AppDynamics and NewRelic show just how sexy app data monitoring can be, with whopping 100-plus percent growth

Suddenly, app monitoring tools — AppDynamics and New Relic chief among them — are grabbing lots of attention.

By letting companies track application data across their business, they’ve become one the first and easiest ways businesses can connect the dots between operations and financial results.

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On the face of it, software tools that allow big businesses to monitor how their various applications are performing aren’t the sexiest things. The only people who used to care about them were IT executives. But in an age of hype around “Big Data,” these companies offer a tangible way to wring results out of this data. Managers across a wide range of corporate functions — not just IT execs — are starting to use these apps to get ahead.

Both AppDynamics and New Relic say they are on the verge of reaching annual $100 million revenue (see the announcements by New Relic and AppDynamics, respectively), and are eating their way into the larger market for IT operations management, which is valued at about $18 billion and is growing about 4.8 percent a year.

In interviews with VentureBeat, executives at AppDynamics and New Relic reaffirmed that their growth continues, and that Big Data analytics offerings specifically will dominate their respective agendas in 2014, now that most of their customers — large and small — are thirsting for such offerings.

The emergence of AppDynamics and NewRelic to chief status in app data monitoring is documented by research firm Gartner in a report released December 18, which got little publicity at the time. The research firm listed the two companies on the top of its “Magic Quadrant” for the app monitoring industry (see image above).

The report is notable, too, for documenting the falling-away of the large companies that have dominated the industry traditionally, including IBM, CA Technologies and BMC Software. AppDynamics and New Relic weren’t even mentioned in the Gartner report two years ago. They first hit Gartner’s radar last year.

Both companies offer ways for companies to track performance through a software-as-a-service (SaaS) delivery method. IBM, CA and BMC have offered software principally aimed at very large enterprise customers that rely on their own data centers to host their applications. These large customers typically move slowly. AppDynamics and NewRelic rode to prominence by serving faster, emerging companies more accustomed to agile application development. These customers need to make constant updates to their apps, and demand monitoring tools that can keep up.

AppDynamics and New Relic have been trumpeting impressive financial results and customer wins all year. In November, AppDynamics said it saw 150 percent revenue growth in the third quarter, compared with the year before it. And in an interview with VentureBeat yesterday, chief executive Jyoti Bansal updated that, by saying the company’s overall second half has come in even stronger, at about 160 percent growth, compared to the second half of last year.

New Relic has made similar announcements, including that it saw 100 percent revenue growth in the third quarter. It will release fourth quarter results after it has closed, said Jay Fry, New Relic’s VP of product marketing.

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Gartner concedes that its report is already outdated, having taken into account industry developments only up to July, 2013. Since then, both New Relic and AppDynamics have each made several other announcements that show they are still racing ahead.

There’s one big difference between the two companies: New Relic focuses focuses solely on delivering its service through SaaS. AppDynamics offers a SaaS application, but also serves large enterprise customers with an on-premise offering. New Relic’s focus has allowed it to make its SaaS offering especially intuitive, usable with minimal or no end-user training — something Gartner gives its kudos for. AppDynamics released in its self-service SaaS offering in July, 2013, Gartner notes, “later than many competitors, allowing those vendors to catch up and even surpass AppDynamics execution.”

In most areas, the two companies are matching each other’s features blow-by-blow. Both have since released support for Node.js, the popular server-side language many companies are embracing to scale applications faster.

New Relic has emphasized its ability to do analytics in real-time, through a project code-named Rubicon, and also by tracking data across mobile devices, network and back-end networks. New Relic drew favorable attention two weeks ago, when the Obama Administration revealed it had used New Relic to help it monitor the reconstruction of its Healthcare.gov site. New Relic has also closed a perceived gap in serving enterprise customers. It won 500 enterprise customers this year, including Adobe Systems, Farmers Insurance, Intel Corporation

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AppDynamics CEO Bansal, meanwhile, says his company has closed most, if not all, of the perceived gaps with New Relic, in areas like user interface and mobile offerings.

In 2014, the focus will be on analytics, he says. Specifically, AppDynamics will seek to help companies drill down into their apps and make better business decisions, he says.

Bansal gives the example of a larger retailer: By using AppDynamics, the retailer will note immediately when say, its revenues drop to $3,000 a minute, from $5,000. AppDynamics could show that the drop is tied to a simultaneous fall in shopping conversions on the retailer’s site. AppDynamics could then reveal this was caused by a slower response time by the retailer’s web site, and that this happened at the same time a developer pushed some new code to the site’s back-end. By removing the code, the company could reverse its revenue decline.

New Relic’s Fry promises similar business uses cases for 2014.

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Look for more action, and perhaps IPOs, from both companies next year.