It was time. Splunk was waiting for the next-generation, cloud-native application architectures to evolve to a point where it could pounce. And pounce Splunk did, scooping up SignalFx for $1.05 billion. This dwarfs previous acquisitions by Splunk over the last couple years, which acquired security automation and orchestration platform Phantom for $350 million, and DevOps incident management VictorOps for $120 million.
SignalFx provides a SaaS-based, real-time cloud monitoring platform for infrastructure, microservices, and applications. And knowing cloud-first strategies are becoming more prevalent, Splunk recognized the value of this play. In fact, over the last year alone, ESG research shows that those organizations with a cloud-first policy (i.e., deploying new applications using public cloud services unless someone makes a compelling case to deploy it using on-premises resources) has increased from 29% to 39%.
For Splunk, its customer footprint has been primarily on-premises and investigative, leveraging log indexing and analysis to identify why an error occurred (more historical than real-time). It hadn’t pushed heavily into the application monitoring space. While Splunk has cloud solutions and offerings, they weren’t overly cloud-centric just based on where the company was adding the most value to its customer. The customers gained insight into the cloud-native application side through Splunk partnerships. And looking through the customers’ eyes, the writing was on the wall. It’s time to add value by addressing customer requirements across both their cloud journeys and their evolving application lifecycle journeys.
So, what does it mean for the existing customer base? Many of Splunk’s customers wanted Splunk + something to give them a more real-time, comprehensive view of their infrastructures and applications across hybrid environments. And interestingly enough, the only overlap of Splunk and SignalFx was their customer bases. Their technologies have virtually no overlap at all. Customers should be excited.
Though the deal isn’t expected to close until the second half of fiscal year 2020, I’m excited to see how the messaging evolves once these two companies come together. They traditionally speak and sell to different audiences, with Spunk often landing at the IT Ops level and SignalFx with VPs of engineering and cloud operations. I would be surprised if a cloud migration use case wasn’t one of the first narratives we hear about once all the accounting is done. This would be incredibly important for on-premises-heavy customers looking to move to the cloud. SignalFx can provide the monitoring data and guidance to inform customers on which is right for them.
This was a no-brainer acquisition for Splunk. They want SaaS. They want real-time. They want cloud-native. They want application performance monitoring (APM). They want the whole investigative management and monitoring stack across hybrid environments. Onto the fun part: Execution!