PRIVATE AND CONFIDENTIALTECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.Cloud Middleware OverviewPeter FalveyManaging Direc...
2Cloud Middleware Investment & Activity Accelerates in 2013 Adoption growing: Enterprises have widely embraced the econom...
3Software Development Paradigm is Shifting to CloudA paradigm shift in software development is underway, enabled by a grow...
4PaaS Growth Outpaces SaaS and IaaS for Foreseeable FutureWider enterprise adoption of SaaS and IaaS will drive continued ...
5What’s Fueling Growth of PaaS?Several trends in enterprise software development are forcing more IT departmentstowards ad...
6Cloud Market Movement: Converging on PaaSLarge SaaS and IaaS vendors are moving down and up the stack, respectively, as t...
7Defining the PaaS MarketApplicationDatabaseVirtualization LayerServers Storage CPUVirtualMachineVirtualMachineVirtualMach...
8Market Map for Application & Integration PlatformsApplication / SuiteAPI DataScaleSmallLargeScaleSmallLargeAPPLICATION PA...
9Market Map for Point Solutions & SpecialistsAPP DEVELOPMENT & TESTING- Tools for rapid application design, development an...
10Leading Consolidators’ Offerings in the Technology StackLarge enterprise software vendors have started to build out func...
11ApplicationPaaSIntegrationPaaSInterest Comes From Several DirectionsPoint SolutionPaaSDiversified Technology Consolidato...
12Recent Acquisition ActivityTarget Acquirer Date SolutionApril 2013 MBaaSApril 2013 Visual PaaSApril 2013 Integration Paa...
13Recent Investment ActivityTarget Date Solution Amt. / Total Raised InvestorsApr 2013 Application PaaS $7.5M / $18M Atlas...
14Falvey Partners OverviewFOCUS SELECT TRANSACTION EXPERIENCEDecember 2011Has acquiredJuly 2012Has beenacquired bySeptembe...
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Cloud Middleware Overview

  1. 1. PRIVATE AND CONFIDENTIALTECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.Cloud Middleware OverviewPeter FalveyManaging Directorpeter.falvey@falveypartners.comP. 1.617.598.0437Jason MylerManaging Directorjason.myler@falveypartners.comP. 1.617.598.0438Jeffrey CookVice Presidentjeffrey.cook@falveypartners.comP. 1.617.598.0439
  2. 2. 2Cloud Middleware Investment & Activity Accelerates in 2013 Adoption growing: Enterprises have widely embraced the economic benefits of SaaS and IaaSsolutions and are quickly moving to middleware solutions as the technology matures andprovides an increasingly compelling value proposition The market is separating: We are beginning to see leaders emerge and break away in anincreasingly crowded market place Platforms are assembling: The universe is extremely fragmented from both a programminglanguage and solution perspective. Larger PaaS players (e.g. EngineYard) and major enterprisevendors are beginning to build platforms through development and acquisition Investment and consolidation will continue: We expect the increasing activity in the cloudmiddleware space to accelerate in 2013- Investment activity will focus on enabling leading platforms to consolidate and betting ondisruptive point solutions- Acquisition activity will come from diverse industry sectors as larger vendors continue tobuild out their cloud strategiesWe expect the level of investment and transaction activity in the broad cloudmiddleware sector to accelerate in the coming year
  3. 3. 3Software Development Paradigm is Shifting to CloudA paradigm shift in software development is underway, enabled by a growing numberof cloud middleware solutions Faster applicationdevelopment and deliverywith compelling economics Abstraction of “table stakes”back-end functionality toallow developers to focus onvalue-added services Shift to a service-orientedarchitecture Search for a standard:hybrid v. public clouds, openv. proprietary solutions, etc.MainframeDistributedCloudEVOLUTION OF SOFTWARE DEVELOPMENT
  4. 4. 4PaaS Growth Outpaces SaaS and IaaS for Foreseeable FutureWider enterprise adoption of SaaS and IaaS will drive continued adoption and growthof PaaSSaaS - $16.0BPaaS - $0.6BIaaS - $6.0BPAAS MARKET SHARE OF CLOUD MARKET, 2013MARKET GROWTH OF CLOUD VERTICALS, 2012 – 2016SaaS, 70.8%PaaS, 2.7%IaaS, 26.5%$16.0$0.6$6.0$33.0$2.9$24.0$0.0$5.0$10.0$15.0$20.0$25.0$30.0$35.0SaaS PaaS IaaS2012201620% CAGR 48% CAGR 41% CAGR
  5. 5. 5What’s Fueling Growth of PaaS?Several trends in enterprise software development are forcing more IT departmentstowards adoption of PaaSCompelling EconomicsRise of DevOpsNeed for Custom ApplicationsViability of Private / Hybrid CloudPaaS market grows at 48% for the next 5 years Maturation of PaaS solutions hasprovided a compelling economicargument for development Allows IT to do “more with less” PaaS has been shown to reducedevelopment times by 50%+ anddeployment times from weeks to minutes Increasing interdependence in ITbetween developers and systemadministrators with goal of gettingapplications to market faster DevOps are the primary consumers ofPaaS Enterprise adoption of PaaS hamperedby security and compliance concerns Advent of viable private / hybrid PaaSsolutions provide the benefits of PaaSwhile mitigating security concerns Many expect gradual migration fromprivate / hybrid to public PaaS Developing custom applications is seenas a competitive advantage Advent of BigData / Analytics requiringapplications and reporting specific toeach business Integration of siloed applications anddata
  6. 6. 6Cloud Market Movement: Converging on PaaSLarge SaaS and IaaS vendors are moving down and up the stack, respectively, as thePaaS market gains tractionSaaS Vendors IaaS VendorsPaaS Large-scale, mission-criticalSaaS vendors are releasing PaaSofferings so users can buldcustom applications to extendfunctionality of their core solutions Typically not acquiring PaaSvendors, but developing offeringsin-house Examples: Force.com andNetsuite SuiteCloud provideplatforms to extend core CRM andERP platforms IaaS has become a “race to thebottom” as the hardware layerbecomes increasinglycommoditized Margin is moving up the stackfrom IaaS to PaaS IaaS vendors are activelyacquiring and developing PaaStechnologies to move up thestack Example: Amazon releasingElastic Beanstalk, Joyentlaunching no.de, VMWarelaunching CloudFoundry
  7. 7. 7Defining the PaaS MarketApplicationDatabaseVirtualization LayerServers Storage CPUVirtualMachineVirtualMachineVirtualMachineVirtualMachineVirtualMachineO/S O/S O/SO/SApplication ServerAppLifecycleMgmtSOA ToolsBusinessProcess ToolsUser InterfaceComponentsIdentity &Security MgmtAppDev&TestingToolsPaaS players offer a varying degree of tools and services that abstract the“middleware” layer between the infrastructure and the applicationCLOUD APPLICATION TECHNOLOGY STACK TYPES OF PAASApplication PaaSPlatform for new application development,deployment, run-time and managementTwo Main Types:I. Pure Platform: Move existing anddevelop new custom applications incloud, typically will adhere toframeworks specified by the PaaSvendorII. Platform + Dev Tools: Create nativeapplications in a vendor-supplieddesigner and deploy on theirinfrastructureApplication & Data Integration LayerIntegration PaaSTools to integrate cloud applications anddataO/SOther: PaaS Point SolutionsCloud services delivering specific pointfunctionality in the PaaS stack (Database,BPM, MBaaS, Identity Mgmt, etc.)Application and integration servicesvendors are gaining the most tractionCredit: OrangescapePlatform-as-a-Service Layer Infrastructure-as-a-Service LayerMiddleware
  8. 8. 8Market Map for Application & Integration PlatformsApplication / SuiteAPI DataScaleSmallLargeScaleSmallLargeAPPLICATION PAASINTEGRATION PAASPURE PLATFORM PLATFORM + DEV TOOLS- Used for deployment and scaling of existing or new custom applications developed in-house- Mainly in use in business environments where application development takes places in-house anddevelopers are looking to abstract the back-end- Developers will typically need to adhere to an architecture specified by the PaaS vendor- Front and back-end of application developed anddeployed in studio provided by vendor- App development adheres to design templatesprovided by vendor in visual studioPaaSScale based on company funding and revenue, where availableAcquired
  9. 9. 9Market Map for Point Solutions & SpecialistsAPP DEVELOPMENT & TESTING- Tools for rapid application design, development andtesting prior to deployment through a platformSECURITY & IDENTITY TOOLS- Point solutions to manage private or public PaaSsecurity and user identityDATABASE & ANALYTICS- Outsourced database platforms and BigDataanalytics platformsBUSINESS PROCESS MANAGEMENT- Supports software development and SOA byproviding defined, reusable business processesMBAAS- Mobile back-end-as-a-service- Focused exclusively on the stacks used for mobileapplicationsSecurity IdentityDevelopment Testing Data AnalyticsDeveloper EnterpriseScale based on company funding and revenue, where availableAcquired
  10. 10. 10Leading Consolidators’ Offerings in the Technology StackLarge enterprise software vendors have started to build out functionality across thestack to offer a complete solution to end customersApplicationMiddlewareVirtualization LayerHardware / IaaSConverging interest in cloud middleware
  11. 11. 11ApplicationPaaSIntegrationPaaSInterest Comes From Several DirectionsPoint SolutionPaaSDiversified Technology ConsolidatorsUpgrading product offerings as software development shifts awayfrom legacy products to the new paradigmWhile there will be interest in cloud middleware from diverse industry sectors, webelieve three main industry sectors will drive the consolidationEXAMPLES OF PAAS CONSOLIDATORS
  12. 12. 12Recent Acquisition ActivityTarget Acquirer Date SolutionApril 2013 MBaaSApril 2013 Visual PaaSApril 2013 Integration PaaSApril 2013 Integration PaaSMarch 2013 SecurityFebruary 2013 Visual PaaSJanuary 2013 Integration PaaSAugust 2012 Visual PaaSAugust 2012 Business Process ManagementMarch 2012 SecurityFebruary 2012 MBaaSSeptember 2011 Visual PaaSAugust 2011 Integration PaaSApril 2011 IaaSMarch 2011 App development & testing
  13. 13. 13Recent Investment ActivityTarget Date Solution Amt. / Total Raised InvestorsApr 2013 Application PaaS $7.5M / $18M Atlas Venture, Citrix, Maayan VenturesApr 2013 Integration PaaS $4.2M / $4.2M Javelin Venture Partners, Costanoa VCApr 2013 Integration PaaS $37M / $80.5M NEA, Salesforce, Morgenthaler, OthersMar 2013 Data & Analytics $30M / $60M Lightspeed Venture Partners, NEA, RedpointMar 2013 MBaaS $5M / $70M UndisclosedFeb 2013 MBaaS $25M / $46.6M August Capital, Intel Capital, True VenturesFeb 2013 Data & Analytics Undisclosed Samsung Venture InvestmentFeb 2013 Security $31M / $51M JMI Equity, Investor Growth CapitalDec 2012 Security $25M / $54M Sequoia Capital, Andreessen Horowitz, OthersDec 2012 Data & Analytics $65M / $141M Accel, Greylock, Ignition Partners, OthersNov 2012 Data & Analytics $6.8M / $16.9M UndisclosedNov 2012 Integration PaaS Undisclosed Primera CapitalOct 2012 Framework PaaS $10M / $18.5M Intel Capital, Madrona, Ignition Partners, OthersOct 2012 Data & Analytics $25.5M / $39.6M Meritech Capital Partners, Crosslink CapitalSep 2012 Integration PaaS $22.4M / $37.3M Ignition Partners, Triangle Peak Partners, OthersAug 2012 Visual PaaS $7.1M / $10.1M Longworth Venture Partners, OthersJul 2012 Integration $20M / $82.6M Focus Ventures, Norwest Venture, SAP, OthersJul 2012 App Dev & Testing $5M / $10M SEB Merchant Banking, Others
  14. 14. 14Falvey Partners OverviewFOCUS SELECT TRANSACTION EXPERIENCEDecember 2011Has acquiredJuly 2012Has beenacquired bySeptember 2011Series DConvertiblePreferred StockLed bySeptember 2012Has beenacquired byA portfolio company ofJuly 2011Has been acquiredby a portfoliocompany ofApril 2011Has beenacquired byJuly 2011Has beenacquired byFebruary 2011Growth equityinvestment fromJuly 2011Has beenacquired byMarch 2011Has divestedits diagnosticsolutions unitNovember 2010Has received aninvestment fromA portfolio company ofOctober 2010PGI Notify and Sendplatforms acquired byAugust 2010Two divisions have beenacquired by a portfoliocompany ofApril 2010Has beenacquired byAugust 2010Series CConvertiblePreferred StockLed bySERVICES Sell-side or buy-side M&A Growth capital raising Board and corporate advisorySECTOR Software / SaaS Tech-enabled business services IT services Internet / digital mediaCOMPANY TYPE $50M - $250M in enterprise value Growing, with established scale Profitable or near-term path to profitabilityFalvey Partners is a leading advisory firm servingmid-market clients across technology sectors Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team Falvey Partners professionals have closed dozens of software transactions representing billions ofdollars in transaction value
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