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Infrastructure Software
Neeraj Agrawal  |  January 25, 2017
Cisco’s $3.7B Acquisition of AppDynamics Means More Than $10B in Value Created by IT Monitoring in Three Years

From e-commerce to autos to the insurance industry, software applications have become the heart and lungs of many enterprises—basically keeping companies alive and functioning. Simply put, businesses need sophisticated applications so they can perform at the same level as consumer Web giants like Google and Facebook, and quickly meet the increasing demands of enterprise customers.

This has caused corporate IT departments to shift from functioning mainly as cost centers into groups directly aligned with actually generating revenue at many companies; if an e-commerce website goes down, for instance, the glitch negatively impacts a company’s sales and bottom line.

So how do companies, more broadly, prevent these critical applications from crashing?

Technology to help manage and monitor enterprise applications has become critical in today’s software-based organizations. In the market today, there are specialized tools to monitor applications as well as servers, databases and front-end websites, and to remediate issues these tools dig up. Battery has made investments in companies serving many of these areas, including AppDynamics* (application performance), Dataloop.IO* (servers and containers), VividCortex* (databases), BigPanda* (alert correlation), Catchpoint* (website performance) and OpsGenie* (on-call).

Yesterday, Cisco announced its intention to acquire another Battery portfolio company, AppDynamics, for $3.7 billion, making it the largest-ever private software acquisition. Combine this with Compuware (2014 for $2.4 billion) and SolarWinds (2015 for $4.5 billion), both take-private transactions, and there has been over $10 billion in realized M&A value over the past 26 months in the monitoring category alone.

Clearly, someone needs to watch over today’s software-based enterprises, and we predict more growth in monitoring companies over the next few years.

Here is a sampling of IT-monitoring companies:

monitoring software

*Denotes a current or former Battery portfolio company. For a full list of all Battery investments and exits, please click here.

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