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The 2023 Observability Market Map – Key Trends, Players, and Directions

June 19, 2023
Written by
Nick Heudecker's Image

Nick Heudecker leads market strategy and competitive intelligence at Cribl. Prior to join... Read Moreing Cribl, he spent over seven years as an industry analyst at Gartner, covering the data and analytics market. With over twenty years of experience, he has led engineering and product teams across multiple successful startups in the media and advertising industries. Read Less

Categories: Events

Cribl has a unique position right in the middle of the observability market, giving us a distinct view of all things security, APM, and log analysis. Observability as a concept has exploded into specialized areas over the past two years, and making sense of the players and market forces, particularly in a difficult macro environment, can be tricky. Let’s break it down.

Budgets Frozen and Short Handed

While data continues to experience rapid growth, organizations are facing a significant disconnect as their budgets fail to keep pace with this expansion. The traditional approach of simply accumulating data within existing analysis systems is proving insufficient in terms of scalability, technological requirements, and staffing capabilities. Consequently, costs are escalating, and the hunt for skilled employees becomes increasingly challenging, exacerbating the disparity between budgets and the essential needs of security and IT professionals. This prevailing trend has become a central theme for 2023, prompting CISOs to embark on a quest for unexplored opportunities in the realm of observability—a quest akin to seeking a “blue ocean” where they can navigate uncharted waters and find effective solutions.

The Current Observability Landscape

The observability market is a rapidly changing space, with many new companies looking to help manage enormous amounts of data and the security threats they pose. It’s hard to fully encapsulate, but here’s one way to envision the current landscape:

Source: Cribl 2023

Logging and Monitoring

Moving clockwise from your traditional SIEM and XDR tools, you’ll find Logging and Monitoring vendors, many of which also have a finger in the security pie. As we go deeper into 2023 and beyond, you’ll see more and more convergence between security and observability practitioners. They’ll likely come together around tools and data as opposed to practices — taking the same data and sending it to multiple places, whether it’s a SIEM, somewhere else on-prem, or to the cloud.

Model and AI Observability

Model and AI Observability will be an interesting area of growth over the next couple of years. As more and more companies dive into AI solutions, they’ll want some insight into how those black boxes are actually working.

Data Observability and AI OPS

There is a lot of new funding in the Data Observability (not to be confused with observability data) space for startups supporting the concept of a modern data stack. Helping organizations figure out how to get data into tools like Snowflake and Redshift — or give them insight into how their analytic data pipelines perform and why they break — has proven to be a great way to get funding in 2023.

AIOps companies like Stack Slate, PagerDuty, and BigPanda are helping IT departments and security teams around automation and coping with staffing challenges due to the overwhelming volume of alerts they’re dealing with.

Application Performance Monitoring

The application performance monitoring (APM) space seems ripe for innovation as well. Chronosphere, an organization specializing in metrics, recently landed a $115m Series C funding round.

Several other companies have taken advantage of some new standards and capabilities and put a new edge on APM. The real differentiator over time in APM will be around pricing considerations, like how vendors charge to monitor any given server.

Edge Observability, Network Observability, and Observability Pipelines

Edge automation and data collection are some of the interesting things happening in Edge Observability — which Cribl also has its hands in with our Cribl Edge observability agent. Network Observability seems to be gaining a lot of steam with the growth of software-defined networks that span from home offices into multi-cloud environments, and the need to understand the security of those networks.

Observability Pipelines are right in the middle of the map because they connect all of these different components. There aren’t a whole lot of vendors in this space today, but given the value proposition of pipelines, you’re going to start to see more and more companies moving into it.

What is Driving the Observability Market?

One major factor is funding — since 2021, over $1.7 billion has been raised by a mix of observability, security, and APM firms. Seed rounds have been fairly easy to come by, but growth funding is a different story. A lot of the available funds have shifted to the generative AI space as well, which seems to be all the rage nowadays, so you’re likely to see a lot more acquisitions in the near future.

Another thing driving the observability market is the availability of new standards and technologies like Open Telemetry (Otel) and extended Berkeley Packet Filter (eBPF). Otel has opened the door to a lot of new APM vendors like Honeycomb — I’m still an Otel skeptic, but companies are taking advantage of the opportunity to capitalize on it nonetheless.

Even with the increase in funding and new technology, data growth is still the main driver behind the explosion of the observability market in recent years. Data is expected to grow at a 23% CAGR through 2025, a percentage that is comically low for many organizations. I’ve spoken to a few clients in the last year who said they dream of only a 23% growth, and that the real number was double that, or more.

Be sure to watch the full webinar on the 2023 Observability Market Map to learn more about how all the players in the observability market fit, interact, and compete. First, I’ll share my recommendations for where to focus observability efforts to get the most value from your data and the tools you use to manage it,. Then we’ll discuss what will happen with the trend towards the cloud and how staffing challenges and AIOps will affect the way organizations operate.

 


 

Cribl, the Data Engine for IT and Security, empowers organizations to transform their data strategy. Customers use Cribl’s suite of products to collect, process, route, and analyze all IT and security data, delivering the flexibility, choice, and control required to adapt to their ever-changing needs.

We offer free training, certifications, and a generous free usage plan across our products. Our community Slack features Cribl engineers, partners, and customers who can answer your questions as you get started. We also offer a hands-on Sandbox for those interested in how companies globally leverage our products for their data challenges.

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