What the New Relic IPO says about enterprise software,innovation and Nouvola

Posted by on January 8, 2015 6:16pm

In December, New Relic, a six-year-old maker of application performance management software, went bigstock-NEW-YORK-CITY--MAY---Chargi-26676596public in an IPO that saw shares rise almost 50 percent in the first day of trading.

This debut is significant for any business that operates in the sector providing solutions for developers and application performance, like Nouvola. It is also highly significant because New Relic is leading the pack in establishing a new paradigm for enterprise IT. For Nouvola, it’s especially significant because New Relic is one of our partners.

It’s gratifying to see investors get so excited about this enterprise software business because too often there’s a perception that enterprise software is not innovative and just “not cool”. It’s true that it’s often easier to explain the function and the value of a consumer technology and up until two years ago, most of the interest in innovative software was focused on the consumer sector of the market. Investors I’ve met with have often admitted that they could not get too excited about performance testing and developers solutions.

In reality, those of us who work in this space understand that enterprise software sector today represents a tremendous opportunity. There’s a classic technology platform shift happening, driven by the move toward cloud-based computing. And the financial consequences of being on the wrong side of technology platform shifts can be monumental.

The value of B2D software

Like Nouvola, New Relic provides B2D (business to developers) software, a sector that’s commonly been dismissed as a niche where it would not be possible to gain significant traction or make much money. The strong debut of New Relic, is a testament to how much developers matter. The B2D segment in which New Relic operates is a wide open market where market share is up for grabs. There have been prior examples of the potential of this space, including the $250 million Heroku acquisition by Salesforce, but as the first IPO of a developers-focused company, New Relic really validates the developer approach to doing business in the enterprise.

Performance is your brand

Some of the other misinformed feedback I’ve gotten is that performance is something that businesses deal with only when problems occur. Instead, the avalanche of money invested in New Relic shows that performance underlies every aspect of doing business. Businesses that are smart will address performance before something goes wrong because they understand that customers will judge them based on the user experience they provide — good or bad, fast or slow.

Software is critical for businesses and consumers

Software has become a central element of business and consumer life. Businesses use software to interact with their customers, end-users and employees, to grow revenue and improve operational efficiency. Businesses and consumers use software on a variety of devices in more of their day-to-day activities. And everyone expects their software to be fast and reliable. When it disappoints, they can simply replace the applications they use.

At the same time, applications are becoming more and more complex with thousands of optimizations points. It is becoming ever more challenging to stay on top of your application performance in a fast-paced and dynamic environment. This reality is at the core of New Relic’s value proposition. In the S-1 filed in connection with its IPO, the company explained that “business and consumer applications are running on both cloud and legacy architectures and are built with a multitude of programming languages,” resulting in “significant challenges and complexities for technology users, business users, and software developers. The success or failure of businesses is increasingly determined by the availability, accessibility, response time, and quality of their users’ experience.”

Like most true SaaS products, New Relic is a product-focused company. Its attention to simplicity, great core features and delivering value on a monthly basis has paid off. Companies like New Relic that are working to make developers happy are the future of the enterprise. Nouvola is proud to be among them.

 

Don’t hesitate to contact me directly with your comments and inputs via paola dot moretto at nouvola dot com. You can find me on Twitter at @paolamoretto3 or @nouvolatech.

 

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