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).

End-user organizations are looking to take more of a service-centric approach when managing IT performance, and management vendors, for the most part, have done a good job of adjusting to this trend. Recently, I had the chance to see a number of demos of IT performance monitoring products that are based on different underlining technologies for collecting performance data, are being sold to different job roles within the organization, and even competing in different markets, but they all had something in common. The first screen of their performance dashboards looks almost identical. And products that are based on network monitoring technologies, data center management or application monitoring all of a sudden have the same look and feel:

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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.

Click here to download a complimentary copy of the report

TRAC Research had the chance to interview Darin Bartik, Senior Director of Product Marketing at Quest Software about the key trends and challenges regarding managing application performance in virtual environments.

Here are some of the key insights that Darin shared during this podcast:

“The reason that most of IT organizations are not on the same page is that their priorities have been based on the old way of thinking about performance monitoring and management. This is based on the IT being pushed by the business and then struggling to keep up, so they end up being reactive many times and that reactivity has forced the need to get very broad coverage. What ended up happening here is that this broad coverage didn’t help domain specific technologists, so a lot more domain specific tools were purchased…. and all of this different data and different tools that people have has created all of this finger pointing and you have “war room” activities and never ending conference calls.“

“The fundamental challenge for managing application performance in virtual environments comes from a really good part of virtualization, which is both resource sharing and all of the efficiencies that come with it, but this breaks that physical link that was true forever, and all traditional management tools are now starting to lose visibility because these tools were built on the idea of the physical world…End-user organizations have to take the view of a service that they are delivering, which is something that is static. So if we take more of a service management approach and manage the application instead of the infrastructure pieces that will help maintain that visibility link all the way from where the end-user interacts to the virtual infrastructure.“

“Automation is something that customers are begging to ask about, especially in more mature environments and that’s what is really going to take things from more of a performance monitoring to a performance management paradigm. Instead of just monitoring what is going on and reacting to that manually, let the tool take an administrative action. Let it witness the event and instead of telling someone that something is wrong and giving some expert advice, actually take that expert advice and perform an action.”

“Virtualization was set to change everything and when it comes to managing performance it really does."

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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?

Over the last 2-3 years, the term “Application Performance Management” (APM) became an integral part of marketing messaging for more than 70 technology vendors. Even though solutions provided by all of these vendors are helping to improve the speed and availability of business-critical applications, these vendors are providing solutions that are significantly different. These solutions could range anywhere from network performance monitoring to application acceleration, Web management and even managed/carrier services.

However, the APM as a general concept has become relatively easy for decision makers of end-user organizations to digest, as it hits all key pain points that IT organizations are dealing with. As a result, multiple vendors were more than happy to jump on this bandwagon and position themselves as players in this space.

Other than the language in their press releases and marketing collateral, these vendors really have nothing else in common. Technology wise, how similar are the offerings of F5, NetQoS, Keynote Systems and OpTier? They are not similar at all.