Author: Hyoun Park

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LeanIX gets SaaSy by Acquiring Cleanshelf

On March 24th, 2021, enterprise architecture management company LeanIX announced the acquisition of Software as a Service (SaaS) management company Cleanshelf. This acquisition brings together two pioneers in their respective markets and brings together the combination of two large themes in IT: the increasing consumerization of IT that allows end-users to pick and combine their tools easily conflicts with the enterprise need to productize and manage IT so that technology investments are aligned with revenue.

About Cleanshelf, the Acquired Company

Cleanshelf was founded in 2017 as one of the first vendors focused on the business challenges of managing SaaS. Cleanshelf is based in San Francisco with subsidiaries in Denver and Ljublijana, Slovenia. The company had previously raised an $8 million A round in March of 2020 lead by Dawn Capital with participation from LAUNCHub Ventures.

Cleanshelf manages over $700 million in spend under management, has over 3,000 integrations with SaaS applications, and uses its operational data both for license optimization and to audit access and security issues. With this acquisition, Cleanshelf will continue as a standalone product, but will be renamed “LeanIX SaaS Intelligence” as of May 1st, 2021. SaaS discovery and cataloging functionality is scheduled to be provided as a complimentary component of the LeanIX Application Portfolio Management module in Q2 2021.

About the buyer, LeanIX

LeanIX was founded in 2012 to help businesses with continuous digital transformation and is headquartered in Bonn. LeanIX is an enterprise architecture management company with a focus on ease of use, providing business context to enterprise architects, controlling cloud environments and providing alignment between IT and product-based technology use cases. LeanIX has raised over $120 million, including an $80 million D round in July 2020 led by Goldman Sachs Growth, and has been noted as a market leader or leading solution by a variety of analyst firms and review sites.

Currently, LeanIX’s platform consists of: 

  • Enterprise Architecture Suite consisting of Application Portfolio Management, Technology Risk Management, and Business Transformation Management modules
  • Cloud Intelligence module supporting cloud services across AWS, Azure and GCP and spend showback for cloud architects and managers
  • A newly announced Microservice Intelligence capability providing cataloguing and discovery capabilities for all microservices in an organization and to help DevOps teams manage complex microservices environments 
  • And, with the acquisition of Cleanshelf, a SaaS Management solution to provide discovery, catalog, cost and user metrics, and renewal management

Why This Acquisition Matters for Managing Massively Distributed IT

Foundationally, Amalgam Insights believes this acquisition is important because it provides IT departments with an opportunity to manage their growth portfolio of microservices, SaaS, and public cloud resources through a single vendor. Although the public cloud, multi-cloud support, and microservices have been used over the past decade to build and support massively scalable products and businesses, the management of these technologies has been widely distributed, siloed, and often dependent on the manual tracking conducted by individual architects, analysts, and developers within IT. 

This challenge has become increasingly difficult to manage as the granularity of microservices, the wide variety of SaaS vendors, and the ever-expanding breadth of public cloud services have led to a complex and ever-changing set of catalogs and spend management. And, frankly, IT managers lack the time and expertise to be the accountants and service trackers that these services increasingly deserve as they have become million-dollar line items in corporate budgets.

Amalgam Insights notes that LeanIX is differentiated based on its ease of use and implementation, which are especially important traits for managing the more “agile,” decentralized, and end-user-oriented aspects of IT and technology such as software and microservices. LeanIX’s approach aligns technology to externally facing products and services is also a valuable approach for understanding why technology is being used within an organization. With the addition of Cleanshelf, LeanIX will be better positioned to provide granular management capabilities at the end-user level to help managers handle their technology portfolio within the umbrella of the broader governance of enterprise efforts. 

Recommendations for the IT Community

In light of this acquisition, Amalgam Insights provides the following recommendations for the IT and enterprise technology communities.

Amalgam Insights recommends that companies develop both a strategy and a toolkit portfolio to manage a new generation of technologies across all areas of cloud (infrastructure, platform, and applications) that are accessible and can be sprawling in nature. Remember the trend of Bring Your Own Device, which wreaked havoc on IT asset management, governance, compliance, and security efforts? With the evolution of public cloud, Software as a Service, and microservices, the “Bring Your Own” IT trend has grown to encompass practically all data, services, and digital processes that an employee may use. In short, employees are increasingly able to do the majority of their work outside of enterprise-approved tools if organizations fail to effectively govern and track vital IT services. Now we are in an era of “Bring Your Own IT” as well as an era of “digital transformation” that is driving the paperless office and rapid automation. 

Amalgam Insights also recommends that businesses treat “IT-business alignment” as a mandatory task rather than simply providing lip service to the phrase and treating it as a fluffy MBA buzzword. To do so, companies must align technology to a value chain that is associated with a key performance indicator or business objective. This allows companies to both gain a better sense of the true Total Cost of Ownership associated with business transactions as well as the lineage and governance needed to detect whether there are opportunities for maintaining a more optimized technology environment. There may be opportunities to consolidate multiple products conducting the same task or to bring in new technologies that can bridge opaque or error-prone process steps. 

Finally, Amalgam Insights recommends that companies look specifically at managing the applications, APIs, and microservices that employees and customers are accessing. It is easy to assume that just because a SaaS app or a cloud-based microservice does not require internal resources, that it does not need to be managed. But this approach will lead to a financially unsound approach where the IT Rule of 30 will come into play, which states that any unmanaged technology category will accumulate 30% in waste over time. 

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Market Alert: Calero-MDSL Develops a UCaaS Management Solution to Rationalize Enterprise Telephony

Key Stakeholders: Chief Information Officers, Chief Technology Officers, Chief Financial Officers, Finance and Accounts Payable Directors and Managers, Human Resources Officers, Procurement Directors, Telecom Directors and Managers, Mobility Directors and Managers, IT Architects, Vice President/Director/Manager of IT Operations, DevOps Managers, System Architects, Product Managers, IT Sourcing Directors and Managers, IT Procurement Directors and Managers

Why It Matters: The era of the business desk phone is coming to an end, but employees still need a variety of unified communications, conferencing, and collaboration apps to maintain productivity. To support this multi-modal communications environment, enterprises need a single view of inventory, cost, and usage for their full telephony and unified communications environment.

Top Takeaway: With this Unified Communications as a Service (UCaaS) cost management module, Calero-MDSL is providing a specialized toolkit to analyze and compare both fixed wireline and UCaaS services to right-size and rationalize telecom investments. 

Calero-MDSL Announces a UCaaS Expense Management Module

On March 17th, 2021, Calero-MDSL announced the launch of a UCaaS Expense Management module designed to support both the fixed and variable costs associated with collaboration. This module is designed to provide one perspective for both landline telephony usage and UCaaS and to provide both end-users and cost center managers with both visibility and self-service options to optimize their calling and collaboration environments. There are several key market trends driving increased focus to UCaaS management.

First, this decade, the 2020s, will lead to the decline and fall of the desk phone.

As of the end of 2020, Amalgam Insights estimates that approximately 70% of employees are assigned a desk phone and 55% of employees use smartphones and cell phones for work purposes. In the face of COVID and the digital transformation and remote work tasks that have been made necessary in a quarantine, Amalgam Insights expects that these numbers will flip-flop by the end of the year as half of the workers who went home for the quarantine will not come back to the office every day. We are moving from a pre-pandemic environment where less than 10% of employees worked from home to a post-pandemic environment where roughly 25% of employees will primarily work from home and another 20% will only come into the office part-time.

All of a sudden, 30% of desk phones will be rendered permanently obsolete at the end of 2021 when remote and in-office work has been rationalized.

Source: Amalgam Insights

Enterprises will need to increase their support and ownership of mobile devices and apps to ensure governance and control of the primary communications channels used by employees going forward.

Second, as enterprises continue to shift both towards Unified Communications as a Service and Communications Platform as a Service (CPaaS) to support telephony, it is no longer sufficient to simply treat the PBX as the end-all and be-all of enterprise telephony. Not only does telephony need to be treated as a potentially cloud-based function, but also as a set of APIs and services that can potentially be embedded into other applications and processes. Telephony is increasingly fragmented and granular, making it harder to compare the supply, demand, and cost for the various on-premises, cloud, and app-based options for telephony services without having a single inventory and cost management source.

Third, the obvious expansion of conferencing solutions ranging from Zoom to Microsoft Teams as well as stalwarts such as Cisco WebEx have resulted in the need to better manage usage, employee plans, accounts, and add-on functionalities to support larger meetings, recording, calling features, and enhanced security. To avoid wasting time in ensuring that appropriate roles are empowered with the right level of access, businesses need to manage their conferencing and UCaaS.

Amalgam Insights considers Calero-MDSL’s development of a UCaaS specific expense management module to be an interesting product launch that will provide value to IT departments. In this case, Amalgam Insights considers UCaaS to be a subset of the larger SaaS management category rather than a telecom expense management topic, as UCaaS is driven by SaaS-like economics and demand. However, the biggest difference between a SaaS Expense Management solution and Calero-MDSL’s UCaaS solution is in understanding the granularity of management. SaaS management tends to focus on the license level of procurement and expense, with some basic visibility into whether functions are being used and if users are logging in. However, by focusing on UCaaS, the unit economics of usage and cost are driven down to the call level where companies can get a per-call or per-conversation cost basis for their UCaaS investments as well as an understanding of how, when, or if the business is better suited to move from landline or app-based services based on employee preferences and remote work trends.

Recommendations

Based on the emergence of this UCaaS module in context of broader IT and economic trends, Amalgam Insights provides the following recommendations.

First, aggregate the usage and cost management of landline, conferencing, mobility, and relevant voice applications into a single area. The tradeoffs between landline, wireless, endpoint-neutral apps, and embedded voice-related APIs cannot be fully analyzed or rationalized unless the business gains visibility to all voice usage in one area. This view allows companies to see if there are duplicate solutions in place or whether specific solutions have been abandoned or used to a greater extent. This perspective is especially important in light of the tumultuous business environment of the past year where the combination of remote work, work-life balance constraints, time-shifting, process automation, and the increased use of video are leading to fundamental and rapid technology shifts. Changes that used to take five to ten years to occur are now happening in months and this is the new normal.

Second, drive beyond license and account-level economics for your voice, telephony, mobility, and endpoint spend and consider how to analyze cost at the level of calls, transactions, and data across all areas of telephony. As voice has become an app, it is important for companies to treat voice as the data that it has become and to track not only call traffic and minutes of usage, but also bandwidth usage and the security of the endpoints involved in the conferencing and calls being made. To know how much an organization needs to invest in bandwidth and data plans, one must first track telephony on a per-call and per-megabyte level as well as understand which calling, conferencing, and data plans are most appropriate for employees to use.

Finally, as a broader recommendation, Amalgam Insights believes that the combination of public cloud, the shift of telephony from hardware to software, and the trends towards remote work all require telecom expense managers to look beyond carrier management and to consider all of the applications, subscriptions, and services associated with communications and collaboration. The world of telecom expense management provides a mature framework and rigor for cost management, invoice processing, dispute management, vendor management, and contract negotiations that is increasingly needed in the rest of IT. This is a time for CIOs to take best practices from their telecom expense teams and to work on their center of excellence for IT expense management and technology rationalization.

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Market Alert: Zuora Launches Collect AI to Increase Subscription Revenue

On March 17th, 2021, Zuora announced the launch of Zuora Collect AI as an addition to its suite of subscription management applications. As a research firm focused on the practical use of AI in the enterprise and a firm that provides guidance on subscription finance, expense management, invoice processing, and business model management, we explored this announcement to consider what aspects of artificial intelligence have been brought into this product and the business value that can be expected from this launch.

Zuora Collect AI is focused on the value of payment processing and collections. This application analyzes a variety of transaction characteristics to discover top drivers that affect payment and revenue recognition. These characteristics include payment methods such as the bank, credit card, or payment gateway involved as well as client characteristics such as the region, payment value, and history of payment success.

Rather than simply treat all customers as a single payment cohort under the same calendar for all payment processing activities, Zuora Collect AI allows for greater granularity of payment pursuit, transaction channels, and recovery tactics. As a result, Zuora customers can be expected to reduce the dunning rates and delinquent payment status while providing a more efficient dunning process for late payers. In addition, Zuora Collect AI collects data daily from a variety of payment gateways and payment methods to continue updating parameters associated with payment success over time.

This use case is a strong value proposition for machine learning in that it combines the volume of billions of transactions across hundreds of currencies and regions and uses this information to solve a million dollar problem for enterprises. Zuora’s use case fits into the framework for practical, high-value AI that Amalgam Insights has advocated for years.

To elaborate on how this is a scalable issue, consider that Amalgam Insights estimates that the average subscription revenue company faces revenue leakage of 2% when using a billing system and will only recover 40 – 50% of that revenue over time. With better tuned and scheduled payment processes, organizations could gain an extra 10 – 20% in revenue recovery.

This difference would have equated to a 5% – 10% percent increase in net profit in 2020 for the average non-financial services firm that registered a 4% net margin in 2020.

In Zuora’s public-facing documentation, they have documented three organizations (Whitepages, RankingCoach, and Motortrend Group) with results ranging from 10 – 18% increases in payment recovery through the use of Zuora Collect AI compared to manual payment retries and an umbrella policy for retrying payments within collections dunning cohorts.

Although this type of payment analysis could theoretically be done by an on-site data scientist, Amalgam Insights notes that one of the key challenges with expense and payment optimization is the changing nature of the data as new payment types, schedules, quantities, and patterns emerge. Because of these changes, transactional optimization is not served well by creating a one-time model to find optimal payment processing times and patterns for each customer and payment type. At volume, it requires ongoing data intake and monitoring to maintain the efficacy that maximizes revenue optimization which is better served through treating revenue optimization as an ongoing process and service rather than a one-time audit and model creation.

Based on this announcement, Amalgam Insights makes the following recommendation for subscription and usage revenue-based organizations:

First, pursue the use of machine learning to support revenue recovery.

This one activity has the potential to increase your net profit margin by 10% or more even if your organization already has a mature dunning process for subscription customers.

Second, invest in the ongoing maintenance and updating of these models.

To maintain these gains over time, your organization will need to invest in daily data processing and ongoing model optimization to ensure that your payment collection schedules and processes keep up with ongoing trends. Otherwise, Amalgam Insights estimates that the models created will lose their value within 18-24 months and leave the organization back at a point where significant revenue is being unnecessarily lost due to poor dunning and payment processing schedules.

The big takeaway here is that machine learning continues to be brought into the business world to solve the highly transactional analyses that are too time-consuming to be solved through manual analysis or even through traditional data analysis tools. Take advantage of the increasing availability of productized AI and the data associated with digital payments to solve operational issues with million-dollar payback potential.

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Torii raises a $10 Million A Round to Automate SaaS Management

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.

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Managing Inventory for Kubernetes Cost Management

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.

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Market Alert: Box Acquires SignRequest to Develop Internal Electronic Signatures

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.

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Databricks and DataRobot Funding Rounds Highlight a Rising Trend in Tech Funding: the Investipartner

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.

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The Need to Manage Kubernetes Cost in the Age of COVID

Kubernetes has evolved from an interesting project to a core aspect of the next generation of software platforms. As a result, enterprise IT departments need to manage the costs associated with Kubernetes to be responsible financial stewards. This pressure to be financially responsible is exacerbated by the current status of COVID-driven pandemic recession that the majority of the world.

Past recessions have shown that the companies best suited to increase sales after a recession are those that

  • Minimize financial and technical debt
  • Invest in IT
  • Support decentralized and distributed decision-making, and
  • Avoid permanent layoffs.

Although Kubernetes is a technology and not a human resources management capability, it does help support increased business flexibility. Kubernetes cost management is an important exercise to ensure that the business flexibility created by Kubernetes is handled in a financially responsible manner. Technology investments must support multiple business goals: optimizing current business initiatives, supporting new business initiatives, and allowing new business initiatives to scale. Without a financial management component, technology deployments cannot be fully aligned to business goals.

From a cost perspective, Amalgam Insights believes that the IT Rule of 30 also applies to Kubernetes.

The IT Rule of 30 states that any unmanaged IT spend category averages 30% in wasted spend, due to a combination of resource optimization, demand-based scaling, time-based resource scaling, and pricing optimization opportunities that technical buyers often miss.

IT engineers and developers are not typically hired for their sourcing, procurement, and finance skills, so it is understandable that their focus is not going to be on cost optimization. However, as Kubernetes-related technology deployments start exceeding $300,000, companies start to have 6-figure dollar savings opportunities just from optimizing Kubernetes and related cloud and hardware resources used to support containerized workloads.

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

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Informatica Supports the Data-Enabled Customer Experience with Customer 360

On January 11, 2021, Informatica announced its Customer 360 SaaS solution for customer Master Data Management. Built on the Informatica Intelligent Cloud Services platform, Informatica’s Customer 360 solution provides data integration, data governance, data quality, reference data management, process orchestration, and master data management as an integrated SaaS (Software as a Service)-based solution.

It can be easy to take the marketing aspects of master data management solutions for granted, as every solution on the market focused on customer data seems to claim that they help to manage relationships, provide personalization, and support data privacy and compliance while supporting a single version of the truth. The similarity of these marketing positions provides confusion on how new offerings in the master data space differ. And the idea of providing a “single version of the truth” is becoming less relevant or useful in an era where data grows and changes faster than ever before and the need for relevant data based on a shared version of the truth becomes more important than simply having one monolithic and complete version of the truth documented and reified in a single master data repository.

Customer master data also provides challenges to companies as this data has to be considered in context of the expanded role that data now plays in defining the customer. In the Era of COVID, customer interactions and relationships have largely been driven by remote, online transactions as in-person shopping has been sharply curtailed by a combination of health concerns, regulations, and, in some cases, supply chain interruptions that have affected the availability of commodities and finished goods. In this context, customer data management plays an increasingly important role in driving customer relationships, not only by providing personalization of data but also in managing appropriate metadata to support the appropriate building of hierarchies and relationships. Both now and as we move past the current time of Coronavirus, companies must support the data-enabled customer and reduce barriers to commerce and purchasing.

In exploring the Informatica Customer 360 solution, Amalgam Insights found several compelling aspects that enterprise organizations should consider as they build out their customer master data and seek a solution to maintain data consistency across all applications.

First, Amalgam Insights considers the combination of data management, metadata management, and data cleansing capabilities in Customer 360 to be an important capability. Customer data is notorious for its ability to become dirty and inaccurate because it is linked to the characteristics of human lives: home addresses, email addresses, phone numbers, purchase activities, and preferences, etc…

In this context, it is vital that a master data solution focused on customer data needs to support clean and relevant data and the business context provided with reference data and other relevant metadata. Rather than treat master data literally as a static and standalone data record, Customer 360 brings together the context and cleansing needed to maximize both the value and accuracy of master data.

Second, Customer 360’s use of artificial intelligence and machine learning will help businesses to maintain an accurate and shared version of the truth. AI is used in this solution to

  • assist with data matching across data sets
  • provide “smart” field governance to auto-correct data in master data fields with defined formats such as zip codes or country abbreviations
  • use Random Forests to support active learning for blocking and matching
  • support deep learning techniques for text matching and cleansing text that may be difficult to parse

Third, Informatica’s Customer 360 solution provides a strong foundation for application development based both on being built on a shared microservices architecture as well as investments in DevOps-friendly capabilities including metadata versioning supported by automated testing and defined DevOps pipelines. The ability to open up both the services available on the Customer 360 solution as well as the data to custom applications and integrations will help the data-driven business to make relevant data more accessible

The Customer 360 product also includes simplified consumption-based pricing, a different user interface designed for a more simple user experience, as well as improved integration capabilities including real-time, streaming, and batch functionality that reflects the changing nature of data. Amalgam Insights looks forward to seeing how a pay-as-you-go SaaS approach to Customer 360 is received, as this combination is relatively new in the world of master data management implementations that are often treated as massive CapEx projects.

Overall, Amalgam Insights sees Informatica’s Customer 360 as a valuable step forward for both the master data management and customer data markets.

This combined vision of providing consumption-based pricing, a contextual and intelligently augmented version of the truth, and a combination of data capabilities designed to maximize the accuracy of customer data within a modern UX is a compelling offering for organizations seeking a customer data management solution.

As a result, Amalgam Insights recommends Customer 360 for organizations interested in minimizing the amount of time spent in cleansing, fixing, and finding customer data while accelerating time-to-context. Organizations focused on progressing beyond standard non-AI-enabled data cleansing and governance processes are best positioned to maximize the value of this offering. 

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Why Babelfish for Aurora PostgreSQL is a Savage and Aggressive Announcement by AWS

On December 1st at Amazon re:invent, Amazon announced its plans to open source Babelfish for PostgreSQL in Q1 of 2021 under the Apache 2.0 license. Babelfish for PostgreSQL is a service that allows PostgreSQL databases to support SQL Server requests and communication without requiring schema rewrites or custom SQL.

As those of you who work with data know, this is an obvious shot across the bow by Amazon to make it easier than ever to migrate away from SQL Server and towards PostgreSQL. Amazon is targeting Microsoft in yet another attempt to push database migration.

Over my 25 years in tech (and beyond), there have been many many attempts to push database migration and the vast majority have failed. Nothing in IT has the gravitational pull of the enterprise database, mostly because the business risks of migration have almost never warranted the potential operational and cost savings of migration.

So, what makes Babelfish for PostgreSQL different? PostgreSQL is more flexible than traditional relational databases in managing geospatial data and is relatively popular, placing fourth on DB-Engines ranking as of December 2, 2020. So, the demand to use PostgreSQL as a transactional database fundamentally exists at a groundroots level.

In addition, the need to create and store data is continuing to grow exponentially. There is no longer a “single source of truth” as there once was in the days of monolithic enterprise applications. Today, the “truth” is distributed, multi-faceted, and rapidly changing based on new data and context, which is often better set up in new or emerging databases rather than retrofitted into an existing legacy database tool and schema.

The aspect that I think is fundamentally most important is that Babelfish for PostgreSQL allows PostgreSQL to understand SQL Server’s proprietary T-SQL. This removes the need to rewrite schemas and code for the applications that are linked to SQL Server prior to migration.

And it doesn’t hurt that, as an open source project, the PostgreSQL community has traditionally been both open and not dominated by any one vendor. So, although this project will help Amazon, Amazon will not be driving the majority of the project or have a majority of the contributors to the project.

My biggest caveat is that Babelfish is still a work in progress. For now, it’s an appropriate tool for standard transactional database use cases, but you will want to closely check data types. And if you have a specialized industry vertical or use case associated with the application, you may need an industry-specific contributor to help with developing Babelfish for your migration.

As for the value, there is both the operational value and the financial value. From an operational perspective, PostgreSQL is typically easier to manage than SQL Server and provides more flexibility to migrate and host the database based on your preferences. There is also an obvious cost benefit, as the inherent license cost of SQL Server will likely cut the cost of the database itself by 60%, give or take on Amazon Web Services. For companies that are rapidly spinning up services and creating data, this can be a significant cost over time.

For now, I think the best move is to start looking at the preview of Babelfish on Amazon Aurora to get a feel for the data translations and transmissions since Babelfish for PostgreSQL likely won’t be open sourced for another couple of months. This will allow you to measure up the maturity of Babelfish for your current and rapidly growing databases. Given the likely gaps that exist in Babelfish at the moment, the best initial use cases for this tool are for databases where fixed text values make up the majority of data being transferred.

As an analyst, I believe this announcement is one of the few in my lifetime that will result in a significant migration of relational database hosting. I’m not predicting the death of SQL Server, by any means, and this tool is really best suited for smaller TB and below transactional databases at this point. (Please don’t think of this as a potential tool for your SQL Server data warehouse at this point!)

But the concept, the proposed execution, and the value proposition of Babelfish all line up in a way that is client and customer-focused, rather than a heavy-handed attempt to force migration for vendor-related revenue increases.