The momentum behind next-generation enterprise computing has been building for years.
Most big enterprises now have hybrid IT environments built for agility with private cloud deployments and public cloud projects supplementing traditional data centers running on-premise software. The majority of new apps are SaaS-based, though not all.
Few believe this rapidly evolving market place will leave legacy vendors unscathed.
Even on-campus ERP systems, the core of today’s corporate infrastructure, will typically be delivered using hybrid cloud approaches in five years, according to Gartner, creating teeth grinding decisions for Oracle and SAP.
There is a new cycle of change” underway, said Jerome Lecat, CEO of software-defined storage company Scality. “There is a real change in the way people will be doing IT in 10 years.”
All this is sparking a broad rethink of enterprise IT and enormous excitement among venture capitalists. There is a belief that young innovative companies will remake the enterprise technology stack from network to application layers.
In this increasingly complex environment, putting money behind the right startup could bring big rewards.
“It is a great time for that,” said Ziv Kedem, co-founder of disaster recover software maker Zerto. “The good VCs see that.”
At a high level, broad trends, such as the mobile-first apps, the consumerization of the enterprise and SaaS adoption have investment juices flowing. New excitement has emerged behind machine learning.
Below the surface, questions rage on how the enterprise re-think will unfold. Will OpenStack rival VMware? How much of the corporate workload will shift to public clouds? Will software-defined data centers and networks see mainstream adoption in two, three, or more years?
So far, the uncertainty has not slowed interest.
“We are extremely active right now even though prices are at relatively high levels.”
Bessemer Venture Partners
“We are extremely active right now even though prices are at relatively high levels,” said Byron Deeter, a partner at Bessemer Venture Partners. “We continue to invest actively.”
And while some areas of enterprise investing have cooled—such as betting on infrastructure-as-a-service plays to compete against Amazon and Microsoft—other areas are hot.
Platform-as-a-service, where vendors manage the software stack, continues to draw capital. Big data platforms have attracted buckets of money for companies such as Cloudera and MapR Technologies. API layer initiatives draw interest.
For Gordon Ritter, a general partner at Emergence Capital Partners, one area worth exploring is vertical SaaS. “The next decade of the cloud will be companies that focus on an industry and have multiple product lines that sell into the industry.”
“The next decade of the cloud will be companies that focus on an industry and have multiple product lines that sell into the industry.”
Emergence Capital Partners
Interest is rising as well in tools and automated systems to monitor complex cloud-based environments. These systems might detect data centers outages and issue commands for repairs, but also respond to changes in application performance and availability.
For Steve Herrod, a managing director at General Catalyst Partners, these management tools for broad heterogeneous environments that mix cloud and campus resources are good bets. Along with performance monitoring, they might address security and perhaps governance issues, such as keeping track of which employees handle which data.
Another VC looking at cloud security tools is Ariel Tseitlin, a venture partner at Scale Venture Partners. More innovation will come in the space because of the need to better process signals from the vulnerability-detecting security products across a network, he said
For Tim Porter, a managing director at Madrona Venture Group, data infused apps that leverage large data sets to provide solutions for specific vertical markets also represent a big opportunity.
Clearly, there is no shortage of ideas across the enterprise landscape.