has been a journey for them, but there is no question on the vision and  technology. Expect some disruptive capabilities from Compuware, they are not in follow mode, while many if not all other APM companies are.

There are few other companies in the space truly leading and innovating, but many are trying to change and catch up. The question is with the rate of innovation and change, can anyone actually accomplish that, especially with the level of growth and capital commanded by the leaders in the market.

Please comment here on @jkowall on twitter

31 Comments »

Category: APM IT Operations Monitoring     Tags:

31 responses so far ↓

  • 1 Daniel   May 23, 2014 at 5:53 pm

    I saw a similar story in Israel regarding Optier. So, is it true that Optier closed their doors?

  • 2 Jonah Kowall   May 23, 2014 at 6:04 pm

    That is correct, based on checking multiple sources.

  • 3 Joe Kucic   May 25, 2014 at 1:48 pm

    It seems inappropriate for any industry analyst to provide positive recommendations for any firm that goes out of business within 24-36 months after the last recommendation. Clients (individuals/companies) that follow your guidance are damaged when that happened. Similarly, it is concerning that an industry analyst would proivide positive guidance for companies that have 10x or more valuation compared revenue when the only real option is a buyout down the road. Finally, failure to mention CA APM within the article/blog represents a current and forward thinking gap in your knowledge.

  • 4 Jonah Kowall   May 25, 2014 at 2:34 pm

    Joe, we have provided accurate and consistent guidance on risky versus stable companies regularly. I disagree with your assessment that the valuation is concerning, the business models are different they are spending to drive growth, similarly to public companies like Splunk.

    CA is undergoing a lot of change right now, hence the outcome of that change is still very much up in the air. We don’t yet have an opinion, hence we don’t speak about it in public.

  • 5 TC   May 25, 2014 at 5:33 pm

    Joe really ought to identify himself as a CA employee before attacking the author for not including his company in a report. The article is about leaders, innovators and the companies trying to catch up. CA is no longer a leader and has never been an innovator – they used to purchase innovative companies. I think the author did a favor to CA by not mentioning how far behind they are and how unlikely it is that they can catch up…

  • 6 Joe Kucic   May 25, 2014 at 7:09 pm

    TC – First, my comments were my own not CA’s view and I used my complete name (not hiding who I am). Second, companies and executives that purchased a recent out of business vendor are impacted so that was a non-vendor specific statement. Third, valuations of over $5 billion for revenue of $302 Million in FY14 as the reference point of Splunk that Mr. Kowall mentioned seems out-of-line when you read the Annual Report that justifies the valuation by comparing Splunk to LinkedIn, Service Now, Pandora Media and Zillow for their valuation (Page 29 of the Annual Report). Fourth, I was offered a Gartner Research Analyst position after the interview process and at that time Joe Baylock and others held high standards and statements were well reviewed by peers prior to publication which the blog seems to avoid. Fifth, you are entitled to your own view of CA, its APM solution (Past and Future) – what I will say is that your limited view will become a market advantage when you are proven misinformed. People that know me also know that I rarely speak openly unless I have a distinct advantage. Sixth, I am very proud of working for CA – I just don’t speak on CA’s behalf in my current role.

  • 7 Andy Dede   May 26, 2014 at 1:44 am

    I think it is important that organisations take on board what the analysts say but should of course do further research with regards to the financial status of any organisation they wish to do business with. This in my view is carrying out proper due diligence. I don’t think anyone can blame an analyst for giving a positive technical review of an organisations solution if it is indeed justified, even if they go out of business very shortly afterwards.

  • 8 blackpearl   May 26, 2014 at 8:48 am

    It seems an unofficial info, i would like to hear from them instead of an analyst..

  • 9 Jonah Kowall   May 26, 2014 at 3:10 pm

    Andy : Completely agree, and we’ve been hiring some additional talent to help with financial analysis of companies. Look for an upcoming note I worked on with our new analyst on Splunk. This is obviously much easier to do with public companies, but still something we are trying to ramp up.

  • 10 Jonah Kowall   May 26, 2014 at 3:13 pm

    Joe – All good I understand your views here. I don’t believe the book has been written on CA APM yet, there are many changes happening there, which may be able to turn things around from the past several years in terms of APM investment. As TC has seen the past decisions at CA and is making his own conclusions, but every company can change, we’ve seen this time and time again. The new CEO, leadership, and org changes are the right first steps, now execution time!

  • 11 Daniel   May 26, 2014 at 6:17 pm

    My company dumped $4 million into Optier and now we are scrambling to find an alternative. I looked at appdynamics and dynatrace. Dynatrace has a lot of strength. One thing that I liked is it ability to capture SQL statements and the variables to quickly diagnose issues. Appdynamics looks like the next mover and shaker in the APM area don’t know if it has similar capabilities as dynatrace. I am looking for a product that can be deployed on 40000 servers and can scale. Do you have any recommendations?

  • 12 paul o'sullivan   May 27, 2014 at 10:09 am

    Optier had an $8m cash injection in 2013 (http://www.geektime.com/2013/08/16/israeli-optier-raises-8m), and amidst the rather sad hand-wringing and vendor-bashing in the above posts, readers may consider two aspects:
    – regret for the many employees who have lost their job
    - wonder at where all the money went.

    Paul.

  • 13 Gabriel Lowy   May 27, 2014 at 1:25 pm

    I speak for myself and for my company, Tech-Tonics, where I am the founder. Our unique expertise intersects strategy, technology and finance. I’ve been covering this space for over 7 years. This is an interesting thread. A few observations:

    1) Jonah is entitled to his opinion on the space. I’ve followed his work, which is usually well thought out and reasoned.
    2) Analyst firms that are paid by vendors for positioning is a caveat emptor for both customers and competitors.
    3) As such, analyst firms are only one source of due diligence.
    4) Jonah correctly identifies that good management and good technology are not mutually exclusive. Having started my career at Andersen Consulting, I can cite many examples of companies that were either first to market or had the best technology that did not win the market. Jonah cites a couple here.
    5) Jonah incorrectly identifies the rationale for Splunk’s valuation or either of the private companies’ for that matter. As Jackie Mason would say, “It is not his field”. Of note, Splunk’s share’s have fallen 57% from their high precisely because investors realized that the shares were being valued incorrectly. And that fall has occurred without Splunk missing quarterly expectations. No question Splunk is a well-managed innovator, but there is a difference between that and valuation.
    6) Jonah does not tell the full story of the APM space, which BTW we no longer consider an apt description. See our work on the PADS Framework (Performance Analytics and Decision Support). For example, while noting the changes at Compuware, he omits not only CA, but also NetScout. Of note, while Splunk’s stock has fallen by 57%, NetScout’s has risen by over 25%. Why? Because that company is also evolving and their stock price reflects performance. This market is too small to make an impact on CA’s stock price.
    7) Just as some companies pay the analyst firms for favorable mention or positioning, those that don’t, won’t or can’t, are often over-looked or omitted. The vendor community knows this and increasingly, so does the customer community.
    8) Net-net, as they say on Wall Street, Jonah does a good job. The only opinion I’ll express here is that it could be more balanced and inclusive. I guess we’ll have to wait for the next MQ for that.

  • 14 Jonah Kowall   May 27, 2014 at 2:23 pm

    Daniel, sorry to hear. I would be happy to speak with you about where each solution can fit, but we only offer advice on private inquiry calls with clients. If you’d like to discuss more just email me firstname . lastname @ gartner.com and I’ll determine how we can assist. I’ve taken quite a few calls of a similar nature this past week.

  • 15 Jonah Kowall   May 27, 2014 at 2:25 pm

    Paul, I’ve already reached out offering assistance to the employees if I can help at all.

    In terms of the money, it’s a decent sized organization where the spend was not particularly well orchestrated with the goals. The enterprise business was very people intensive (expensive), consisting of heavily customized solutions. The new SaaS business was growing, but not quickly enough to fill the spending gap.

  • 16 Jonah Kowall   May 27, 2014 at 2:25 pm

    Gabriel I appreciate the response here, my main issue with these comments is that I spend most of my time speaking with end user clients. This is quite contrary to other analyst firms. That being said Gartner analysts understand the buyer persona which many do not. I did not mention CA on purpose, and my comments above explain that. If you believe that Netscout is an APM company they have you fooled, APM buyers are distinctly different than NPMD buyers.

    Gartner is not a pay for play company, the vendors in the note above do not pay for coverage, they are relevant to end user clients and come up on a lot of calls (along with CA and Netscout!).

    PADS is good conceptually, but it’s quite high level. You’ll enjoy my next note which should be out rather soon.

  • 17 Steve Burton   May 27, 2014 at 6:08 pm

    Having worked at Precise, OpTier and AppDynamics, I’d like to give my perspective on why two failed and one looks setup for success.

    I joined Precise post merger with VERITAS Software around early 2005. At that time its technology, capabilities and vision were light years ahead of anything else in the market (Wily included). The problem wasn’t the technology (although bleeding edge), it was a combination of market infancy, and an owner that didn’t get “applications”. Back in 2005 no enterprise budgeted for “APM”, even with VERITAS CXO contacts the sell was often a technical one because the only people who could relate to the technology were developers and DBA’s. Combine the fact that 98% of VERITAS account reps were selling backup, storage and clustering meant that their customer champions were in the wrong organization. Storage and Application teams are like chalk and cheese. Precise failed because VERITAS treated it as a commodity product, rather than a product that needed specialists to sell until the market and its technology matured. CA learnt a lot from the VERITAS/Precise disaster and left Wily Technology alone to scale by itself, albeit with more engineers and sales specialists. The key lesson here is that you need the right people to build and sell APM, you can have great technology but its pointless unless you can touch and capture the market.

    OpTier was a little bit different. Hugely capable team with the right drive, passion and hunger to succeed let down by weak leadership decisions. The technology was great in 5% of customers environments, which wasn’t a bad thing if those environments happened to be large mission critical enterprise applications. This is where OpTier did well, very well. Unfortunately the technology didn’t work in 95% of the remaining environments without significant engineering resource and professional services. These two things being the primary reasons why OpTier was never able to scale and grow beyond their niche market segment. They were literally the Rolls Royce of APM. That being said, they did recognize these limitations and tried to re-invent themselves as a big data/SaaS APM vendor. Had they made this change 18 months earlier a lot could have been different. Unfortunately, the presence of DynaTrace, New Relic and AppDynamics never allowed OpTier to re-group and find their stride. Key lesson here is that the market was never big enough for what OpTier was trying to sell, had leadership recognized this earlier they could have built a lightweight, smarter, easy to use deep dive tool which fit 95% of customer environments.

    AppDynamics was way different. We had the right people building and selling the product from day one. We knew what we had, we knew what the market needed, and we knew which APM vendors to take down and expose. The technology was, and still is, vastly superior because it turned APM products into APM features. Instead of a customer buying 5 products, 5 UI’s and having an APM suite, they needed one product, one user interface with five features and one agent. In addition, they have a sales organization that “gets APM” – they know the buyer, they know the pain, they know the sell, and they know how little value existing APM vendors are providing. AppDynamics biggest weapon was its flexible freemium model, the ability for customers to “try before they buy”, either thru on-premise software or via their SaaS platform. They were smart enough to build their technology to fit both use cases, rather than assume every customer wanted SaaS. The biggest difference at AppDynamics was the people, everyone trusted everyone to get the job done. We all lived and breathed APM…that was our job. APM is still a specialist sell, its not a commodity because application environments are complex, very complex. You still need great people to make great technology successful.

    Steve Burton.

  • 18 Charley Rich   May 27, 2014 at 7:27 pm

    While I do work for a competitor in the same space as OpTier (business transaction monitoring with CEP analytics – Nastel Technologies), I am sad to hear the news about OpTier. Over the years I had a lot of friends who worked there and it is always alarming to watch a company die. I believe the APM market is alive and well and OpTier’s failure should in no way be seen as a failure of the APM market.

    The fact that there are so many varieties of APM now available market should be looked as a sign of market health and not as the beginning of a trend.

  • 19 Gabriel Lowy   May 27, 2014 at 11:58 pm

    Jonah- Thanks for clearing up the pay-for-play question. As you are likely aware, it has been circulating for some time. I won’t comment on vendors here, but I do believe stripes are changing at some. Sometimes it is a technology matter and sometimes it is a communication matter.

    Thank you for the call out on PADS. It is intended to be a top-down strategic framework to complement the type of bottoms-up research you do. It is meant to get vendors thinking more strategically about the market direction and to help customers “frame” their approach to the teechnology. It is also meant to improve ROI and reduce TCO by promoting consolidation on fewer platforms while gaining better, more actionable operational intelligence. I look forward to your next piece.

  • 20 Chad Cardenas   May 28, 2014 at 3:29 am

    Daniel – my company has evaluated the serious players in this space and can confirm that AppDynamics does offer the SQL statement capture you reference. In our experience they are the solution that could scale to your requirements in a cost effective way. I’d recommend tom.levey@appdynamics.com (chief technologist) as a good contact if you are looking for someone to advise on their capabilities. I’d also echo Steve’s comments about the AppD people and focus – they have great clarity on who they are and the solutions they’re building and it is proving to be a highly successful model. Net Promoter score of 84, customer retention over 90%, doubling year over year, etc. Good luck – hope this helps.

  • 21 Larry Rosof   May 28, 2014 at 4:08 am

    Jonah,
    Really good article! It is truly amazing how quickly some of the upstarts have disrupted the APM market. Steve Burton’s comments are also very interesting. As Steve mentioned, the secret weapon to Appdynamics success was the fremium high velocity sales model. Executive sales leadership that built that model has since left Appdynamics and went to Crittercism, the leader in mobile APM. With the rate of mobile adoption growing exponentially faster than the adoption of web applications, I would expect the disruption of mobile APM to be even more swift then what we saw with Appdynamics and New Relic against legacy APM solutions.

  • 22 Scott Sumner   May 28, 2014 at 5:12 am

    I was at OpTier same time as Steve and was in direct competition with Precise at Quest. He is 100% spot on with the problems Precise and OpTier both faced.

    I work at CA but I don’t support or sell APM. I worked at Nolio and got acquired by CA. But I feel people are disregarding CA too quickly as not being an innovator which from what I’ve seen my first year at CA couldn’t be further from the truth. I’m excited about what I’ve seen so far at CA I don’t think it’s the same CA of the 90s-00s which I sold against at my days at Quest, Mercury, OpTier.

    I think people should be cautious of making huge investments in these startup that i believe have ridiculous evaluations because the market can change quickly. They can end up like OpTier and Precise very quickly. All it takes is few key management people to leave or bad ones to take over to end the parade, I’ve seen it happen to many times.

  • 23 Dan R.   May 28, 2014 at 6:09 am

    Is there any reason why you completely dismiss Riverbed in the whole discussion?

  • 24 Gabriel Lowy   May 28, 2014 at 1:40 pm

    Steve – Excellent and insightful analysis. This industry proves over and over again that it’s not so much about the technology, but the people, the strategy, the articulation and the execution.

    Larry – I agree with your observations. Mobile is the new frontier. And smart leadership is transferable. Partnering with a player with strong cloud technology and presence could give rise to a dynamo.

    Scott – I have found the same to be true. But CA could help itself strategically by either spinning out this business or leveraging it as the centerpiece across its entire portfolio. Now that would be powerful (and courageous).

    Dan R. – Having covered Riverbed as a Wall Street analyst since its IPO until I founded Tech-Tonics Advisors, one need not look further than the executive suite to answer your question. See comments above. The smartest guy at the poker table usually does not tell people he’s the smartest. The player who does gets burned making bad bets. OPNET was a potentially winning hand that could not have been more misplayed. Rarely has a company that dominates it’s core space proven to be as vulnerable (see activist investor). The current re-branding is misguided and unclear.

  • 25 Jonah Kowall   May 28, 2014 at 11:48 pm

    Dan : Riverbed’s story has yet to be written, they are clearly relevant in the market and we cover them in both our NPMD and APM magic quadrants. There is a lot of change currently happening at Riverbed.

  • 26 Nitin Thakur   May 30, 2014 at 5:17 am

    Daniel – I evaluated both the vendors you describe in your post and can confirm that AppDynamics does offer the SQL statement capture you reference. From my own experience they are the only solution that could scale to your requirements in a cost effective way (similar size/scale to our own environment). I’d recommend tom.levey@appdynamics.com as a good contact if you are looking for someone to advise on their capabilities. I’m sure he will not mind me passing on his details – he doesn’t work in sales ;)

  • 27 Bernd Harzog   June 1, 2014 at 2:30 pm

    Daniel – I replaced Precise with AppDynamics at a large insurance company that was a client of mine. A couple of very important points:

    1) It proved to be quite difficult to “completely remove” all of the Precise Agent. It took multiple support calls to get this right. The good news is that AppDynamics support correctly diagnosed the issue immediately and was quite helpful. If you embark upon this transition, just make sure that you really get ALL of Precise out of your servers before you install AppDynamics.

    2) At the time that we did the AppDynamics install (two years ago) AppDynamics did not have the detailed database monitoring that they do now. The was of quite a bit of concern to the client. But the client like the AppDynamics product so much better than the Precise product they went ahead and bought it with the understanding that the database piece was forthcoming.

    On the more general point of winners and losers in APM, in my opinion we are the the middle of a fundamental shift in management software in general. The bottom line is that legacy management tools were not build for dynamic and distributed data centers and clouds. Legacy management tools were not built for applications that change every week.

    So if you are going to buy an APM tool, my best piece of advice is to ask yourself the following questions first:

    1) How many applications do I need to monitor?
    2) How many of those are custom developed vs purchased?
    3) Where are these applications deployed, and how will this change over time?
    4) How frequently are these applications going to change.

    If you have a large number of rapidly changing applications deployed over various distributed environments tools from the legacy vendors are not going to meet your needs. The newer vendors (New Relic and AppDynamics) and the vendors in Jonah’s new AA-IPM category are most likely a better fit.

  • 28 GP   June 3, 2014 at 3:32 am

    This is a great post on APM and beyond. Kudos to Jonah for continuing to drive focus and attention on an extremely important space for folks interested in/responsible for the operations of large complex IT systems. A couple quick notes and comments -

    Daniel – have you looked at some of the open source alternatives to the COTS vendors? There are some really strong solutions that include Elasticsearch, Kibana, Logstash (ELK) and Netflix’ Suro. Jonah has a post on Elasticsearch here…http://blogs.gartner.com/jonah-kowall/2014/04/13/monitoring-technology-pick-week-of-april-7th-elasticsearch/

    You can learn more on the OpenOpsIQ Blog on Netflix Suro.
    http://openopsiq.com/2013/12/15/announcing-suro-backbone-of-netflixs-data-pipeline/

    You might also find this Nato report useful http://openopsiq.com/2013/12/30/comparative-analysis-of-open-source-log-management-solutions-for-security-monitoring-and-network-forensics/

    2. Gabriel Lowy’s comments really resonate. In my experience having now operated major cloud platforms for very large enterprise customers, the Systems Monitoring, Logging and APM space are going to increasingly get consolidated into a holistic operations management framework. See http://openopsiq.com/2014/04/03/apm-logging-monitoring-three-legs-of-a-stool-or-redundant-tools-waiting-to-be-consolidated/

    I define this framework as “ServiceOps” making a play on DevOps. The ServiceOps manifesto is to help organizations deliver a reliable, secure and cost-effective IT service that is continuously optimized and includes End-User, System, Security and Financial Metrics. With the ability to pay-as-you-go, the ability to optimize the performance of cloud-based applications pays rich dividends in operations savings. But most IT organizations are ill-equipped and not focused on the financial aspects of cloud computing. However, this is starting to change with the advent of tools like TrustedAdvisor from Amazon.

  • 29 Micheal Kl   June 11, 2014 at 1:19 am

    I second Joe Kucik views Jonah. It seems like the startup you are referring to are not enterprise grade scale ready. We even checked up on some of their big references they provided (online movie streaming portal) and even they have don’t feel that these startups will cut it. Their are gaps in their solution. So we are left with a combination of HP, CA and IBM tools sets. I think your view are way into the future. But that is ok from forward looking prespective. Deploying solution on SaaS /cloud will also not be safe for many enterprises. For small startups it’s a different story. Your research material and blog has too much emphasis on cloud and SaaS, therefore I does not help us. And I don’t think big enterprise will jump on the bandwagon of cloud yet. For tier 2 apps, yes yr material and research is fine but not for critical apps.

  • 30 Jonah Kowall   June 19, 2014 at 6:33 pm

    Michael, we believe you need to do some due diligence. There are many startups which are well run and completely financially viable. There are indeed gaps in every solution on the market, hence we recommend having an analyst discussion where we can provide you the right advice for your situation in terms of not only technology, but your people and process maturity. Sticking with legacy tools comes with a lot of added complexity and debt you will have to pay for and manage over time, sometimes that’s the right choice, but often times newer approaches can provide major benefits.

    The use of SaaS is somewhat of a misnomer, saying that APM cannot be deployed SaaS due to security is blatantly false. Most likely your business is already deploying and relying on SaaS to house critical data, this is something which was changed with web analytics technologies (now all are SaaS), marketing automation tools, crm, ppm, and many other tools today. APM is no different, the use of SaaS has advantages for the buyer, but it’s not for everyone. I speak to many large global 100 companies who are deploying SaaS solutions, so it’s not just for those small startups.

    Pleased to discuss as needed Michael.

  • 31 Fantastic failures: 5 startups that sank in 2014 | I am pirated   July 3, 2014 at 7:18 am

    [...] first reported by Gartner Research’s Jonah Kowall, APM and analytics company Optier has ceased operations as of May, despite more than $100 million [...]

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