Month: February 2021

On February 18, 2021, Torii, a management and automation solution for Software as a Service (SaaS) portfolios, announced a $10 million Series A funding round led by Wing Venture Capital with participation from its prior investors, Entree Capital, Global Founders Capital, Scopus Ventures, and Uncork Capital.

Context

SaaS management is a unique technology challenge for the enterprise both because of the sheer number of applications that are running in a large business (Amalgam Insights estimates that organizations with over 1,000 employees average 500 or more apps being used in production for business purposes) and the decentralized nature of SaaS purchases often allow any employee to bring a new app into the business without direct security, governance, or management input from IT.

About Torii

Over the past year, Torii has increased revenue by 400% and grown to 25 employees. Torii’s role in SaaS management focuses on providing a discovery engine to find all of the SaaS in an organization and then to provide automation to support the service orders to add and remove employees from each account, which is comparable to the telecom terminology of MAC-D (Moves, Adds, Changes, and Disconnects). Torii’s discovery capabilities are aided by integrations with identity management vendors solutions such as JumpCloud, Okta, Onelogin, and SailPoint as well as connections to reimbursement software such as Concur and Expensify. From a usage perspective, Torii also supports a variety of direct integrations with enterprise software solutions, provides web browser extensions to find new apps, and supports an app directory for SaaS applications being used in the enterprise.

As an interesting aside, Torii was founded by Uri Haramati, who was a founder of current social media darling Houseparty.

Context for this funding

Torii’s growth has been driven by the increased need for SaaS and was accelerated both by the global COVID-19 pandemic and the subsequent need to digitize workflows and onboard all remote employees to applications capable of managing work. The core driver associated with Torii and its competitors comes from the need to manage SaaS portfolios and licenses. This need is reminiscent of a similar challenge that was created a decade ago to manage the rapidly growing fleets of smartphones and tablets that quickly infiltrated the enterprise. But the biggest difference that Amalgam Insights sees between these two areas is that SaaS management is a purely digital challenge that can run across a variety of devices whereas mobile device management also included a physical device component.

This round of funding comes at a time when SaaS management is growing both in awareness and investment. Based on the growth of prior IT trends over the past 20 years, Amalgam Insights believes that the current market opportunity for managing SaaS across financial, operational, and technical management is over $2 billion and continues to grow as the SaaS market as a whole is growing. Given that even large enterprise SaaS applications such as Salesforce, Workday, and ServiceNow are continuing to grow 20-30% year-over-year, it is no surprise that Amalgam Insights expects the SaaS market continue growing 20% in 2021 and for the SaaS management opportunity to grow at roughly the same rate.

As of 2021, SaaS Management has become a legitimate market of competitors that have their own specializations, strengths, and market focus. In this market, Torii competes with the likes of startups Bettercloud, Blissfully, Cleanshelf, CoreView, Productiv, and Zylo to manage SaaS portfolios in the enterprise space as well as traditional Software Asset Management, IT Asset Management, and security providers such as Flexera, SailPoint, ServiceNow, and Snow Software.

Recent examples of investment in the SaaS Management space include

• Zylo raising a $22 Million Series B round in September 2019
• CoreView’s acquisition of Alpin in October 2019 and raising a $10 million Series B round in October 2020 to manage Office 365.
• Productiv raising a $20 million Series B round in November 2019
• Cleanshelf raising an $8 million Series A round in March 2020
• Bettercloud raising a $75 million Series F round in May 2020
• SailPoint’s acquisition of Intello in February 2021

What to expect from Torii

With this round of funding, Amalgam Insights expects that Torii will invest in talent and resources to pursue what is still a massive latent market. From a tactical perspective, Torii will likely double its employee size over the next year based on both its funding and revenue-based growth, which will help as it both enters net-new deals and competes against its peers in the SaaS Management market.

Amalgam Insights also expects that Torii will be pressed to pursue a wide variety of opportunities associated with audit, compliance, process and workflow automation, service automation, sourcing and contract management, and security management. This set of challenges and opportunities will require focus in the short-term and will likely require another round of funding in the next couple of years to fully pursue.

These are interesting times for the SaaS Management market as a set of vendors have started to coalescence in this space. As these companies grow over the next three-to-five years, the size of their market opportunity will potentially double with at least a couple of these companies achieving exits along the lines of AirWatch (now part of VMware), Apptio, MobileIron (now part of Ivanti), and Tangoe. With this round of funding and the opportunity in place, Amalgam Insights believes that Torii is well positioned to be a competitive option in the SaaS Management market for the next few years and should be considered by enterprises seeking to discover their hidden SaaS accounts and automate SaaS across the hundreds, if not thousands, of apps currently charged to the company and supported on corporate devices and the corporate network.

Last week, we mentioned why Kubernetes is an important management concern for cloud-based cost management. To manage Kubernetes from a financial perspective, Amalgam Insights believes that the foundational starting point needs to be in discovering and documenting the relevant technical, financial, and operational aspects of container inventory.

Kubernetes Cost Management requires a complete inventory of containers that includes the documentation of namespaces, clusters, and pods associated with each node. This accounting allows companies to see how their Kubernetes environment is currently structured and provides the starting point for building a taxonomy for Kubernetes.

In addition, a container-based inventory also needs to include the technical context associated with each container. Containers must be tracked along with the cloud-based storage and compute services and resources associated with the container across the lifespan of the container. Since the portability of containers is a key value proposition, companies must focus on the time-series tracking of assets, services, and resource allocation with each container.

Containers must also track these changes on an ongoing basis as they are not simply static assets like a physical server. Although IT organizations are used to looking at usage, itself, on a time-series basis, IT assets and services are typically tracked simply based on when they are moved, added, changed, or deleted. Now, assets and services must also be tracked based on when they are reassigned and reallocated across containers and workloads. These time-based assignments for container-based reassignment can be difficult to track without a strategy to track these changes over time.

Inventories must also be tagged from an operational perspective, where containers and clusters are associated with relevant applications, functions, resources, and technical issues. This is an opportunity to tag containers, namespaces, and clusters with relevant monitoring tools, technical dependencies, cloud providers, applications, and other requirements for supporting containers.

From a practical perspective, this combination of operational, financial, and technical tagging ensures that a container can be managed, duplicated, altered, migrated, or terminated without any effects to relevant working environments. There is no point in saving a few dollars, Euro, or yuan only to impair an important test or production environment.

Kubernetes inventory management requires a combination of operational, financial, and technical information tracked over time to fully understand both the business dependencies and cost efficiencies associated with containerizing applications.

To learn more about Kubernetes Cost Management and key vendors to consider, read our groundbreaking report on the top Kubernetes Cost Management vendors.

“On February 2, 2021, Tidelift announced several updates to its Tidelift Subscription designed to help companies manage open source in their IT and software environments. Amalgam Insights has covered Tidelift in the past as an emerging vendor dedicated to solving the thorny problem of supporting open-source maintenance and paying maintainers across the breadth of open source projects that are used in the business world.

Amalgam Insights finds today’s announcement by Tidelift to be interesting in supporting open-source portfolios for a few reasons.”

To learn more about this announcement and our recommendations for the Open Source community, read the full report: Tidelift Catalogs Clean Up the Enterprise Open Source Portfolio

Key Takeaway: “This opportunity for existing Box customers to embed e-signature more deeply into their document approval processes is a multi-billion dollar opportunity when the analytics, automation, workflows, and business process optimization opportunities are all taken into account.”

On February 3, 2021, Box announced its intention to acquire SignRequest, a Dutch e-signature vendor founded in 2014, for an estimated $55 million to develop Box Sign. Box plans to launch Box Sign in the summer of 2021 and to make it available both for personal and enterprise plans. Amalgam Insights believes this is an interesting opportunity for multiple reasons.

First, consider that Box’s entire go-to-market strategy is driven around placing enterprise standards around cloud-based content. This has always been its key driver and was the foundational starting point for allowing Box to succeed at a time when cloud-based content management system startups were popping up like wildfire a decade ago. As a starting point, let’s just use “enterprise standards” as a shorthand to describe the governance, security, analytics, and automation necessary to translate basic data and activity into the context and foundation needed to support businesses. Adding e-signatures allows Box to better serve its pharmaceutical, healthcare, government, legal, & other regulated clients with contractual & personal information transfers.

Second, the emergence of the COVID pandemic has driven the need to develop remote work capabilities and highlighted weaknesses in paper-based workflows that organizations have avoided for decades. The disease-driven digital transformation happening now is forcing companies to conduct the operational equivalent of changing the tires on a car while driving on a highway and requires complex problem-solving solutions that are well-packaged and readily available. This need drove the revenue of enterprise Software-as-a-Service companies in 2020 and will continue to drive growth as the majority of companies still need to fill gaps in their digital work toolsets.

Third, with internal e-signature, Box can now add human trust, activity, response time, & human-driven automation to a variety of documents and activities where it was previously dependent on partners. Human sign-off is a key data component, but it’s not the be-all, end-all of work. This is an opportunity to add signature-based approval as a foundational metadata component to every document, workroom, and content-based collaboration that Box supports, which is a vital area that no company has fully conquered. Looking at the enterprise market, companies that have started taking on this challenge include Workiva and ServiceNow, which are both obviously cloud SaaS darlings both from a revenue growth and valuation perspective.

I’m hoping this is a step towards Box being a Workiva (and eventually ServiceNow) competitor and starting to push activity analytics, machine-learning driven optimizations, and workflow capabilities to themarket. The content activity Box supports has immense latent value in benchmarking, authorizing, and rationalizing work. This trusted activity was one of the areas that some analysts, including myself, hoped that Blockchain would serve. But reality has proven that unlocking value from trusted activity requires hybrid activity that includes people, documents, and transactions.

This hybrid activity management along with the analytics, automation, trust, and force multiplier productivity that could result from this combination of human trust, document context, timely context, and related documents and workflows is the true promise of this acquisition. Existing document management vendors either lack the enterprise governance, platform standardization, automation, or functional capabilities to bring authorization and work together to the masses in a cost-efficient manner. Box’s business model that includes both freemium and enterprise models provides a unique opportunity to bridge the gaps in e-signature adoption, content, and business scale to provide both a better e-signature product and a next-generation trust platform driven by e-signature.

The takeaways here are two-fold. First, look closely at Box to see how they bring Box Sign to market in 2021. This opportunity for existing Box customers to embed e-signature more deeply into their document approval processes is a multi-billion dollar opportunity when the analytics, automation, workflows, and business process optimization opportunities are all taken into account. Second, expect enterprise workflow and content vendors ranging from ServiceNow to Workiva to OpenText to both change their esignature offerings and to start a product war to support greater advancement in signature-based capabilities, data management, and analytics as Box threatens to change the game.

In the tech era, one of the key buzzwords to describe businesses going to market is the idea of “coopertition” where companies choose to work together towards common goals while competing with each other.

Coined by Novell founder Raymond Noorda, this neologism now describes a common occurrence in the technology world and is a key operational aspect in describing Microsoft’s rapid ascent as Satya Nadella took office as CEO. Under Nadella, Microsoft is happy to sell its cloud infrastructure services while supporting competitive applications such as the 2019 announcement of selling Salesforce on Azure. Needless to say, coopertition is both a mature and expected business practice.

In the 2020s, this idea of coopertition has transformed and evolved as several tech trends have accelerated the pace of business.

• Large tech companies have billions of dollars in cash on hand, see their stock trading at record highs, and need to continue growing rapidly.
• Venture capital and private equity-backed companies have improved their ability to build “unicorns,” startups that grow to billion-dollar valuations within a few years. This size increasingly prevents even relatively large companies from purchasing these startups.
• The radical growth of data, analytics, and machine learning as both data and algorithmic models continue to grow at triple-digit pace year over year
• Customer interest in purchasing best-in-breed point solutions to solve specific problems
• Customers are increasingly comfortable in quickly knitting these solutions together through a shared platform, use of APIs, virtualization, and containerization.

This combination of technology creation and consumption makes it difficult for incumbent vendors to build and bring tools to market in a relevant time frame before startups pop up and rapidly gain market share. In light of this challenge, Amalgam Insights notes that a number of recent funding announcements show signs of modernization of “cooperition” where vendor companies in competitive or adjacent markets invest in a quickly emerging and growing partner that solves issues that are related to their own solutions.

Rather than purchasing the company outright or creating their own version, the vendors choose to take a minority stake in these companies while having some shared go-to-market or partnering strategy. This additional step beyond cooperation involving an equity investment is a trend that Amalgam Insights calls “Investipartnering” where companies choose to make equity commitments with go-to-market partners. Recent examples include:

DataRobot, an automated machine learning solution that has quickly acquired and developed machine learning preparation, operations, and deployment capabilities. In December 2020, DataRobot raised a $320 million Series F round which added investipartners Snowflake, Salesforce Ventures, and Hewlett Packard Enterprise to accompany go-to-market approaches to pair analytics and cloud infrastructure with DataRobot’s ability to develop and operationalize machine learning.

Databricks, a unified analytics platform built by the creators of Apache Spark, announced its $1 billion Series G round on February 2021. This round included new investors Amazon Web Services, Salesforce Ventures as well as additional investment from Microsoft. In addition, Databricks took investment from the Canada Pension Plan Investment Board, which is currently a private equity owner of Informatica. Databricks competes in data management, machine learning, and analytics against each of these investors to some extent, but is also seen as a strategic partner.

Of course, this approach requires both that the startup is willing to partner with an established company in a space where the startup may also be positioned for further growth. And it requires that the large investing company both has the humility to realize that it may not be best suited to create the solution in question or that it should diversify its holdings in a particular market.

And this is not a unique or especially new trend. Microsoft’s investments in Apple in 1997 and Facebook in 2007 both show prior examples of investipartnering. However, what is new is the increased frequency with which high-flying companies such as Microsoft, Amazon, Adobe, Salesforce, Paypal, ServiceNow, Zoom, Snowflake, and Workday will continue to play this role in building fast-growing startups.

As large technology companies continue the need for growth and startups seek strategic smart money to facilitate their transition from private to public companies, Amalgam Insights expects that the Investipartner route will continue to be an attractive one for savvy technology companies that realize that the power of building markets is more important than a basic winner-take-all strategy.