Application monitoring becomes table stakes in the digital age
The lofty premium Cisco paid for AppDynamics underscores the importance of application performance monitoring software, which customers such as United Airlines use to support flight operations and passenger services.
Bill Hineline had two requirements as he was searching last year for a new tool to keep tabs on the hundreds of interconnected applications that keep United Airline’s planes flying. It had to ensure critical flight operations software was working and it had to meet customers’ demands for accessing information from smartphones and tablets. The airline’s director of application performance management also wanted a cloud application rather than another on-premises tool to manage internally.
Hineline settled on software from AppDynamics, which he uses to monitor everything from United.com to mobile apps consumers use to book and track flights to software employees use manage weight and balance and flight planning systems. Hineline says the technology regularly alerts United’s IT staff about subpar application performance before it becomes an issue. These capabilities are table stakes in an airline industryfraught with outages caused by software and hardware glitches.
“It’s been really well-adopted and we rely on it every day,” Hineline says, adding that the technology helps United spot trouble in continuous release cycles intended to keep software fresh for customers. “Tools like this are no good if the investment we make is not used by the people that you want to use it.”
Such customer stories are a big reason why Cisco Systems last Tuesday shelled out $3.7 billion for AppDynamics, a hefty premium over its valuation of about $1.9 billion and more than twice the $1.7 billion the company had expected to raise in a planned initial public offering. As CNBC and Fortune noted, Cisco swooped in 72 hours before the IPO to buy a company that has racked up more than 2,000 customers, including Nike,Nasdaq and new owner Cisco, since its inception in 2008.
APM: What it is and what it does
AppDynamics specializes in an enterprise software niche known as application performance monitoring (APM), essentially an early warning system that spots and fix bugs before they become issues. Software systems today are highly complex, interconnected systems, typically both on-premises and cloud applications that touch multiple endpoints, from desktops to mobile devices. In an enterprise architecture, many applications depend on others to function properly, which means that a failure in one application can cascade down, triggering multiple outages and impacting customer experiences.
That’s a big no-no in a digital age where consumers have little patience for slow crawling websites and mobile apps — or for an airline whose software systems are complex and interconnected and for whom uptime is sacrosanct.
For much of the last two decades, tech heavyweights such as Hewlett-Packard Enterprise, IBM, Microsoft, CA and BMC have spent heavily to build and acquire startups making APM software that alerted engineers about problems in software code, databases and the servers running applications.
Newer entrants such as New Relic and AppDynamics have disrupted the industry by getting at the root cause of an issue, analyzing its impact and generating detailed reports on the findings in real-time, says AppDynamics CTO Bhaskar Sunkara, who co-founded the company with Chairman Jyoti Bansal.
“The need to connect the dots better in terms of how things are doing has [triggered] the second wave of companies like AppDynamics and New Relic,” Sunkara tells CIO.com. “People wanted a better way of connecting performance with their business.” He says that business performance has taken on greater importance as companies rush to initiate digital transformations.
Why AppDynamics gets an ‘A’
AppDynamics is highly regarded among enterprises, according to research from Gartner, which places the company in the leadership category of its vaunted “magic quadrant” matrix.
“The technology is consistently identified by its customers as being among the easiest to use and enjoys a relatively rapid time to value,” wrote Gartner analysts Cameron Haight and Federico De Silva, in a report last month. They also say the company is well-regarded for helping enterprises meet business outcomes, using value assessment tools, and employs a sales engineering staff that is capable of helping customers work through challenges.
Acquiring AppDynamics means Cisco has joined the APM fray in a major way, further signaling its intent to support customers beyond the network layer it has empowered for decades to the applications that underpin today’s digital transformations. “Acquiring AppDynamics is a big step out of Cisco’s legacy image, delivering more of what Cisco’s customer want from a digital business enabler: Help tame my technology and make it agile – not just networks and security … all of it,” says Forrester Research analyst Milan Hanson in a research note.