Product mindset to steer DevOps platform, ITSM M&A in 2022
ITSM tools, DevOps platforms and value stream management are converging amid an enterprise move away from IT projects and toward a strategic product mindset.
Enterprise digital transformation has brought with it a move from a project-oriented to a product-oriented IT mindset. Now, IT vendors are laying out 2022 product roadmaps that look to align with the trend.
The product mindset isn't new to DevOps. Vendors have been expanding the elements of the DevOps process their products can address for years, which has also included blends between IT security and observability tools. They've paid lip service to aligning IT with business for decades, including the most recent decade in which Agile and DevOps emerged.
So, what's different now?
That's where the COVID-19 pandemic comes in, industry observers said. It has forced enterprises to make the leap to cloud computing and adopt digital business practices to survive its economic disruptions, where some organizations had been dragging their feet before.
"Initially, people hunkered down, because nobody really knew what was happening," when the pandemic first hit the U.S. in early 2020, said Josh Koenig, co-founder and chief strategy officer at Pantheon, a web operations platform in San Francisco. Koenig said he's seen these trends among his company's clients over the last two years.
"Then a lot of things went into super-emergency mode to be able to stay in business," Koenig said. "But by the spring and summer [of 2021], I think a lot of organizations were saying, 'Well, OK, we can't just duct tape this together.'"
This was also when many enterprises realized these "emergency" digitization strategies would likely become permanent, Koenig said.
"There are now incentives to make tradeoffs that politically weren't tenable before, because digital transformation isn't a win for everybody inside a company," he said. "It's forcing people to actually get real. ... They're bringing projects to a stop that weren't really going to get done."
Experts predict that a project-to-product mindset change, spurred by the COVID-19 pandemic, will set off a wave of DevOps M&A activity in 2022.
Product mindset alters IT purchasing decisions
Analysts said conversations with clients in recent months reflect a major transformation taking place in how IT functions inside businesses, which has started to have a noticeable effect on how clients evaluate IT products.
"What is changing is the delivery operating model," said Charles Betz, an analyst at Forrester Research. "The pivot to product-centricity ... continues to generate inquiry and attention, not just among small companies or digital-native companies."
In the past, software and other business initiatives operated according to a project mentality, in which staff and other resources were allocated to the time-limited concept of a project that had a definite deadline, after which resources were re-allocated to the next project. With digital transformation and a shift in focus to software-based products, enterprises instead align their work around software and services as products, which are maintained and improved indefinitely. This product mindset now increasingly includes a company's own software delivery mechanisms, maintained by internal product managers for internal developer customers.
This is a historic shift away from a 30-year-old operating model.
Charles BetzAnalyst, Forrester Research
"This is a historic shift away from a 30-year-old operating model," Betz said. "Top 10 global companies, the biggest of the big, everyone that we talk to is doing this."
Analysts at IDC have seen a similarly seismic shift in enterprise product purchasing decisions as the product mindset takes hold.
"The most forward-thinking organizations ... are ensuring that everything that is not only procured, but that is used, has to be service-oriented," said Brad Casemore, an analyst at IDC. "You don't get these [purchasing] choices based on functionality if it doesn't have a business outcome. This stuff has to work on a systemic level -- you can't have things off to the side like some sort of crazy quilt that doesn't work together."
After market sea change, analysts predict M&A tsunami
As vendors hatch fresh strategies in response to this trend, analysts predict a fresh wave of DevOps market consolidation this year, as well as increased integration among vendors' existing tools.
"Anything that enables functional IT managers to behave more like product managers is going to be very valuable in the market," Betz said. "It requires analytics and automation."
Financial analysts have also predicted major consolidation in tech writ large, where IT security and observability players such as Splunk and DevOps platform vendors including GitLab could also be acquisition targets for major cloud vendors.
Within the DevOps and IT service management (ITSM) market, Atlassian has already taken the lead expanding from DevOps pipelines and software delivery into value stream management, IT alignment with business and broadening its platform, Betz said, bringing it into increased competition with ServiceNow for ITSM. That competition will further intensify as ServiceNow expands its DevOps management tools.
Meanwhile, GitLab, especially, will likely expand its competition with Atlassian Jira by adding services management, Betz predicted. ServiceNow doesn't plan to add a Bitbucket-like CI/CD pipeline to its ITSM/DevOps portfolio, according to company execs, but it still has opportunities to expand into other aspects of the DevOps workflow, Betz said.
"It's not so much about having the continuous delivery pipeline as it is about having that unified funnel, where I've got one way of tracking work as things move forward in the pipeline, and another way of tracking work as things move back upstream," he said. "That is, to me, the biggest dysfunction in IT management -- people are tired of looking in two different places."
These vendors have taken some steps down this path already. ServiceNow began to combine its ITSM tools with DevOps products from the company's acquisition of LightStep last year. The company's 2022 plans call for adding configuration data management from its 2020 acquisition of Sweagle to this mix as well.
GitLab, meanwhile, confirmed that it plans expansion beyond software delivery pipelines toward a broader DevOps platform that connects the software delivery process to business outcomes, also known as value stream management.
Under this strategy, acquisitions similar to GitLab's acquisition of observability vendor Opstrace in December will likely follow, according to company officials.
"Once you have a DevOps platform ... you've got the ability to ask questions like, 'That idea we had, how long does it take to get into production?' And then, 'What impact did it actually have?'" said Brendan O'Leary, developer evangelist at GitLab. "We want to make that data more available [to users]."
Beth Pariseau, senior news writer at TechTarget, is an award-winning veteran of IT journalism. She can be reached at [email protected] or on Twitter @PariseauTT.
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