Data Center Monitoring: Market Analysis

Part
01
of two
Part
01

Data Center Monitoring Market Size

While a direct answer to the size of the US Data Center Monitoring industry is not publicly available, from the existing public data we triangulate that the current size of the US Data Center Infrastructure Management (DCIM) industry, which encompasses data center monitoring, is between $63.8 million and $264 million and, based on investment in the data monitoring segment, most likely towards the high end of that range.

RESEARCH STRATEGY, USEFUL DATA, AND TRIANGULATION

We initially attempted to locate a market report for the Data Center Monitoring market. While such reports are most often proprietary and expensive to obtain, the abstracts released for marketing purposes often contain useful details such as the market size and compound annual growth rate (CAGR). In this case, however, we ran into two problems: First, all the available reports focused on the global market. By itself, this isn't necessarily a problem, as knowing the global market size often gives us a baseline to triangulate the US market based on other known market factors. Which brings us to the second problem, namely, that all the public market report abstracts made a point of concealing the current market size and growth. (This abstract illustrates the problem.)

Therefore, we switched strategies. Our earlier research had uncovered a market report abstract that included a list of top players in this industry:


As many of these are publicly-traded, we pulled several of their annual reports (e.g., Microsoft's 2018 Annual Report) and conducted quick searches to see if they tracked their data center monitoring as a separate segment. The answer in all cases was no; in fact, the term "data centers" appeared extremely rarely and never in conjunction with the word "monitoring."

For our third approach, we broadened our research to learn more about the data center industry in general. There is not always overlap between data centers and data center monitoring, as many of the monitoring solutions are inexpensive SaaS products; however, we judged it likely that if we could identify how much in-house monitoring cost as either a dollar amount or a percentage, the SaaS solutions might be worked out from there, likely being only a small segment of the total industry.

This avenue of research resulted in the following salient facts:


This means that the US has less than a 1/17th share, or 5.8% (10 / 174) of the global market while possessing only 4.7% of the world's population (327 million / 7,015 million). While this is a greater than average share, it does not accord with the US's 24.0% share of the world's GDP ($19.39 trillion / $80.68 trillion). Therefore, we hypothesize that the US market reflects data centers based in the US, not data centers in other countries with US customers. This means that a multinational company in the US renting server space in, for example, India to US-based clients may not be counted towards the US total market in this report if our hypothesis is correct.

As a final piece in the puzzle, our research also uncovered many articles discussing the rapidly-changing nature of and diversity in models for data centers. For example, an article in the Data Center Post identifies three (relevant) trends which are changing the face of data center monitoring and management:


Each of these requires different approaches to data center monitoring. For example, a company offering cloud services to its clients would require a monitoring solution, but this solution would very likely be developed in-house and offered as a value prop to prospective clients. Also, for smaller companies needing monitoring of their data centers, there is a fourth solution:


Between the diversity of possible data center monitoring solutions, the fact that many would be bundled with other products (e.g., a cloud or colocation server), and the problem of untangling which market a cross-national monitoring solution belongs to, it is no surprise that market reporting services do not wish to give away any of their information for free.

DATA CENTER INFRASTRUCTURE MANAGEMENT

However, there is a related industry which encompasses data center monitoring, including for the aforementioned data center solutions, data center infrastructure management, or DCIM. Based on the abstract of the global market report and some data points above, we can triangulate the US market as follows:

  • The global market is expected to reach $2.85 billion by 2024 after growing at a CAGR of 21%.
  • Calculating backward, this gives us an estimated 2019 market of $1.10 billion.
  • As noted previously, the US has a 5.8% share in the world data center market and 24% of the world's GDP.
  • Therefore, the US would have a DCIM market of between $63.8 million ($1.10 billion x 0.058) and $264 million ($1.10 billion x 0.24).

While either number is reasonable given the size of the US data center market given above, we found one more data point which makes it likely that the DCIM market is closer to the higher end of our range:

  • In 2016, private equity firm Providence Strategic Growth (PSG) invested $120 million in LogicMonitor, a SaaS data center monitoring service.

It seems unlikely that PSG would consider this a good investment if the total market were towards the low end of our range. Therefore, we consider it likely that the US DCIM market, which encompasses the Data Center Monitoring market, is close to $264 million today.

FURTHER READING

If a more comprehensive answer is critical, any of the following reports should provide the needed clarity, though at a high price:

Part
02
of two
Part
02

Data Center Monitoring Ecosystem Map

A thorough study of the Data Center Monitoring industry and business ecosystems finds that there is no publicly-available map of that industry's ecosystem. Indeed, due to the sheer number of possible combinations of companies, vendors, customers, and other organizations, creating a map of any industry would be virtually impossible. Rather, for reasons explained in detail below, mapping ecosystems is a visualization technique that is intended to be applied at the individual company level.

INITIAL FINDINGS

We began our research by taking a high-level approach in the hopes of quickly finding one or more maps or charts of the ecosystem of the Data Center Monitoring industry. It became quickly apparent that, even if found, a single chart would not suffice. Data Center Monitoring operates in many environments, including:


Defining an ecosystem as Investopedia does, as "the network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the delivery of a specific product or service through both competition and cooperation," we would not expect the ecosystem of a colocation or cloud service provider to come even close to that of a SaaS monitoring solution provider. In the former case, the monitoring ecosystem would likely be bound up in the larger ecosystem of the company's core data center business while in the latter case, we understand that the ecosystem would be far simpler.

We determined that, in terms of broad strokes, there would likely be at least two major ecosystems: the aforementioned SaaS ecosystem and the data center infrastructure management (DCIM) ecosystem, which we had previously determined encompassed data center monitoring, but would also tie into colocation, Edge, and cloud data centers.

SEARCHING FOR A MAP

With that as our backdrop, we began a search for one or more ecosystem maps for both types of monitoring solutions. Our research strategy was similar for both, so we will describe it as a single strategy below.

An initial high-level search pattern turned up several "ecosystem" charts. However, these proved to be software ecosystems rather than business ecosystems, as shown in the attached project document under Examples 1 & 2. Even more common were white papers and articles that discussed the place of a DCIM or other monitoring service within a network ecosystem, but which did not attempt to provide a chart. Of course, this does not fit the criteria of this request.

ECOSYSTEM MAP LIMITATIONS

We next attempted to narrow the parameters of our research to eliminate network ecosystems as false positives. While this did not yield a chart per se, it did uncover an excellent, very thorough article on "The Data Center Ecosystem," which we recommend reading in its entirety. While the focus is not on monitoring per se, it provided the key information that explained why an industry-wide ecosystem chart for the Data Center Monitoring industry is unavailable — in fact, why it would be nearly impossible to draw one up.

To sum up the most salient points, there are three broad "buckets" that comprise the data center business ecosystem are as follows (quoted verbatim):

  • Data center operators — You have the data center operators, both colocation and wholesale data center operators. That's in bucket number one.
  • Data center end-users — And bucket number two is the end-users of data centers; basically, enterprise IT users.
  • Vendors that sell to these two groups — And then in bucket number three are the vendors, the companies, that sell to these two groups: the data center operators and the data center end-users.

Based on our prior conclusions above, data center monitoring could fit into either the first category (as an added-value service provided by the operator) or the third (as a SaaS sold to the end-user). However, these buckets don't convey the breadth of services which enter this ecosystem. For example, apart from data center monitoring firms (the subject of this brief), some vendors which would also likely be relevant to those monitoring firms might include:


The vendors used would, of course, vary according to the needs and decisions of a given data center monitoring company, as would its clients and competitors. While an individual company might map or chart its particular place in the wider ecosystem, or even that of a client, ecosystems have always been understood by James F. Moore, who coined the phrase, as personalized to a particular company, not for mapping an entire industry; in fact the first thing mapped in an ecosystem is the "core," which includes "those typically considered to be part of a [given] corporation." Consequently, it is not possible to locate or provide a map of the ecosystem of an entire industry.
Sources
Sources