AppDynamics Paves the Way for APM into Digital Transformation

On November 10, 2016, AppDynamics announced Business iQ, a single platform for combining application and business monitoring. This announcement represents a significant development in the role that application performance monitoring (APM) solutions play in enabling digital transformation.

Market Context:

APM vendors (especially market share leaders) are looking for new avenues that will support rapid growth that they have experienced in traditional APM deployment cases and many of them recognized digital transformation as the next big avenue that can fuel their future growth. However, helping organizations to become digital businesses is a complex and multifaceted endeavor. APM vendors have been struggling with finding where they could fit in digital transformation enablement and coming up with the right message that will resonate with digital transformation leaders. So far, their attempts to jump on the digital transformation bandwagon have been limited to the following areas:

  • Positioning their existing solutions as very effective in monitoring (or even transforming) IT environments for digital businesses while emphasizing their effectiveness in monitoring technology attributes of digital enterprises, such as Cloud, IoT, Mobility, etc.
  • Tying their existing monitoring solutions into portions of some of the key themes of true digital transformation such as Agile, collaboration or customer experience (CX).
  • Providing correlation between IT metrics they are collecting and some high level business metrics (more than three-quarters of IT monitoring tools can do this to some degree) and positioning this capability as digital transformation enablement.
  • Staying true to their core value proposition, which is troubleshooting and preventing performance issues, and explaining how that frees up more resources for transformation and growth (this the most honest and accurate way to describe the role of APM solutions in digital transformation).

What all of these areas have in common is a lack of understanding what digital transformation is. The core of digital transformation, from the technology perspective, is making technology an integral part of a business strategy and using it as a source of competitive advantage.

AppDynamics announcement

AppDynamics’ Business iQ is the first solution coming out of the APM space that enables digital businesses to deliver on the core promises of digital transformation. The solution does provide correlation between IT and business metrics, but not in the traditional format that was designed to just prove the value of IT to the business. The solution is actually using this type of correlation to target business users and have them leverage application performance data for their own goals. That is a major shift in how APM information is being used in the organization, as IT data is being leveraged for making non IT decisions. It is also well aligned with goals of user organizations and 41% of the organizations in DEJ’s IT Operations Analytics (ITOA) research reported that they are looking to use IT data outside of the IT.

Business iQ is delivered as a part of the company’s App iQ platform that provides strong collection and analytics capabilities around applications, user experience and infrastructure. This allows the company to collect an enormous amount of IT data on a wide range of domains and monitoring aspects.  Applying Business iQ capabilities to this data core will enable executives and other business users to access information about major business areas that they would not be able to receive from other business performance monitoring tools.

Open questions

Even though this announcement represents a major opportunity for AppDynamics, there are two areas that the company will have to work on to maximize the potential of Business iQ:

  1. This announcement puts AppDynamics in front of a different audience in terms of job roles, purchasing processes and needs for prove points. It will also require changes in the company’s messaging and sales approach, where potential buyers will care more about business outcomes than KPIs. This is a new situation for AppDynamics and it is yet to know how the company will be able to execute in these markets.
  2. The company will have to find the right balance between putting resources behind this new strategic direction and not jeopardizing their existing APM business and install base (or future buyers of their pure APM capabilities).

As DEJ already wrote, APM is a market that  will not be able to continue its rapid growth from the last 5-6 years without the innovation and introduction of new capabilities. The announcement represents a new stage in the evolution of APM and it challenges other players in this market to innovate and find ways to redefine this market and the role that APM capabilities play in the enterprise.