Data Center Monitoring: Industry
The Data Center Monitoring Industry is heavily fragmented, with solutions ranging from off-site server farms monitored by the vendor (e.g., cloud servers) to relatively inexpensive and easy-to-deploy SaaS solutions for monitoring data centers on-site, off-site, or a combination thereof.
Data center monitoring competitors, particularly the key players, are listed differently in various market reports. For example, the key players listed by WiseGuyReports include some of the largest and most famous IT players:
- Opsview Ltd.
- Zoho Corp.
- Raritan Inc.
- Mindarray Systems
- Paessler AG
- Sunbird Inc.
Another report by Global Market Research, on the other hand, lists several lesser-known and smaller companies as the "top key players":
- Black Box Network Service
- Controlled Power Company
- CyberPower Systems
- Delta Power Solutions
- Tripp Lite
- Server Technology
Global Market Research seems to focus more on the hardware side of the market, as there is considerable overlap between their list and the manufacturer's list shown under "Supplier Power" below. In addition to the above, there are many competitors, like Dynatrace, who provide lightweight SaaS solutions to data center monitoring. To list just a few:
In short, this is a very fragmented market with numerous players who compete at varying levels, from providing remote cloud servers which they monitor for their clients to providing in-house SaaS solutions for those running their own server farms.
There are numerous "major vendor/manufacturers" providing the hardware needed in this market:
- Schneider Electric
- RZ-Products GmbH
- Panduit Corp.
- FNT Software
- Sunbird Software
- Delta Power Solutions
- Tech Plan
- Zoho Corporation (ManageEngine)
- Altima Technologies
Based on the number of major players, including several very well-known, multinational corporations, competing in this sector, and the fact that a single server farm may simultaneously deploy servers from multiple manufacturers, we judge that the suppliers in this case have little leverage that would allow for significant increases in prices.
In the case of SaaS-based data center monitoring solutions, we find no seller pressures at all in the conventional sense. However, there may be pressures on finding the right personnel:
- 81% of leaders in the IT industry find it difficult to find qualified candidates to operate their data centers due to the number of experienced workers transitioning out of the workforce. We hypothesize that the data center monitoring industry experiences similar difficulties.
There are a number of factors impacting buyer power in this industry, but these must be divided into hardware and SaaS solutions.
- As shown in "Competitive Rivalry" above, buyers have "a plethora of cloud offerings available in today's marketplace."
- In addition, enterprise clients still run 70% of their workloads in corporate data centers, 20% on colocation data centers, and only 9% in the cloud.
- The concerns driving enterprises to keep their own server farms include:
- Maintaining control of their data,
- Security and governance;
- A lack of direct relationships with vendors;
- Safekeeping of intellectual property; and
- Uptime and DR.
- In addition, migrating business-critical infrastructure to the cloud for remote monitoring is extremely expensive and difficult. On the one hand, this may discourage some companies from migrating to cloud-based data center monitoring solutions; on the other, it becomes a barrier to leaving an existing solution for a competitor.
Regarding SaaS-based solutions:
- Low costs and free trials create very low barriers to client companies changing vendors.
THREAT OF NEW ENTRY
There are several factors indicating that the threat of new entries into this industry are high:
- First, the fragmentation of the industry noted above suggests that new competitors are common.
- Second, "low cost of entry and simple value chains" make it easy for new competitors to emerge and impact even the global market.
- Several SaaS companies with products considered among the top 20 were founded in just the last ten years, including Datadog and Instrumental.
- However, the concerns that hold back enterprises from adopting remote solutions described under "Buyer Power" above may prove a roadblock to a new data center monitoring solution, at least until it earns a reputation for addressing those concerns.
THREAT OF SUBSTITUTION
- The primary substitution available to contracting a vendor to monitor or purchasing a SaaS-solution is to build one in-house.
- However, given that SaaS solutions are inexpensive and IT managers find it difficult to hire qualified talent for their server rooms, we judge that while enterprises may keep monitoring in-house, smaller companies are less likely to substitute either a SaaS monitoring solution for their own servers or even migrating to a cloud solution.
Due to the wealth of information on this subject, our research was straightforward in most respects. Indeed, what difficulty we had stemmed from how broad and ill-defined the Data Center Monitoring Industry is, meaning that our greatest challenge was parsing the info into a suitably concise brief. However, there were a couple of points on which we need to offer clarification about our interpretation of the report criteria and research strategy.
After reviewing Porter's Five Forces analysis and the abstracts of several market reports for the Data Center Monitoring Solution industry, we immediately identified two potential problems in completing this brief. First, data center monitoring can be offered as a software service or hosting and monitoring a physical data center for clients (e.g., cloud services). How then should we look at supplier power in an industry that needs little in the way of physical supplies? Second, there are no market reports that focus solely on the US industry, or even that of North America. This is because, as a TBKconsult article points out, "The software industry is by nature a global industry," and has been for many years due to the "low cost of entry and simple value chains." Consequently, the majority of countries, and certainly the overwhelming majority of key competitors, operate on an international stage.
Therefore, in order to provide a coherent brief, we have had to expand the scope of the request and to think slightly out-of-the-box on the "supplier" issue. Namely, since the major limiting supply in software services is competent programmers, we looked into possible limitations on the "supply" of skilled labor. On the data center monitoring systems side, we looked into possible supply problems arising from the need to purchase physical servers and other hardware on a regular basis.