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Magic Quadrant for Application Performance Monitoring Suites

Archived Published: 21 December 2016 ID: G00298377

Analyst(s):

Summary

For I&O leaders in 2016, there is no changing of the guard in terms of Leaders in the APM suite market. However, the competition continues to grow more fierce as historical Leaders continue to ramp up their game and new Challengers arise.

Strategic Planning Assumption

By 2020, 70% of APM suite technology buyers will reside outside of traditional IT operations organizations, up from 40% in 2016.

Market Definition/Description

Gartner has updated its definition of application performance monitoring (APM) suites since the 2015 Magic Quadrant exercise. Gartner now defines APM suites as one or more software and/or hardware components that facilitate monitoring to meet three main functional dimensions:

  • Digital experience monitoring (DEM) — Digital experience monitoring is an availability and performance monitoring discipline that supports the optimization of the operational experience and behavior of a digital agent, human or machine, as it interacts with enterprise applications and services. For the purposes of this evaluation, it includes real-user monitoring (RUM) and synthetic transaction monitoring (STM) for both web- and mobile-based end users.

  • Application discovery, tracing and diagnostics (ADTD) — Application discovery, tracing and diagnostics is a set of processes designed to understand the relationships between application servers, to map transactions across these nodes, and to enable the deep inspection of methods and other host resources. It combines three formerly separate dimensions (application topology discovery and visualization, user-defined transaction profiling, and application component deep-dive) under a common name. All three dimensions are primarily focused on problem remediation and are interlinked.

  • Application analytics (AA) — Application analytics enables the automated detection of the source (or root cause) of performance anomalies for HTTP/S transactions supported by Java and .NET application servers through machine learning, statistical inference and/or other methods.

Gartner will continue to include DEM as a component of our APM suite evaluations while also evaluating it as a separate market.

Magic Quadrant

Figure 1. Magic Quadrant for Application Performance Monitoring Suites
Research image courtesy of Gartner, Inc.

Source: Gartner (December 2016)

Vendor Strengths and Cautions

AppDynamics

AppDynamics continues to maintain very high levels of visibility within the APM industry and, as a consequence, regularly appears on enterprise shortlists for APM technology — especially for complex enterprise needs. Since the last APM suite Magic Quadrant, AppDynamics has enjoyed one of the highest, if not the highest, revenue growth rates in the market. The technology is consistently identified by its customers as being among the easiest to use and enjoys a relatively rapid time to value. Against this backdrop, however, the company has seen changes in its executive ranks, with the biggest change being the September 2015 assumption of the CEO reins from co-founder Jyoti Bansal by David Wadhwani, formerly of Adobe. While Bansal remains with the company, Gartner believes that Wadhwani was brought in to help drive the company to long-term growth and profitability. Wadhwani needs to continue to guide the firm on its growth path without impacting the culture that helped to create AppDynamics.

Strengths
  • AppDynamics consistently works with enterprise clients to establish a clear expectation of how the product will not only address their technical challenges, but also derive desired business outcomes, through business value assessments and business value realization programs.

  • The sales engineering function within AppDynamics receives high praise from clients for its ability to not only assist with problems, but also help the development of customized product capabilities.

  • The company has a common architecture for both on-premises and SaaS deployments that acts to reduce development costs for the firm and provides flexibility for increasingly dynamic end-user needs.

Cautions
  • Customers cite a long time to market for new features and functions, which is exacerbated by early announcements of these new capabilities.

  • Product costs are consistently cited as being too high for smaller enterprises with modest monitoring requirements. Customers further cite the inability to take advantage of higher discount levels enjoyed by customers with larger contracts.

  • AppDynamics continues to provide little to no support for legacy application environments.

BMC

BMC remains a company in transformation as it continues its efforts to regain preprivatization levels of momentum in a market undergoing significant disruption. While Gartner believes that the corporate position from a financial perspective remains mixed, BMC has begun to achieve positive results where it has renewed investment in its products, such as in its TrueSight product line. However, TrueSight AppVisibility Manager, which is a part of the portfolio, is still not as visible as other APM suites within the IT industry. This may be because the technology is usually positioned as part of a larger TrueSight Operations Management suite sale, which might also include TrueSight Infrastructure Management and TrueSight IT Data Analytics. Like other firms in the APM market, BMC has had its share of executive changes over the past several years. Shayne Higdon, president of the performance and analytics line of business, has been steering BMC's initiatives in APM for over two years. He has extensive experience in the APM market, going back to his days at Quest Software.

Strengths
  • BMC has a large IT management product portfolio, which allows it several potential entry points for APM product sales.

  • BMC remains the third-largest supplier of mainframe operations management software, with an estimated 20% of the market, which likely continues to be a source of some funds for investing in other businesses, such as APM.

  • TrueSight App Visibility Manager includes a network-based application monitoring capability, called Real End User Experience Monitoring (formerly Coradiant TrueSight), which several of the leaders do not have.

Cautions
  • BMC has demonstrated little ability to sell outside of IT operations, which will become a liability as the purchasing influence for APM continues to shift "left," or toward development, application support and so on.

  • While not a unique position within the market, BMC lacks industry- and geographic-specific offerings for its APM technology.

  • TrueSight App Visibility Manager does not currently support a SaaS-based option (however, it does provide a SaaS-based general monitoring solution called TrueSight Pulse, formerly from Boundary).

CA Technologies

With strong profitability and cash flow from operations, CA Technologies continues work on reinvigorating its APM portfolio (within the past year, it has applied for 10 patents on a wide range of APM capabilities). A key challenge for CA, as with some other historical vendors in this market, is that it is not a pure-play APM technology provider. As a consequence, CA must work to ensure that continuing developments, such as the recent introduction of a new DEM service called CA App Experience Analytics, are communicated effectively. CA App Experience Analytics is a new SaaS- (and on-premises-) based service that is a reflection of CA's strategy to significantly increase its percentage of digital sales to help in reducing customer acquisition costs. At the same time, the firm is continuing to more fully develop its ability to sell to additional personas with interest in APM (such as DevOps) within its large existing installed base. The CA leadership put into place in late 2013, several with roots linking back to the original Wily Technology organization, continues to lead the company's current APM initiative.

Strengths
  • CA has a very large sales and support staff that enables extensive partnerships and account development with its enterprise clients.

  • There are several extremely large CA enterprise clients with deployments of tens of thousands of APM agents that provide a "real world" testing ground for future scalability requirements.

  • CA App Experience Analytics, the follow-on from Mobile App Analytics, provides both web and mobile real-user monitoring, and delivers in-depth metrics with an appealing end-user interface.

Cautions
  • While CA scores well in terms of profitability, it has only seen a return to generally accepted accounting principles (GAAP) revenue growth on a year-over-year basis over the past two quarters.

  • The number of products that make up the APM suite portfolio have led to elongated time-to-value consequences for many enterprise customers.

  • While the CA App Experience Analytics product has a SaaS option, the firm's core APM technology (CA Introscope) does not yet support SaaS.

Correlsense

Correlsense is a new entrant to the APM suite Magic Quadrant. Correlsense is a privately held APM pure-play vendor founded in 2005, with headquarters in Tel Aviv, Israel, and Framingham, Massachusetts, and sales and support offices in EMEA and South America. The company has received three rounds of funding, totaling more than $30 million. Its product, SharePath, provides transaction visibility across much of the entire IT stack and has received several patents for its unique instrumentation approach that goes beyond traditional application server observability. While the company has succeeded in winning some large deals in the U.S., it has little overall visibility in the APM market, as Correlsense is keenly focused on profitability and has had a cautious approach to expansion. The company is generally moving away from field sales to a term-license-oriented, partner-led business model, which includes the leveraging of SaaS-based deliverables. The founders of the firm were IT practitioners in past positions, and their experiences have influenced the development of SharePath.

Strengths
  • Gartner believes the company to be profitable, although it has gone through a recent restructuring to help facilitate this.

  • The company has an engineering culture that prides itself on developing unconventional approaches to solving APM problems.

  • SharePath has a unique approach to instrumentation that provides tracing visibility beyond what much of the market offers, including rich clients, web servers, proxy servers, C/C++ and COBOL-based applications, virtual desktop infrastructure (VDI) technology, Oracle applications, service buses, and so on.

Cautions
  • The company is not well-known, and this limits its growth prospects in a very "noisy" market.

  • Correlsense has a limited direct sales force, which is necessary to be able to sell into complex enterprise environments.

  • There is no synthetic transaction monitoring within the SharePath product.

Dynatrace

Based upon revenue, Dynatrace remains the largest technology provider in the APM suite marketplace. Visibility of the company for its technology is high, and the firm is often found competing against the other APM market leaders — especially AppDynamics — for large, complex enterprise opportunities. From a feature/function perspective, Dynatrace has among the broadest (and, as many end users cite, the deepest) APM suite product lines in the marketplace. However, this technology richness has historically brought with it complexity challenges. The company is moving aggressively to converge its product offerings, but this will not be complete for at least 12 more months, thus creating opportunities for challengers in the meantime. As with other APM suite providers, Dynatrace has seen several changes in its executive ranks since the last evaluation.

Strengths
  • While Dynatrace is privately owned by Thoma Bravo, we believe the firm to be fiscally sound.

  • Dynatrace has the largest dedicated sales force in the APM suite market, which provides an advantage for enterprise sales opportunities.

  • The newer Dynatrace technology (formerly called Ruxit) is based upon modern architectures, provides strong support for emerging technologies, and incorporates a more intuitive look and feel from Dynatrace Application Monitoring (AppMon)/User Experience Management (UEM).

Cautions
  • Dynatrace has the largest share of the APM suite market, although its growth rate has been much lower than that of other market leaders.

  • Knowledge of future roadmaps with respect to "foundational" Dynatrace and the former Ruxit technology has not been consistent within the industry, providing opportunities for competitors to exploit.

  • While a unified UI is a work in progress, Dynatrace's product line currently offers too many consoles or displays, which is counter to the desire in many enterprises for a "single pane of glass."

HPE

From a technological standpoint, Hewlett Packard Enterprise (HPE) has continued to strengthen its APM suite product line — most notably, its SaaS-based offerings, which are built on a modern, cloud-native architecture. The on-premises products, while based on older technology, are not being left behind, though, as improvements are being made to the various UIs. The buying influence of APM suite technology is beginning to shift. In recognition of this shift, APM recently joined the Application Delivery Management organization, and is focused on creating synergies with its testing solutions and leveraging existing routes to market. HPE has seen turnover in its managerial ranks, with the former general manager of the former HP Business Service Management (BSM) group moving to another firm within the IT operations management (ITOM) industry. The key event that may influence HPE's APM direction is the recently announced spin/merge of its entire software portfolio to Micro Focus, which is expected to close in late 2017. Although there is no apparent significant overlap between HPE's APM portfolio with other monitoring solutions within Micro Focus, the acquisition raises questions about how the APM product line will be supported within the confines of its new ownership structure.

Strengths
  • HPE has a specialized field operations organization (sales/presales, consulting, etc.) to support APM suite product sales across the globe. These specialists will move with HPE Software as part of the spin-merge.

  • HPE has a large opportunity to cross-sell the APM suite into its existing installed base.

  • HPE's AppPulse set of SaaS-based service offerings have easy-to-deploy usage capabilities.

Cautions
  • The spin/merge of HPE Software to Micro Focus may impact the current APM suite roadmap.

  • The HPE APM software suite today has limited visibility outside of IT operations.

  • HPE's APM on-premises offerings consist of a collection of diverse products, complicating the implementation and administration of the portfolio as a whole.

IBM

Version 8 remains the flagship of IBM's APM suite strategy, with additional enhancements since the last Magic Quadrant evaluation. Some of these improvements include a (continuing) in-process update on the user interface, support for SAP Hana and Hadoop, and a new synthetic transaction monitoring capability available for both SaaS and on-premises deployment. IBM believes that its strategy of offering cloud and on-premises infrastructure platforms in tandem with APM and other monitoring technology gives it an advantage over firms in the market that focus solely on monitoring, as it (and some others) expects commoditization to drive down prices. In addition, IBM is very focused on leveraging the firm's stated $17 billion investment in analytics technology to drive it to the top of the APM suite market. The company has been in the process of updating its sales approach to focus more on industry-oriented solutions, rather than pure technological or product-driven sales.

Strengths
  • IBM has a considerable installed base of cloud, infrastructure and ITOM clients in which to sell APM suite technology.

  • The company's investment in what it refers to as "cognitive computing" could be a game changer, if it can make it easy to consume from both a technological and a pricing perspective.

  • IBM's Bluemix platform as a service (PaaS) offering provides a modern APM UI capability and enables frictionless instrumentation of applications running on the platform.

Cautions
  • The company still needs to enhance marketing of its IBM APM suite capabilities.

  • While IBM certainly has a global reach, Gartner does not see it effectively leveraging this capability, at least with respect to APM suite sales.

  • The APM suite consists of several products, add-ons and related tools that make migration and implementation a time-consuming task.

Microsoft

Since the last APM suite evaluation, Microsoft has finalized a strategy shift. Specifically, Azure-hosted Azure Application Insights has become the flagship APM product for Microsoft. The product has a modern interface that was designed specifically to assist developers — a key Microsoft constituency. It has some advanced analytical capabilities, such as Proactive Detection, which looks for abnormal patterns. In the short term, the focus on developers will likely be a limitation, as today they are not the primary purchasers of APM suite technology. However, with the ongoing shift "left," away from IT operations as the key buying center, Microsoft's developer-centric positioning could result in an advantage. As Gartner looks at Microsoft's strategy, it's clear that every new dollar of product revenue from the likes of Azure Application Insights is important, but the longer-term focus may also be to improve the penetration of Azure within the IT marketplace.

Strengths
  • Microsoft has one of the world's largest developer constituencies, which is a natural target for Azure Application Insights.

  • Once fully rolled out into Microsoft's Azure infrastructure, Azure Application Insights will be able to be accessed in over 30 Azure regions worldwide.

  • Azure Application Insights can display telemetry specific to function calls in a feature called CodeLens, which makes it easy for programmers to observe performance data without leaving the developer environment.

Cautions
  • Outside of Microsoft-sponsored events, such as Build, Azure Application Insights has little APM marketplace visibility.

  • Microsoft will have to work with enterprises to assist in the migration to SaaS-based Azure Application Insights from on-premises System Center implementations.

  • Support for cross-platform or application server tracing is limited to Java and .NET.

Nastel Technologies

Nastel Technologies continues to focus on its heritage of providing enterprise-focused, middleware-centric monitoring products and services. This includes offering solutions for enterprises with mission-critical applications requiring the support of high-throughput and time-sensitive transactions. As a consequence, Nastel places great emphasis on working with key financial services, healthcare and retail enterprises. Since our last APM Magic Quadrant evaluation, Nastel continues work on evolving its jKool technology from merely being a SaaS-based offering to now also being an on-premises product (rebranding both versions as AutoPilot Insight) while also continuing to upgrade the core analytics platform that undergirds the product. It has also introduced a new browser-based real-user monitoring capability that enables end-to-end visibility. The company remains headed up by the same individuals who co-founded Nastel over 20 years ago.

Strengths
  • Nastel has deep insight and relationships with organizations within the financial services industry.

  • The company remains centered on messaging and business-oriented opportunities, and uses this as an advantage against companies that center their efforts primarily on Java and .NET technical sales.

  • AutoPilot Insight provides an intuitive natural-language-based query builder that can enable non-APM professionals to rapidly analyze metrics, logs, events and other transaction data.

Cautions
  • While Nastel is profitable, due to its size it may have difficulty penetrating the market at the same rate as its larger competitors.

  • The company has limited sales reach in rapidly growing geographies, such as Asia/Pacific.

  • The AutoPilot product line has limited synthetic transaction monitoring capabilities.

New Relic

New Relic, which is publicly traded, is the only APM Magic Quadrant suite participant that offers only a SaaS version of its product. While this has sometimes caused its removal from consideration, overall it has not seemed to impact the company's expansion, as it enjoyed a 65% revenue growth rate from FY15 to FY16, and has over 14,000 customers. The company has also begun to make headway into the more traditional large-enterprise market for APM. End users continue to identify the technology as among the quickest to deploy and realize value. Since the last APM suite evaluation in 2015, New Relic purchased Opsmatic, a company that provides visibility into infrastructure changes and that is the foundation for a new offering called New Relic Infrastructure (which became available after the Magic Quadrant cutoff date). President and COO Chris Cook has left the firm since the last MQ evaluation and has been replaced by Hilarie Koplow-McAdams, formerly head of global sales at Salesforce.

Strengths
  • New Relic's very large installed base provides significant add-on sales opportunities as new modules become available.

  • The company founder, Lew Cirne, is viewed as an APM industry thought leader, which raises the visibility of the company within the market.

  • The length of time that the company has focused on building not only a scalable cloud technology architecture, but also robust operational and security practices, gives it an advantage against many other APM competitors.

Cautions
  • New Relic does not have an EMEA-based data center, which, because of regulatory and privacy concerns, may act to impact its growth in this critical market (note, however, that its application for the EU-US Privacy Shield Framework has been accepted).

  • While the company has seen solid revenue growth rates, New Relic must still continue to expand its large-enterprise footprint.

  • New Relic does not offer any machine learning or advanced analytics technology beyond search capabilities (note that after the Magic Quadrant cutoff date, New Relic announced Project: Seymour, which is focused on machine learning and artificial intelligence [AI] initiatives).

Oracle

A reinvigorated Oracle enters the APM suite Magic Quadrant for 2016 primarily on the introduction of its SaaS-based offering, Oracle Management Cloud Application Performance Monitoring (or OMCAPM), in December 2015. Of course, Oracle has been in the APM market for many years with its Oracle Enterprise Manager product, with the most recent version called Oracle Enterprise Manager Cloud Control (OEMCC). What makes Oracle's entry interesting is that for the first time, it signals the company's intention to look beyond its own very large ecosystem and to begin supporting non-Oracle and non-Java environments. Oracle's new APM direction is, in fact, part of a larger machine-learning-based IT operations management initiative, which includes SaaS-based infrastructure monitoring, security monitoring and analytics, compliance, and orchestration, in an effort to unify data and processes across IT silos. Oracle's existing approach is to have OMCAPM leverage the data already collected by OEMCC; however, it will still face a challenge to ultimately rationalize two very different technology stacks to provide a seamless APM suite end-user experience.

Strengths
  • Oracle is clearly very strong financially, with the monetary resources to continue to invest in this new APM suite initiative.

  • The company has a large worldwide sales force, of which there are dedicated APM sales and support individuals aligned by both industry and geography.

  • OMCAPM provides a modern UI; it has links to other SaaS services, IT analytics and log analytics, which enable, for example, the linkage of log files and transaction data.

Cautions
  • Oracle's experience in selling APM suite technology into accounts with complex, heterogeneous requirements will require significant investments in pre- and postsales engineering support.

  • Market awareness of OMCAPM appears to be limited to the Oracle installed base and attendees of events such as Oracle OpenWorld.

  • OMCAPM and OEMCC have different competitive strengths that may require clients, at least today, to implement both technologies.

Note: Oracle did not respond to requests for information to assist in the development of this document. Gartner did, however, subsequently hold a meeting with Oracle to review our findings.

Riverbed

Over the past year, Riverbed continued its strategy of expanding its SteelCentral product line into a comprehensive performance platform, combining user, network, infrastructure, and application monitoring capabilities. Since the last MQ, the most significant updates were the acquisition of Aternity in July 2016, the redesign of SteelCentral AppInternals, and AppInternals' integration with AppResponse and SteelCentral Portal. Aternity provides end-user experience and application monitoring capabilities from the vantage point of the end-user device. The integration of Aternity into the SteelCentral suite will enhance Riverbed's end-to-end monitoring capabilities. The company's APM efforts, however, have not gained much visibility in the marketplace yet, as the Riverbed brand is still closely aligned with its network optimization products and not APM. While the firm has accelerated its release cadence, Riverbed is in the midst of updating its go-to-market and partnering strategies with an eye toward improving repeatable revenue and further leveraging its partner channel.

Strengths
  • The company has a large installed base of over 25,000 enterprise customers to leverage for add-on APM suite sales.

  • The acquisition of Aternity will open up new DEM sales opportunities for the company, especially in those environments where end-user productivity is critical.

  • Customers who have chosen Riverbed AppInternals often cite the product's ability to collect very large amounts of fine-grained data to support the needs of complex application environments.

Cautions
  • Riverbed's traditional business does not revolve around APM, and there remains a threat of underinvestment in monitoring should its traditional business see competitive pressure.

  • Because it is a multi-product-line company, Riverbed does not have an APM-focused sales force, which puts it at a disadvantage with pure-play APM suite competitors.

  • Riverbed did not offer complete SaaS-based APM suite solutions during the official evaluation period for this Magic Quadrant (note: Riverbed has since made available two of its APM suite components, AppInternals and Aternity, via SaaS-based options).

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

The following vendors were added to the APM Magic Quadrant:

  • Correlsense — Correlsense met both the updated technical and business inclusion requirements.

  • Oracle — Oracle met both the updated technical and business inclusion requirements (note: Oracle did not provide a completed vendor survey, nor did it submit any customer references).

Dropped

The following vendors were dropped from the APM Magic Quadrant:

  • AppNeta — AppNeta was removed from consideration as it sold its qualifying TraceView product to SolarWinds during the evaluation period.

  • Dell — Dell did not meet the updated technical requirements (specifically, of automated JavaScript injection).

  • JenniferSoft — JenniferSoft did not meet the updated business inclusion requirements of being in the top 12 in terms of revenue.

  • ManageEngine — ManageEngine did not meet the updated business inclusion requirements of being in the top 12 in terms of revenue.

  • Tingyun — Tingyun did not meet the updated business inclusion requirements of being in the top 12 in terms of revenue.

Inclusion and Exclusion Criteria

To qualify for inclusion in the 2016 APM suite Magic Quadrant, vendors needed to meet all of the following product and business requirements.

Product Requirements

The qualifying provider must offer an APM on-premises (software) product (and/or SaaS-based service) suite that includes all of the following APM functions and characteristics:

  • Digital experience monitoring

    • Real-user monitoring of web pages via automatic JavaScript injection performed by server-based agents

  • Application discovery, tracing and diagnostics

    • Automated discovery of web servers, Java and .NET application servers, as well as other middleware and their relationships, through the observation of an application's HTTP/S transaction behavior

    • Automated tracing of unique, individual synchronous and/or asynchronous HTTP/S transaction execution paths from a web and/or application server entry point to a back-end data source exit point

    • Automated collection of data for Java Virtual Machines (JVMs) and .NET Common Language Runtimes (CLRs) to aid in the detection of issues such as memory leaks, hot spots and thread locks

  • Application analytics

    • Automated detection of the source (or root cause) of performance anomalies for HTTP/S transactions supported by Java and .NET application servers through machine learning, statistical inference or other methods.

    • Note: This requirement was subsequently expanded to allow any and/or all of the following capabilities:

      • Complex operations event processing (COEP)

      • Machine learning/statistical pattern discovery and recognition (ML/SPDR)

      • Unstructured text indexing, search and inference (UTISI)

      • Topological analysis (TA; this will also include additional forms of visualization)

        Gartner made the decision to adjust this criterion, as we believe that analytics continues to be an evolving set of technology capabilities. Given its overall lack of maturity in the APM suite market, Gartner elected to allow a more broad interpretation of product functionality in this area.

Business Requirements

The qualifying provider must be among the top 12 vendors in the APM suite market in terms of revenue (including license — both perpetual and subscription, maintenance and services). The market share analysis leveraged data found in "Market Share: All Software Markets, Worldwide, 2015." Vendors that were below this top-12 cutoff could still see themselves included in the MQ if vendors with greater revenue failed to meet any of the technical criteria. In other words, smaller revenue vendors moved up the listing for any technical limitations that disqualified a larger technology provider.

This requirement was updated to redirect the focus on APM suite technology providers that had worldwide product distribution and support capabilities, and, as a consequence, could meet the needs of large global enterprises.

Evaluation Criteria

Ability to Execute

Gartner analysts evaluate vendors on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective, and to positively impact revenue, retention and reputation. Ultimately, vendors are judged on their ability and success in capitalizing on their vision. The criteria are:

  • Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets and skills, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

  • Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit to continue to invest in the product, continue offering the product, and advancing the state of the art within the organization's portfolio of products.

  • Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.

  • Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

  • Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message in order to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional, thought leadership, word-of mouth and sales activities.

  • Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.

Table 1.   Ability to Execute Evaluation Criteria

Evaluation Criteria

Weighting

Product or Service

High

Overall Viability

High

Sales Execution/Pricing

Medium

Market Responsiveness/Record

High

Marketing Execution

Medium

Customer Experience

High

Operations

Not Rated

Source: Gartner (December 2016)

Completeness of Vision

Gartner analysts evaluate vendors on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs, and competitive forces, and how well they map to the Gartner position. Ultimately, vendors are rated on their understanding of how market forces can be exploited to create opportunity for themselves. The criteria are:

  • Market Understanding: Ability of the vendor to understand buyers' wants and needs, and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.

  • Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

  • Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

  • Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.

  • Business Model: The soundness and logic of the vendor's underlying business proposition. Note that in the 2016 APM suite Magic Quadrant, this criterion weighting was changed from medium to high.

  • Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

  • Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

  • Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries, as appropriate for that geography and market.

Table 2.   Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

High

Marketing Strategy

Medium

Sales Strategy

Medium

Offering (Product) Strategy

High

Business Model

High

Vertical/Industry Strategy

Low

Innovation

High

Geographic Strategy

Low

Source: Gartner (December 2016)

Quadrant Descriptions

Leaders

The APM suite Leaders quadrant is composed of vendors that provide products that are a strong functional match to general market requirements, have been among the most successful in building a loyal customer base, and have a relatively high viability rating due to strong revenue growth and/or high market share. They have comprehensive portfolios that typically do not come with major integration challenges and offer superior application visibility. Leaders also show evidence of superior vision and execution for emerging and anticipated market requirements, as well as a consistent track record of innovation.

Challengers

The APM suite Challengers quadrant is composed of vendors with high market reach and large deployments. Vendors in this quadrant typically have strong execution capabilities, as evidenced by financial resources, and a significant sales and brand presence garnered from the company as a whole, if not directly from their APM-related activities. Many have previously been among the top performers in the market and thus offer broad product portfolios; however, they are all currently engaged in efforts to more fully modernize and integrate their architectures and feature sets to better compete against those in the Leaders quadrant.

Visionaries

The APM suite Visionaries quadrant is composed of vendors that provide products that have built a compelling plan to competitively address current and future APM suite market requirements, but whose current product portfolio may still be a work in progress. They have a lower Ability to Execute rating than the Leaders, which is typically due to a lower viability rating as measured by installed base or financial strength.

Niche Players

The Niche Players quadrant is composed primarily of vendors with solutions catering to specific audiences or with limited use-case support today. Because they do not demonstrate equal depth across all five dimensions, they typically do not meet the APM suite needs of larger enterprises, or do so only within specific verticals or market segments. In addition, vendors in this quadrant may have a much more limited ability to invest in in the necessary functional as well as sales and marketing capabilities to expand beyond their current focus. Inclusion in this quadrant does not reflect negatively on the vendor's value in the markets in which they choose to compete.

Context

In the course of this research, several key observations emerged from providers' responses as well as reference customer feedback that should be carefully considered during an organization's APM strategy formulation and solution selection. These include:

  • Pricing (as well as lack of ROI) has risen up to be the major APM impediment to greater enterprise penetration. This is exacerbated by the adoption of increasingly dynamic technologies, such as cloud, containers/microservices and software-defined "everything." APM suite vendors continue to search for the right model to use when pricing ephemeral resources, with some form of consumption-based approaches seeming to capture the greatest technology provider interest.

  • When selected, APM tools were justified on the basis of (No. 1) creating internal/operational efficiencies, (No. 2) improving customer relations/service and (No. 3) improving business outcomes — in that order.

  • After pricing, tool complexity remains the next major issue, as many end users require additional services to assist in APM suite deployment and configuration — the latter is especially acute with respect to correctly identifying key business transactions.

  • In an effort to tame complexity, almost all APM suite Magic Quadrant participants are making extensive investments in improved search, analytics and visualization technology.

  • The shift "left" continues in terms of APM buyers increasingly coming from application development or a similar area, with only 54% of customer survey respondents identifying IT operations as the primary buyer of APM technology.

  • SaaS as an APM suite delivery model continues to grow in acceptance, as the customer references surveyed indicated that applications monitored in this manner would increase from an average of 24% today to slightly over 43% within three years (note that 37% of the respondents indicated that at least 75% of their applications would be monitored via a SaaS approach in three years).

  • Mobile and the Internet of Things (IoT) remain areas of future interest; however, neither technology is generating any significant revenue for APM suite vendors today.

  • APM vendors are expanding the scope of their monitoring domain with plans to move both up the stack (gathering more business-relevant data) and down the stack (collecting information on servers, networks, databases and so on.).

  • DevOps continuous delivery poses additional demands on IT organizations charged with application support. Not only does DevOps drive the need for increased granularity of information to detect subtle performance changes, but it also prioritizes timeliness, in terms of presenting data more rapidly to decision makers outside of IT operations.

  • When each vendor was asked who their primary competitors were, AppDynamics and Dynatrace were tied for the most selections, followed by New Relic and then CA Technologies. When survey respondents were asked to identify other APM vendors that they considered before making their final choice, the order was AppDynamics, CA Technologies, Dynatrace and New Relic.

As always, IT organizations should not utilize the Leaders quadrant as a shortlist of appropriate vendors, but instead should build a list of criteria describing their current and future needs, and then select from vendors that best meet those requirements. Enterprises should select a vendor that has both a history of and future plans for focusing on the APM market. Careful consideration should be given to required skills, training, process and deployment investments, because these factors can have a much greater impact on the overall value realized from an APM suite investment than any specific functional capability found in a given tool.

Market Overview

The APM market is one of the largest subsegments of the IT operations management market, with 2015 revenue of approximately $2.7 billion and a growth rate exceeding 10% annually. Given these statistics, it is no surprise that Gartner observes continuing investment as well as acquisitions within the market (for example, the September 2016 acquisition of AppNeta's TraceView assets by SolarWinds). Interestingly, while Gartner has observed many new startups appearing on the radar screen, we've also seen large software organizations such as Oracle and Microsoft (re)investing at the same time. Oracle's presence is especially interesting, given the fact that the company is now looking to support a greater variety of non-Oracle (and non-Java) platforms. But Microsoft and Oracle are not the only large, non-APM companies expressing potential interest in the market — almost all of the current APM suite providers expect to see companies like Google and Amazon beef up their primarily infrastructure monitoring capabilities with increased support for application visibility. Yet these (and other large) cloud companies may pose another challenge for the traditional APM players, in that there is a continuing scramble for talent acquisition, and there is some concern within the APM market that highly skilled individuals may opt for what may be perceived as better opportunities in the cloud.

Data consolidation is another development that could be challenging to the APM vendor status quo. IT operations and other organizations are already awash with data, and this situation will likely only become more challenging with the growth of cloud, microservices, IoT and so on. Hence, Gartner sees companies such as Splunk, Sumo Logic and even the open-source ELK stack (combining Elasticsearch, Logstash and Kibana) as leveraging their current repository capabilities to act as the system of "truth" for APM data as well. Likewise, we've already observed IT infrastructure monitoring companies, such as Datadog, expanding upon their own data (and event) aggregation capabilities and begin venturing into the APM space.

With this Magic Quadrant, we've highlighted a new market — DEM — which we still categorize as being part of APM. DEM consists of RUM, STM and end-user sentiment monitoring, as well as other functions. Because of the growth of digital business (as well as increasing challenges in monitoring SaaS, PaaS and other technologies), Gartner expects the DEM market to rapidly grow. While the APM vendors all have some degree of support for DEM as a requirement for consideration within the Magic Quadrant, we believe that DEM-specific companies will continue to proliferate and challenge more broad-based APM players.

Asia/Pacific and Japan Addendum

Gartner conducted an online survey regarding APM from 10 February to 18 February 2016 among Gartner Research Circle Members — a Gartner-managed panel composed of IT and business leaders. In total, 180 members qualified. Qualified respondents were involved in their organization's decisions regarding APM tools. Of the 180 members interviewed, 27 were from Asia/Pacific and Japan (APJ). Given that the small sample size from APJ is not one from which to draw statistically valid conclusions, we offer the results here to show some potential differences between, for example, the U.S. market and that of APJ:

  • Both APJ and North America (NA) show that in three years, IT operations will be primary purchasers for APM only approximately 25% of the time.

  • SaaS uptake of APM technology over the next three years, in terms of percentage of applications managed in this manner, will potentially only be slightly higher in APJ than within NA.

  • Security/data privacy issues rank as the highest impediment for APM-based SaaS adoption in both APJ and NA, with security and data privacy being potentially slightly larger issues in APJ.

  • APJ organizations potentially see the impact of DevOps on the processes, organization style and/or technology associated with APM to be significantly greater than perceived by NA-based firms.

  • Currently, within both APJ and NA, IT operations is the primary buyer of tools to monitor the mobile applications environment.

Given the similarities in responses, Gartner's APM suite recommendations do not change. Keep in mind that as APJ encompasses a very large geographic area, there will likely be differences among the various countries within the region in terms of APM suite needs that might alter some priorities. In addition, in several countries, we often see indigenous vendors preferred over multinational providers. Examples of some of the more visible regional firms that we see focusing on meeting APM suite needs in the APJ geography include:

  • Bonree (China)

  • Cloud Intelligence Technology (cloudwise.com; China)

  • JenniferSoft (Korea)

  • OneAPM (China)

  • Tingyun (China)

Gartner expects these vendors, as well as a potentially growing number of APM technology providers, to continue their focus on solidifying their respective local market shares while planning for future overseas expansion.

Evidence

The Magic Quadrant is a reflection of a broad-based research effort involving:

  • Over 1,000 inquiries (among three analysts) with Gartner clients inquiring about APM tools over the past 12 months.

  • Many in-person and other interactions with the vendors within this Magic Quadrant.

  • A detailed vendor survey requiring responses to more than 300 questions.

  • A review of Gartner Peer Insight data responses.

  • As part of the Magic Quadrant process, Gartner conducted a survey of organizations using online tools from August to October 2016. The survey participants were customer references nominated by each of the vendors in this Magic Quadrant. These surveyed customers were asked 38 questions about their experiences with their vendors and solutions. The results were used in support of the assessment of the APM suite market. We obtained 70 full responses representing companies headquartered across several different geographic regions.

  • A product demonstration (or PowerPoint slide set) from each of the 12 participating Magic Quadrant vendors, where each was requested to provide insight into its ability to support specific functions and use cases (specifics are detailed in "Critical Capabilities for Application Performance Monitoring Suites" ).

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.