As early investors in technology companies, we’re interested in the next battleground, not the last one.
Why the heck did VMware pay $1B for Nicira, a company that was just starting to generate revenue? You can (and many have) asked why did Facebook pay $1B for Instagram or Microsoft $1B for Yammer or Dell $1B for Equalogic? In each case, the decision to buy the startup had nothing to do with revenue or earnings or fundamentals; instead it was a “strategic” decision – the acquiring company believed that it needed the startup’s technology and product vision to make its own business worth a lot more in the future and to keep it competitive with its peers.
In the case of Nicira, VMware saw that Nicira’s vision of network virtualization as key to its future. After all, VMware is the company that commercialized server virtualization. But it has not itself been able to lead in network virtualization. By buying Nicira for such a handsome price, VMware has officially validated the idea that virtualizing all the elements of the network is the current battlefield in the enterprise. It started with server virtualization, then desktop virtualization, then storage virtualization and now, network virtualization.
As early investors in technology companies, we’re interested in the next battleground, not the last one: We think that battleground is data virtualization.
We all know that enterprise applications are getting easier to create and serve, on both desktops and mobile devices, by providing software, infrastructure and platforms as a service. But these applications create and maintain their own data in silos, most often off-premise in multi-instance proprietary data warehouses managed by the vendor. As time passes and SaaS/Cloud/Mobile applications increase, data fragmentation gets worse.
In order for an enterprise to have a holistic, or enterprise-wide view, it will have to integrate and manage that disparate data for its own purposes.
For example, we recently ran across a new-era software company that maintains its contracts in Salesforce, its invoices in Zuora, and its ledgers in NetSuite. Last year’s audit took two months and a lot of effort from the accounting staff, not to mention the extra auditing expense, to substantiate the revenue the company recognized by manually tracing through those three SaaS systems. Manually! Welcome to the future…
Until now, integrating and resolving siloed data included manual spreadsheet entry, inflexible and expensive integration projects, and the creation of specialized data warehouses, which consolidate the data to enable coordinated reporting but isolate it from real-time data management systems and increase complexity rather than reduce it.
We believe that our portfolio company Elastic Intelligence is leading this new class of data virtualization with its Connection Cloud. This innovative service allows enterprise data managers to interact with virtualized data in real time from all of their accessible data stores and SaaS applications — and report on that data using standard business intelligence and reporting tools. The Connection Cloud, itself a scalable, multi-tenant, cloud-based service, allows you to see all of the data exposed by your SaaS applications’ vendors API, as if it were available as a relational database. That data appears to you as relational tables, on which you can perform any standard SQL query.
When the application requests the data, Connection Cloud resolves where that data actually resides, fetches it, and delivers it. Indeed, if you request a join operation across tables, even from different applications, Connection Cloud will perform the join and return the aggregated data in real time (as real as your WAN will allow).
So, in the example provided earlier, the customer number was the same in SalesForce, Zuora and Netsuite. A simple join uses the customer number to correlating and aggregating all the requested data from all three applications, each with their own API’s. As those applications change over time, the access and reporting remain constant.
The next element of virtualization has arrived. It’s so new that the company is still working on what to call it and how to explain it to customers. But those early adopters who have understood its value are really excited by their new found ability to access and integrate their cloud data.
