Salto Raises $42 Million to Reduce Technical Debt of Enterprise Infrastructure
Key Stakeholders: Chief Information Officers, Chief Technology Officers, Vice President/Director/Manager of Platform Engineering, Vice President/Director/Manager of Operations, System Architects, Product Managers, Product Marketing Managers, IT Finance, Software Asset Managers, Sales Operations, Marketing Operations
Why It Matters: As Software as a Service continues to balloon into a $275 billion global market by 2025 and the typical Global 5000 enterprise supports over 1,000 apps over its network, the challenge of SaaS configuration increasingly is linked to employee onboarding and productivity. Just as the battle for enterprise mobility security was a core concern for the 2010s, the battle for SaaS app governance will be a core IT concern for the 2020s.
Key Takeaway: IT departments must coordinate enterprise architects, security and governance teams, and software asset management personnel to ensure that all major SaaS applications considered mission-critical have well-governed configuration testing and management capabilities.
About the Funding Round
On May 19, 2021, application configuration platform Salto announced a $42 million B round led by Accel with participation by Salesforce Ventures and prior investors Lightspeed Venture Partners and Bessemer Venture Partners. This round comes only seven months after a $27 million A round announced in October 2020.
With this round of funding, Salto is expected to continue developing its solution and rapidly hiring. Salto currently supports Salesforce, NetSuite, HubSpot, Workato, and Zuora. These core SaaS applications are all market leaders, but considering the breadth of additional enterprise applications currently in market, the potential value associated with Salto supporting additional solutions is obvious and massive.
What Does Salto Do and Why Is It Worth So Much?
Salto is a solution for configuring business applications in a repeatable, scalable, and governed fashion at a time when the administration of Software as a Service is becoming increasingly complicated and challenging. Salto uses DevOps-based and software development-based tools and methodologies to help enterprise support SaaS at scale.
This mindset comes from Salto’s founders, Rami Tamir, Benny Shnaider, and Gil Hoffer, who collectively founded Salto in 2019 after previously working at Pentacom, Quumranet, and Ravello. Each company ended up exiting for over $100 million, showing the type of track record that venture capital firms love to see.
Salto’s core technology is maintained as an Open Source project (https://github.com/salto-io/salto) and a SaaS toolkit that includes
- Not Another Configuration Language (NaCl… get it?), a structured language to help support and define software configurations
- A command-line interface with operations commands including
Fetch, which connects to each enterprise application and downloads current configurations for users
- Deploy, which compare your preferred configurations to existing configurations and then creates an execution plan to fix configurations
- A Salto vs-code extension to the vs-code IDE used to interact with NaCl-based files.
The SaaS offering of Salto also supports
- Environments that allow for testing a service instance of an application and can be managed through the Fetch and Deploy applications
- A Git client, which helps users to effectively push or pull changes as needed to support software configuration.
So, why does this matter so much for IT?
Let’s take a step back. We have established that software is one of the greatest force multipliers for human effort in the history of the world. It is nearly impossible to get work done in large enterprises without using at least one or more complex enterprise software solutions, such as an ERP (Enterprise Resource Planning) or CRM (Customer Relationship Management) system.
To add to this complexity, the dominant deployment mode for software is now Software as a Service, which is growing over 25% per year and drives the majority of new software purchases. Amalgam Insights estimates that the average company with 1000 employees is running 500 applications on their network and about 10% of those apps are centrally managed through IT as key enterprise data assets and workflow managers. These SaaS applications are being updated constantly, to the point that many vendors have given up on providing formal versions and instead simply provide agile updates. Even vendors with formal versions are releasing new functionalities and fixes on a constant basis.
In this era of immense application environments and constant change, companies can easily end up with inconsistent environments across departments and locations as they customize their software deployments with user interface preferences and specific code to match their business needs. Companies need to support their software suites based on business dependencies and make sure that core software solutions are always working for the sake of employee productivity.
Amalgam Insights believes that Salto’s SaaS configuration solution is an important management solution for end-user computing that has not been fully developed as of yet. At a time when everything from paper to on-premises software to hardware is all being replaced by SaaS, companies have either been offered SaaS operations management solutions to govern and secure licenses, Software asset management to manage the inventory of applications, or SaaS expense management to reduce and optimize spend. However, these three families of SaaS management do not effectively govern and audit the configuration and administration of applications
Salto uses NaCl to extract the metadata associated with a software configuration to provide users with a consistent taxonomy, text search, and references to make sure that companies understand what happens when they change their software configurations. Seemingly minor access or usability changes may end up unwittingly breaking business processes and interdepartmental collaboration.
The Value Chain of Salto for Enterprise Environments
The practical result is that Salto has seen customers claim to accelerate update times by 75%. The resulting productivity can be framed in several ways.
First, the terms of the (value of the new solution) * (the number of employees affected). This value should be based on a value based on the average revenue per employee, as employee output is based on revenue, not compensation.
Second, the avoidance of technical debt and avoiding the conflicts of multiple versions or broken versions in production can be estimated.
Third, the value of having visibility to the full configuration and interrelationships that each software system has can lead to better business process management and accelerated business changes. This value may be more difficult to quantify, but is often noticed at the executive level when businesses are trying to make changes.
Fourth, this level of visibility and auditability can lead to more rapid governance and compliance reporting as well as improved protection to potential security vulnerabilities related both to application configuration and the human aspects associated with working on misconfigured applications.
—Hyoun Park, Chief Analyst Amalgam Insights
Altogether, the value of Salto quickly adds up to 1% of an employee’s annual productivity, which Amalgam Insights estimates to be between $3,200 per year.
It is not unreasonable to think that an employee could quickly lose an hour or two each month from NetSuite or Salesforce configuration issues, either from direct work issues or from the lineage, reporting, and security issues that follow. At the enterprise level, this quickly escalates to over $3 million for every 1,000 employees, making the business case for Salto more obvious.
This is ultimately the case that Salto is making in a SaaS-empowered world and that Accel, Bessemer, Lightspeed, and Salesforce Ventures have signed off nearly $70 million to pursue.
Recommendation for Enterprise IT Departments
Amalgam Insights’ key recommendation in light of this announcement is simple: Work with enterprise architects to ensure that all major SaaS applications considered mission-critical have well-governed configuration testing and management capabilities.
Enterprise SaaS is currently a $110 billion market that will grow to $275 billion in 2025. In light of this growth and the increasing corporate dependence on SaaS to support business processes, companies must have a solution to support effective SaaS configuration management and changes. In this world of ever-changing technical needs, IT must keep up and ensure that SaaS deployments and updates are governed just as more traditional software, hardware, network, data center, and other IT resources are.