This report from TRAC Research analyzes the impact of virtualization technologies on network management and examines capabilities that are becoming increasingly important in virtualized environments.

Industry analysts tend to classify vendors into technology "buckets" and create "labels" for each of them, as that makes it easier to compare products, capture key trends and provide context around problems that these products are addressing. This method also resonates with some technology marketers, as it allows them to partially benefit from promotions that other vendors and media are conducting around a label of a technology bucket their product was put into.

The term "application performance management" (APM) has been one of the hottest technology "labels" over the last few years. Performance of enterprise applications impacts nearly all of the key business goals, and it shouldn't come as a surprise that technology solutions for managing performance of these applications has been very high on IT agendas. With that said, it should be even less of a surprise that technology vendors, who are involved in managing the delivery of applications to business users in any way, realized this opportunity and started calling themselves "APM vendors". However, every "hot" industry term has an expiration date attached to it and sometimes it doesn't take long for a company to go from being one of the biggest promoters of an industry term to getting to the point where it doesn't even want to be associated with it.

Back in 2008, there were more than 50 technology vendors that used the term APM to position products that they provide and that number is now down to less than 30. So, had these 20+ companies gone out of business or completely changed their product portfolios? No, but they had realized that the term APM got diluted and that it is in their best interest to separate themselves from technologies that address the same problem as they do, only from a different perspective.

Emergence of new categories

Being thrown into the same technology bucket with companies that are addressing a similar problem from a different perspective could be a major challenge for many technology companies. Organizations that are in this position typically have two options: 1) wait until the market matures to the point when it becomes obvious that their solution is significantly different than other products in the same "bucket", or 2) coin a new term to describe a category in which their product belongs, promote the heck out of it and hope that it will become an industry accepted term. It took a combination of these two approaches to somewhat change the boundaries of the APM "bucket". That resulted in more market awareness about the differences between two groups of products that are also addressing challenges of managing application performance, but doing it from different perspectives: end-user experience monitoring and business transaction management (BTM).

The increased interest of end-user organizations in having visibility into how their applications are performing, not only from the perspective of their IT departments but from the perspective of business users, resulted in more market awareness about the role that end-user experience monitoring solutions are playing in managing application performance. The market matured enough to become more aware of the fact that different flavors of technologies for monitoring the quality of end-user experience, such as those provided by Aternity, Knoa Software, Coradiant or AlertSite, do not compete against, but complement vendors such as OPNET, OpTier or Quest's Foglight.

On the other side, vendors that specialize in managing application performance from a business transaction perspective also found a way to raise awareness about the differences between their solutions and many other APM products. This resulted in an increased adoption of the term BTM when describing capabilities of these solutions. These solutions are taking a different approach when addressing issues with application performance, as compared to some other APM vendors, and enable organizations to monitor the performance of applications across an entire transaction flow. Some of the vendors that fall in this group include OpTier, Nastel, INETCO, Correlsense, Precise Software, dynaTrace and AmberPoint (acquired by Oracle).

One of the emerging trends in IT performance management is that the proliferation of SaaS and cloud computing technologies are changing how organizations go about using and managing IT services. These trends are adding a new dimension to service level and performance monitoring and organizations are increasingly expecting a similar level of flexibility from their management tools as they are getting from their SaaS and cloud deployments. This also opens up new opportunities for management vendors to differentiate themselves from the competition and increase their presence in new markets by acquiring technologies that are well positioned to address new management challenges.

Our recent article highlighted two technology companies that are likely acquisition targets based on their technology, alignment with key market trends and the ability of their solutions to fill in technology and go-to-market gaps that larger vendors currently have. In part two of this series, we are covering two additional companies that meet the same criteria.

Again, this listing is not based on any inside information.

On March 10th, 2010 CA announced that it had agreed to acquire Nimsoft, an IT service management company, for approximately $350 million. The acquisition is expected to close by the end of March of 2010, and Nimsoft will operate as a separate business unit. The goal of this report is to examine the impact of this acquisition on the IT service delivery market and the impact it could have on customers and prospects of CA and Nimsoft.

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2010 could be a very eventful year in the IT performance management market. It is already becoming apparent that virtualization technologies are moving from lab environments to production, and end-user organization are gaining a better understanding of what cloud computing really means for them and how it should be managed. Also, performance monitoring concepts such as “aligning IT with business”, “end-to-end management of application performance” and “making performance data more actionable” are no longer marketing terms. End-users are now able to translate each of these terms into a set of specific technology capabilities, those that are really needed to achieve their IT management goals. These trends are putting additional pressure on leading IT management vendors to expand their product portfolios and differentiate from the competition.

Even though the majority of large IT management vendors have similar visions of where this market is headed, it is becoming apparent to most of them that they cannot execute these visions by solely depending on their marketing, sales and product development muscles. Their competitors are already getting ahead by acquiring vendors that are leaders in their markets (i.e. Compuware acquiring Gomez, CA acquiring NetQoS, etc.) and many of them will have to act quickly before someone else grabs those few leaders or truly innovative solutions in the various IT performance management sub-markets that are left.

This three-part article series will cover our predictions about the 10 technology companies that are likely to be acquired in 2010. In the first part, we’ll start with two technology vendors, both of which are providing different flavors of application acceleration and traffic management.

Once in a while, IT management vendors pick up a theme that their customers are very interested in; they start building their marketing messaging around it, write white papers about it, and have it all over their websites. Before you know it, what originally was a legitimate request from end-user organizations for addressing challenges that they have, it becomes a marketing term that is very difficult to define for end-users. “Aligning IT with business” is becoming a very good example of that.

The fact is, the majority of end-user organizations are still struggling to come up with a set of metrics that would help them understand how their IT initiatives are contributing to their business goals. These organizations are allocating a significant part of their enterprise budgets to their IT initiatives and they need to figure out:

• How their past investments in IT are contributing to their bottom line
• What criteria they should be using when evaluating the value of new technology investments
• How to prioritize their current IT management initiatives

So the need to align IT is a true pain point for end-user organizations and they are willing to invest in technology that will help them with that. But what technology is the best fit?