On July 28, 2016, Riverbed announced that it is acquiring Aternity – user experience monitoring specialist. This represents another stage in Riverbed’s seven-year history of competing in the IT performance market and this article analyzes the impact of the acquisition on Riverbed’s competitive position, as well as the company’s ability to enable digital transformation.
Riverbed and IT Performance Monitoring
After experiencing an impressive growth fueled by becoming an undisputed leader of, at the time, a very hot WAN Optimization market, Riverbed kicked off a series of acquisitions to try to repeat the same success in the IT performance monitoring market. The first two acquisitions of Mazu Networks and CACE Technologies were unimpressive from the technology perspective and were perceived as more of a “bottom feeding” (although there is a lot of value in gaining direct access to the Wireshark community) than a step toward becoming one of the key players in the market. However, adding these technologies coupled with Riverbed’s channel and market muscle was good enough for the company to create a respectable IT performance business unit.
The acquisition of OPNET in 2012 positioned Riverbed as one of the key players in both the network performance monitoring (NPM) and application performance monitoring (APM) markets. However, the best way to describe Riverbed’s history in different markets is to become the market leader, or not play at all; it was expected even after the OPNET acquisition that in order for Riverbed to become the IT performance monitoring leader there will be another shoe to drop. The Aternity acquisition doesn’t seem as flashy as the OPNET acquisition, but the analysis of the key market trends and changes in user requirements tells that Riverbed could be on the path to truly differentiate themselves in the IT performance market.
As we mentioned in our recent article competitive differentiation in digital economy really comes down to addressing specific use cases and the acquisition gives Riverbed an edge in the following:
- Cloud. Fifty-seven percent of organizations in DEJ’s 2016 NPM survey reported that NPM tools are not effective in monitoring Cloud performance. This is due to the fact that how and where these solutions are deployed in IT service delivery chain. Since Aternity’s solution is being deployed on user devices it is agnostic to whether applications are managed in the Cloud or on premise which allows organizations to have full visibility into real user experience of Cloud applications.
- Mobile. Forty-eight percent of organizations reported that they are looking to gain more visibility into performance of mobile applications. This was one of the core strengths of Aternity’s solution and opens a brand new, fast growing market for Riverbed.
- New definition of end-to-end. Thirty-four percent of organizations in TRAC’s research from 2013 reported user devices being a blind spot for APM. The acquisition enables Riverbed to introduce a new brand of end-to-end visibility into application performance and become a strong competitor to some of the leaders in this market, such as Dynatrace, AppDynamics and New Relic.
- Unique combination of user experience monitoring capabilities. The acquisition allows Riverbed to unite OPNET capabilities for user experience monitoring (EUM) with monitoring points of the user’s interaction with the application which creates a fairly unique combination in the market.
Even though Aternity was known mostly as a unique user experience monitoring solution due to the fact that it is installed on user devices, what might not be widely known is that the solution has a very strong analytics engine, which is another capability that Riverbed can use as a differentiator in NPM and APM markets
The acquisition makes Riverbed better prepared than most of the other NPM/APM vendors for enabling digital transformation, especially in areas on top of the mind for digital transformation leaders.
- Solution that benefits multiple job roles and departments. The Aternity solution was providing benefits for the IT team, but also many of their users were business and other non-IT job roles. The acquisition allows Riverbed to provide value across different departments of digital businesses.
- Reduce cost of running and maintaining enterprise technology. As DEJ previously wrote, many digital businesses are moving to the Run-Grow-Transform (RGT) budgeting model for technology purchases so they can free up more resources for growth and innovation. The acquisition allows Riverbed to enable their customers to improve their potential for growth and transformation by being more effective in managing IT performance.
- Enable deployments of other technologies. Two of the key technology areas for digital transformation are Cloud and Mobile. The acquisition allows organizations to better manage these technologies, due to the fact that Aternity’s monitoring capabilities are agnostic of a delivery method type of device.
Still another shoe to drop
On the other hand, requirements of digital transformation leaders for technology purchases go beyond these three areas referenced above. Additionally, the IT performance monitoring market is rapidly changing with capabilities such as automation, DevOps enablement, business level reporting and support for microservices and new application designs becoming the drivers of new growth. However, DEJ’s research shows the top driver for new adoption of new IT performance monitoring solutions is – analytics.
Organizations are reporting that IT Operations Analytics solutions (ITOA) are nearly four times more likely to be perceived as making IT more strategic than NPM tools and nearly two times more likely than APM tools. Additionally, 44% of organizations in DEJ’s recent NPM survey reported that they are looking to deploy advanced analytics capabilities (“what-if-analysis”, ability to project trends, etc.) for NPM. As Riverbed continues to strengthen their IT performance monitoring portfolio, the next logical target would be a pure-play ITOA vendor and there will be more than a few to choose from. These vendors range from companies that already have strong focus on digital transformation such as Rocana, emerging vendors with strong technology offerings such as Correlata or companies with a broader portfolio of capabilities such as Moogsoft.
Some other areas that are driving new adoption and where Riverbed can improve its capabilities, but also are not lacking innovative solutions as potential acquisition targets include:
- WiFi (NetBeez)
- BigData infrastructure for IT performance (Kentik)
- IT operations automation (BigPanda)
Technology-wise, Riverbed has been playing catch up in the NPM and APM markets since they entered this market in 2009. Key competitors in NPM and APM were not worried about the OPNET acquisition because of the technology that Riverbed acquired, but were concerned that Riverbed is getting serious about APM and will eventually figure out how to own this market, as they did with WAN optimization. This acquisition significantly changes the company’s position, as for the first time since entering this market Riverbed has a mix of capabilities that is unique while being well aligned with current and emerging trends and user requirements. However, there is still a long way to go.
Digital transformation is a major opportunity for IT performance vendors, but for Riverbed to be a true IT performance leader in digital economy it will have to think beyond improving traditional IT metrics for user organizations and continue building capabilities that are aligned with key business goals for digital transformation.