"Software is eating the world." This phrase coined by venture capitalist Marc Andreessen remains a prescient observation of how the use of software technologies to drive business outcomes and competitive advantage is affecting organizations of all sizes. Former General Electric CEO Jeffrey Immelt put it another way: "Every industry and company that is not bringing software to the core of their business will be disrupted."
As the world moves to a software-centric orientation, the process by which software applications are being created and deployed is undergoing radical change. The epitome of this change is the rise of DevOps, an organizational, technical, and cultural revolution in how companies approach software development.
DevOps Is Leading a Revolution in Software Development and Deployment
At the most basic level, DevOps describes an agile and collaborative relationship between application development and IT operations teams whose primary goal is to accelerate and improve the efficiency and reliability of new software releases. Prior to DevOps, development and operations teams typically worked in isolation, with developers writing code and testing it, and then passing the baton to the operations team to deploy the application to production and provide ongoing management.
DevOps automates and amalgamates various tools to make the software development and delivery process—from idea inception to production release—faster, more secure, and more efficient. Implementation of DevOps practices has been shown to have a material impact on business outcomes, resulting in more rapid and stable software releases, improved defect detection, and reduced time-to-recovery upon failure. As organizations focus on consolidating their software development tools and increasing collaboration between development and operations teams, technology analyst Jason Ader expects the DevOps movement will gain even broader adoption and fundamentally reshape the way software applications are created and delivered across all industries.
DevOps Is a Large and Rapidly Expanding, but Fragmented and Immature, Market
The market for DevOps software tools is undergoing rapid growth, with IDC forecasting a five-year CAGR of almost 24% and a TAM of $15 billion in 2023, almost triple its current size. Yet the market remains highly fragmented, with the top five vendors accounting for only 32.8% of the market, according to IDC (as opposed to more mature management and infrastructure software markets where the top five vendors typically represent more than two-thirds of revenue). The chaotic nature of the current DevOps landscape is creating enterprise tool fatigue and ripening conditions for market consolidation. While such consolidation could ultimately drive commoditization in certain areas, Ader expects a fair degree of pricing stickiness for the broader DevOps toolchain given the strategic importance of DevOps to businesses of all sizes.
Addressing the "Last Mile"—the Continuous Delivery Bottleneck
Most organizations that have adopted DevOps have reached a certain level of maturity in implementing CI/CD. However, Ader's research suggests that release automation—wherein previously manual checks prior to releasing an application become automated—has become the biggest bottleneck in the DevOps pipeline, and many DevOps practices are focused on getting this "last mile" of the CD process right. "To tackle this problem, release automation and orchestration technologies have come to the fore," stated Ader, "and have become the most recent targets of firms attempting to build out end-to-end platforms." The end-goal is for a developer to be able to upload updated source code to a repository and automatically trigger the compilation, testing, and deployment of the software application to production in a repeatable and reliable way at time intervals of minutes or even seconds.
The DevOps Market Is at a Turning Point, Shifting From Best-of-Breed Toward End-to-End
Over the last decade, vendors have introduced a plethora of point products to address each step of the SDLC. With the technology for DevOps maturing and becoming increasingly strategic to digital transformation initiatives, some of these vendors—through a combination of internal development and M&A—are assembling end-to-end platforms, with the goal of driving mainstream enterprise adoption and simplifying purchasing, deployment, and ongoing management of the DevOps toolchain. Going forward, Ader anticipates a continued ramp-up in M&A activity within the DevOps space, culminating in a handful of major players that will dominate the market. "However, vendors need to be careful not to force feed one-stop-shop solutions," Ader stated, "as some customers (especially on the developer side) may continue to prefer assembling their own suite of best-of-breed tools." While he does not view the DevOps market as a zero-sum game between end-to-end and best-of-breed approaches, he anticipates that the benefits of platform consolidation will become clearer to a growing set of customers.
Ader believes the likely "winners" of consolidation within the DevOps market can be divided into two groups: cloud titans and DevOps specialists. The cloud titans (i.e., AWS, Microsoft, and Google) are leveraging their platform dominance and one-throat-to-choke simplicity, while the DevOps specialists are betting on superior technology, multicloud freedom, and toolset consistency.
For a copy of the "Agility Now: The Coming Battle for DevOps Supremacy" report or for more information on the companies from Jason Ader's coverage list, please contact your William Blair sales rep.
Any statements in this report that are attributable to IDC Research, Inc. ("IDC") represent William Blair's interpretation of data, research opinion or viewpoints published as part of a syndicated subscription service by IDC and have not been reviewed by IDC. IDC's research is current as of the date IDC published it, not the date that William Blair's reports are published. Further, IDC's research contains IDC's opinion, not representations of fact, and are subject to change without notice.