Observability Tools and Platforms Market

[210 Pages Report] The observability tools and platforms market size is expected to grow from USD 2.4 billion in 2023 to USD 4.1 billion by 2028, at a Compound Annual Growth Rate (CAGR) of 11.7% during the forecast period. The impact of the recession (before and after recession) on the market is covered throughout the report. Our modern-day lives are overfilled and loaded with new latest digital developments. The growth of remote-access strategies, such as SASE architecture (Secure Access Service Edge) that combines security and optimized network performance, driving a need for independent, unified observability that preserves great user experience regardless of location drives the observability tools and platforms market.

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Recession Impact on the global observability tools and platforms market

With the recession threat looming over the US, chief information officers are reexamining their budgets to save expenditures. According to the Morgan Stanley analysis, cloud computing, security software, and digital transformation would remain top objectives for CIOs in such a situation. The impact of the recession on the observability tools and platforms market in North America is likely to be severe as the US and Canadian economies are expected to dip in 2023 compared to 2022. A recession might affect Europe’s infrastructure markets, which are already hampered by transportation issues and a shortage of components. Increasing interest rates will force companies to reduce bank loans, allowing slow demand for infrastructure. According to the South China Morning Post, China faces external headwinds ranging from debt shocks in the developing world to monetary policy spillovers from the United States. In contrast to several countries worldwide, Saudi Arabia’s economy is anticipated to grow this year quickly. The country’s gross domestic product is predicted to grow by 7.6%, with inflation at 2.8% in 2022. Middle Eastern economies have not been as hard hit by the crisis because they are not as integrated into the global economy and have fewer ties to international financial institutions. However, they will probably experience side effects like higher unemployment and further decline in living standards due to reduced capital flows.

Observability Tools and Platforms Market Dynamics

Drivers: Growing adoption of hybrid cloud and multi-cloud strategies across enterprises from different industry verticals

With the emergence of several cloud service providers, the market has become highly competitive, thereby offering end users numerous options to choose from. Enterprises need to ensure they have the flexibility to port applications between different providers. End users opt for cloud offerings from different sources to avoid vendor lock-in. For instance, enterprises adopt public cloud services from vendors, such as Amazon, Microsoft, and Google, to store trivial data, while private cloud or on-premises systems are preferred for storing confidential data. Thus, observability tools and platforms simplify the management of a multi-cloud and hybrid environment without compromising control over critical resources and tackles vendor lock-in.

Restraints: Difficulties involved in application portability

Observability tools and platforms vendors manage and regulate automation along with cloud operations according to the desired alignment across different cloud environments. This enables enterprises to govern and manage different cloud services efficiently and save time and money on planning and provisioning. However, the ability to provision and de-provision public cloud services does not provide application portability, which could be defined as the ability of programs to run on different cloud environments without being installed. Cloud vendors may face limitations while transferring workloads from one cloud ecosystem to another. As a result, workloads get locked into a single cloud provider on which it is built. Hence, moving workloads or applications from one environment to the other while maintaining optimum performance and cost-efficiency become major restraints for cloud vendors.

Opportunities: Emergence of hybrid cloud infrastructure

Technological advancements are expected to raise the observability tools and platforms market growth opportunities. The launch of a hybrid cloud infrastructure will provide exceptional benefits to the market. The adoption rate of the hybrid cloud platform will be immense during the forecast period. The low initial cost is one of the crucial aspects that increase the hybrid cloud adoption rate. SMEs are expected to have demand for hybrid cloud infrastructure. The flexibility, scalability, efficiency, and high-end features will attract a wider customer base. The setup and maintenance costs are lower for hybrid cloud management. The hybrid cloud comes with workload management. The security standards are high in the new-age cloud infrastructure. DevOps integration is one of the featured developments in a hybrid infrastructure. With high growth opportunities, the profitability of the market will be massive during the forecast period. More than the launch, the adoption of cloud management will be advantageous to overall market growth. Large enterprises, IT companies, healthcare, and retail are the key end users expected to adopt hybrid cloud platforms.

Challenges: Complexity in network design brought on by cloud and security concerns

High-security issues and distributed denial of service attacks are the major challenges for cloud management platforms. The lack of visibility pushes public security cloud and can lead to unauthorized access to data, improper handling, and duplication of data leading to the deletion of confidential data from infrastructure. In addition to these, the designing of networks from on-premises to the cloud needs high investment, which is one of the major challenges for small and medium-sized enterprises that have small budgets. Complexity in designing the cloud platform hinders the growth of the observability tools and platforms market.

Market Ecosystem

Based on component, services segment to hold the higher CAGR in the observability tools and platforms market during the forecast period

The major driver for the growing Observability services market is considered to be an immensely growing user-centric and infrastructure-centric approach for managing IT performance and organizations’ interest in monitoring IT services for mobile users. The services constitute an integral part in deploying the software in the company’s infrastructure, imparting training, and handling and maintaining software and solutions. Companies offering these services encompass consultants, software experts, and dedicated project management teams specializing in designing and delivering critical-decision support software, tools, and services.

Based on deployment type, public cloud segment to hold the larger share in the observability tools and platforms market during the forecast period

Performance monitoring of cloud, cloud-based services and solutions, and testing tools assist organizations in gaining visibility into their cloud environments by assessing performance using specific metrics and techniques. Efficient cloud performance monitoring is critical for ensuring business continuity and providing access to cloud services to all relevant parties. This holds true for basic public cloud usage and complex hybrid cloud and multi-cloud architectures. Enterprises use a public set of resources to deliver standardized, highly automated offerings. A service provider owns compute resources, storage, and networking capabilities, which are offered on demand with limited SLAs for tenancy, isolation, and performance. Organizations can gain visibility into the performance and stability of their cloud-based infrastructure, services, applications, and connectivity by using public cloud monitoring. Cloud monitoring tools collect data from hybrid and multi-cloud deployments and report it to network teams through alerts and reports.

Based on vertical, BFSI industry holds the largest market share in the observability tools and platforms market during the forecast period

In today's fast-paced world, where technology drives business operations, having a mission-critical infrastructure having the ability to manage voluminous transactions is mandatory. With regulatory requirements such as outages being reported to SEBI (Securities and Exchange Board of India) within half an hour and strict SLAs (Service Level Agreements) in place, implementing and embedding agility and observability into processes and infrastructure is an integral part and an inevitable necessity. Financial services are largely banking on data observability. For instance, Walmart’s PhonePe, a leading P2P (peer-to-peer) payments company, employed Acceldata’s Data Observability platform to monitor their HBase clusters and detect issues that could potentially arise in near future owing to hardware failure or poor table designs. This has helped the payments company with more than 350 million active subscribers to execute over 2 billion successful transactions only in a month’s time. Data Observability provides an assurance cover to the data pipeline by assessing the data quality and alerting businesses in the case of a potential data downtime(s). It is noticed that at times, data can be incomplete, inaccurate, erroneous or outdated. And data fire drills, an entirely manual process, can be cumbersome and costly. Data Observability solution helps enterprises in the BFSI vertical to scale data and analytics platforms by identifying performance and operational bottlenecks (fixing it), cost reduction and resource overruns by providing operational visibility, guardrails, and proactive timely alerts, and maximizing data quality while minimizing data outages by monitoring data reliability across frequent transformations.

North America to hold the largest market share in the observability tools and platforms market recording the third highest CAGR during the forecast period

The observability tools and platforms market in North America has been studied for the US and Canada. The adoption of observability tools and platforms solutions is expected to be the highest in North America compared to other regions. North America, being technologically advanced and developed, is the leading market in terms of developing cutting-edge technologies used in monitoring and tracking devices. Further, the rising expenditure of companies and individuals on digital solutions and advanced technologies boosts market growth. The significant adoption of technologies over the years has fueled the adoption of multi-cloud and hybrid cloud environments across the region. North America is a mature market owing to the presence of numerous players offering observability tools and platforms solutions and services. Moreover, enterprises are increasing their budgets to accommodate observability platforms solutions, which is favoring the growth of the market in the region.

Key market players

The observability tools and platforms market is dominated both by established companies as well as startups such as Dynatrace (US), ScienceLogic (US), LogicMonitor (US), Auvik (Canada), New Relic (US), GitLab (US), AppDynamics (US), SolarWinds (US), Splunk (US), Datadog (US), Sumo Logic (US), Monte Carlo (US), Acceldata (US), IBM (US), StackState (US), Nexthink (Switzerland), Riverbed (US), Broadcom (US), Lightstep (US), Microsoft (US), Atatus (India). These vendors have a large customer base and strong geographic footprint along with organized distribution channels, and incorporate both organic and inorganic growth strategies including product launches, deals, business expansions, which boosts them in revenue generation.

The study includes an in-depth competitive analysis of these key players in the observability tools and platforms market with their company profiles, recent developments, and key market strategies.

Scope of Report

This research report categorizes the observability tools and platforms market to forecast revenue and analyze trends in each of the following submarkets:

Based on the Component:

• Solution
• Services

Based on the deployment type:

• Public Cloud
• Private Cloud

Based on the Verticals:

• Manufacturing
• Energy & Utilities
• Government & Public Sector
• IT & Telecommunications
• Retail & Consumer Goods
• Healthcare & Life Sciences
• Other Verticals (Education, Transportation & Logistics, Travel & Tourism)

Based on Regions:

• North America
  • United States
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Middle East and Africa
  • United Arab Emirates (UAE)
  • Kingdom of Saudi Arabia
  • Rest of Middle East and Africa
• Latin America
  • Brazil
  • Rest of Latin America

Recent Developments

• In May 2023, Dynatrace collaborated with Red Hat, and with this deal, customers using Red Hat Ansible Automation Platform have the capability to integrate AI-powered insights and action from Dynatrace with Event-Driven Ansible to automate a broader range of DevSecOps use cases, including closed-loop issue and security remediation, application healing, and incident response. This supports platform engineering, DevOps, and security teams enhance and mature their automation practices in order to deliver flawless and secure digital experiences for their customers.    
• In May 2023, New Relic launched Grok which is New Relic’s AI observability assistant. With Grok, engineers can sift through data more easily and treat well through their unified telemetry data without having to write complex queries.
• In February 2023, Dynatrace launched AppEngine, a new Dynatrace® platform technology that empowers customers and partners with an easy-to-use, low-code approach to create custom, compliant, and intelligent data-driven app(s) for their IT services/solutions, development, security, and business teams. These custom apps [Smartscape® Health View, Site Reliability Guardian, Carbon Impact] can address boundless BizDevSecOps use cases, while unlocking the wealth of insights available in the massive amount(s) of data generated by modern cloud ecosystems. 
• In October 2022, ScienceLogic acquired ML analytics firm Zebrium to automatically detect the root cause of complex, modern (containerized, cloud-native) application problems. This deal drastically reduces the time taken to identify, diagnose and resolve business-service impacting issues, lowering IT costs, and delivering superior customer and employee experiences.
• In October 200, Auvik acquired Saaslio and Boardgent. With this deal, Auvik will provide a unique toolset to enable IT professionals gain more control, visibility, and troubleshooting capabilities over the new last mile of the office network. It is believed that the combination of the firms’ deep expertise in network monitoring and management, experienced workforces, proprietary technologies, and innovative solutions allow the unified company in delivering the ultimate network monitoring platform.

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