The global health pandemic has caused a huge amount of disruption in how we work and play. With social distancing and shelter-in-place orders, white-collar workers pivoted to working from home while consumers shifted a bulk of their purchases from physical storefronts to online websites. Covid-19 delivered a perfect storm for IT operations teams to advance their organization’s digital footprint while delivering reliable and responsive support for their distributed workforces.
Mergers and acquisitions (M&A) in the IT operations management (ITOM) tools market reflected these broader trends with established ITOM vendors picking up startups with innovative technology or a loyal customer base. In 2020, technology vendors spent more than $2 billion (based on publicly available information) on 25 ITOM tool acquisitions.
The M&A market started with a bang: there were three buyouts in January, followed by a brief lull due to the pandemic. Deal making picked up pace in the latter half of the year, with categories such as application and infrastructure monitoring, digital experience monitoring, AIOps, and automation seeing significant traction.
Leading buyers for 2020 included Splunk (Flowmill, Pumbr, and Rigor), VMware (Nyansa and SaltStack), and ServiceNow (Loom Systems and Sweagle).
Here are some of the major acquisitions across different ITOM tool segments this year:
Application and Infrastructure Monitoring
The broader monitoring segment which includes cloud native, database, infrastructure, and network monitoring saw seven acquisitions:
- The hype around observability has never been greater with the adoption of microservices and containerized infrastructure. New Relic and IBM wasted no time in snapping up Pixie Labs and Instana to strengthen their cloud native monitoring offerings.
- After acquiring database monitoring startup VividCortex in 2019, SolarWinds bought SentryOne, a database monitoring tool for Microsoft SQL Server.
- Following Splunk’s footsteps, security vendor Fortinet acquired infrastructure monitoring provider Panopta for real-time incident insights while Netreo bought out Azure monitoring service CloudMonix.
- Finally, there were two exits in the network performance monitoring space, with Splunk and VMware buying Flowmill and Nyansa respectively.
Digital Experience Monitoring
The need for delivering compelling employee and customer experiences led to five buyouts in the digital experience monitoring space:
- Cisco's $1 billion acquisition of ThousandEyes held the distinction of being the largest ITOM tool purchase of the year.
- The next biggest acquisition of 2020 was Ivanti’s acquisition of MobileIron (endpoint monitoring) for $872 million.
- After buying SignalFx and Ominition in 2019, Splunk broadened its monitoring focus by acquiring Plumbr (real-user monitoring) and Rigor (synthetic monitoring) to gain parity with the likes of Datadog, New Relic, and Dynatrace.
- Finally, Catchpoint acquired Webpagetest.org, an open source service for online performance testing to tap into the tool’s large user base.
Automation was a big theme in 2020 with incumbents buying four different startups this year:
- Progress Software and VMware acquired two well-known infrastructure automation tools, Chef ($220 million purchase value) and Saltstack to strengthen their programmatic capabilities for deploying and configuring infrastructure.
- Freshworks and PagerDuty acquired Flint and Rundeck ($100 million purchase value) for bolstering their process and closed-loop automation use cases.
Cloud Governance and Cost Management
Cloud governance and cost management tools have gained prominence with the rapid migration of workloads from on-prem datacenters to cloud infrastructure.
- Rapid7, NetApp, and CloudBolt acquired DivvyCloud ($145 million purchase value), Spot, and Kumolus to help organizations orchestrate and optimize their cloud workloads.
Artificial Intelligence for IT Operations (AIOps)
Consolidation continued apace in the AIOps space.
- LogicMonitor acquired Swedish startup,
- Unomaly and ServiceNow buying out Israeli firm, Loom Systems.
- With 10 acquisitions of machine learning-powered event management tools such as FixStream, Evanios, Perspica, and Event Enrichment HQ over the last five years, there are now just a handful of pure-play AIOps startups left in the market.
The Bottom Line
The year 2020 was a phenomenal year for both IT operators and technology vendors partnering with these teams. Publicly-traded ITOM vendors such as ServiceNow, Splunk, Datadog, and Dynatrace saw their valuations hitting record highs this year. Meanwhile, innovative startups continue to emerge in segments such as observability, chaos engineering, and CI/CD pipeline monitoring. IT leaders should keep a close watch on how their existing suppliers are keeping pace with industry trends while partnering with technology startups to drive faster return on investment.
About the author: Deepak Jannu is Director of Product Marketing at OpsRamp.