Apps sell infrastructure

Pivotal just announced it did over $270mm of revenue in 2016 from Cloud Foundry helping large companies with digital transformation. That’s some nice growth from the $115mm the year earlier.

The initial Pivotal Cloud Foundry sales pitch was that it gave big companies a way to build new applications that run in a public cloud (rented space on Amazon (AMZN, +0.47%) Web Services, Google (GOOG, +0.34%) Cloud Platform or Microsoft (MSFT, +0.62%) Azure) or private cloud (flexible infrastructure that runs in a company’s own data center.

The need for faster, better software deployment resonated with older companies facing competition from smaller, newer rivals that already use cloud computing. You could argue, for example, that Hilton (HLT, +0.05%) and Hyatt (H, -0.47%) hotels should worry more about Airbnb (AIRBNB) than about each other.

This is yet another sign how large companies are embracing cloud technologies and microservices to be more agile. At the end of the day, it’s not about buying Cloud Foundry because of infrastructure savings, its the ability to quickly and scalably deploy new applications quicker to meet business needs. That’s the bet Pivotal made many years ago, and it’s paying off.

Remember if you are selling infrastructure – stop, sell apps to the heads of business who have a huge sense of urgency to get things done. Most of them also have pretty sizable budgets as well. The byproduct of all of this is saving money but that is not what moves the needle.

Apps selling infrastructure was all around today – see the Fortune Term Sheet note (scroll to middle) on CA’s $600mm purchase of Veracode in the secure dev ops space:

Forrester analyst Amy DeMartine put it nicely when she said that “along with most large technology companies, CA Technologies is on the digital transformation bandwagon and touts that applications are at the center of this transformation,” as she wrote in a recent report covering the impact of the deal. “With the acquisition of Veracode, CA Technologies gives credence to the basic need of companies to secure their applications before release.”

And the Information put out a story (sorry paid subscription) on Google Cloud and how Diane Greene understands how to sell to large enterprises – guess what – apps drive infrastructure spending!

Google didn’t have much traction in the cloud market when Ms. Greene joined, and she has helped the company understand how to sell to corporate customers, said Patrick Moorhead, an industry analyst. “That said, Google Cloud Platform has a ways to go before they can be looked at in the same way as Azure and AWS,” said Mr. Moorhead.

There are signs Ms. Greene is trying a new tack by getting into the market for business applications—such as human resources or customer management software. Google recently advertised for a sales manager for Bebop, the startup founded by Ms. Greene and acquired by Google in 2015, to “lead and grow the dedicated sales team for a new solution at Google.”

Once again, remember if you want to sell infrastructure, sell apps first!

also published on Medium

Published by Ed Sim

founder boldstart ventures, over 20 years experience seeding and leading first rounds in enterprise startups, @boldstartvc, googlization of IT, SaaS 3.0, security, smart data; cherish family time + enjoy lacrosse + hockey

One comment on “Apps sell infrastructure”

  1. Spot on Ed. Speed, agility and quality are a smart priority to cost however not having the deep development cost and team build out doesn’t hurt.

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