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What Does APM and Tiger Woods Have in Common?

If you look at the Application Performance Management market today there are over 20+ players competing for $6B in prize money

At the USA PGA golf tourney last week, Tiger Woods missed the cut for only the 3rd time in his career. Whilst “Go Tiger” has indeed taken on a completely new meaning over the past few years, he is still the worlds #1 sports earner. CNN recently published the 50 highest-earning American athletes in which Tiger was ranked #1 ($90 million). We’ve got no axe to grind with Tiger, but if you study his earnings closely, the reality is that he is living off his past glory.  Over 70% of his earnings for the past three years have come from endorsements and sponsorship. Yet, if you look at ESPN’s worldwide golf rankings this year, you’ll see that Tiger ranks #33 for his actual play.  The current top three in the world (Luke Donlad, Lee Westwood & Steve Stricker) may not have won a major but they’ve been more consistent with Top 10 finishes.

So, what makes today’s #1 golfer then? Is it the one with the most tournament wins and Top 10 finishing positions this year?  Or, is it the one with the most total earnings, including earnings from sponsorships and paid endorsements?  As you’d probably guess, we think it’s the former.

If you look at the Application Performance Management market today there are over 20+ players competing for $6 billion in prize money a year. To decide who the leaders are will depend on how you score the players – is it which players are a) most competitive today OR b) which players have the most recurring earnings from their past glories.   Last year, one of the industry analyst firms rated products like CA Wily & HP BAC as “Leaders” in APM, but cautioned that they’d need to see some sign of innovation from those companies to keep that position.  These players earned over $250 million in APM revenue, which is an impressive number – but you have to ask the follow-on questions about where the revenue came from:

  1. How much of it came from new customer wins?
  2. How much came from maintenance and support renewals?
  3. How much came from customer upsells?
  4. How much of it came from Enterprise License Agreements (ELA’s) where their APM products were included in bundle deals that may include 50 other non-APM products?
  5. How much is now shelfware?
  6. How much of it came from consulting services?

You’d also want to ask what they are doing with their earnings?  Are they re-investing it into the product or are they pocketing it?  Many legacy APM vendors have large earnings but don’t deliver innovation to the APM marketplace and their customer base.  Many of these large APM earners don’t deliver a major software release each year, and thus haven’t kept up to date with today’s application architectures and Agile operating environments.

Why is this relevant? At the end of the day, APM should be about great innovative technology, which solves performance pain for customers. Like golf, APM decisions shouldn’t be about past glory, it should be about how well the product solves customer problems. Just because an APM vendor closes a multi-million dollar ELA, doesn’t mean that software will actually get deployed and solve real customer pain.

In a nutshell, when making an APM decision, you have to assess who has “product leadership” versus who has “revenue leadership” and then decide which is more important to you.

The APM market in the next couple of years will continue to go through a major transformation. Disruptive technology and business models from APM startups like AppDynamics will change the game and give IT Operations an easy way to evaluate and deploy APM. Our Freemium and SaaS APM solutions already have changed the game in that today’s APM buyers can spend more time with the APM product during the buying cycle and make decisions based on what they see the product do.

We encourage all our customers to be from Missouri – the “Show Me State”.  Put AppDynamics and any APM vendor through a rigorous evaluation in your environment and let the best product win!

App Man.

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