Splunk Goes Down Market--Good Move Or Sign Of Weakness?

Splunk was one of the early kid of the block in terms of publicly listing a big data company. Their timing was good, the amount of competition in their space is far greater now than it was when they launched. But getting their IPO away was one thing, returning sufficient growth to keep Wall Street happy is another and today sees Splunk launch an initiative aimed at targeting that growth, a new, lighter weight offering for smaller businesses.

For those unaware of the company, Splunk provides a software platform for real-time operational intelligence. What that means beyond the buzzwords is that using Splunk, organizations can aggregate all of the machine-generated data their IT systems product and run analytics over the data to identify patterns alongside visualizing that data in an easily digestible format.

Splunk has already enjoyed success with large organizations - it boasts of 9,000 customers across large enterprise, universities and service providers, but it has always been out of reach to smaller organizations. This is changing with today's announcement. The new product, starting at $75 per month, looks like a more directly competitive product to some of the lighter-weight logging products - Loggly, SumoLogic etc. In terms of what the product offers, the primary value proposition is its affordability, the product, priced monthly but billed annually, promises to be up and running within customers' operations rapidly and includes a smooth transition to Splunk's full-blown enterprise offering - something that the smaller vendors obviously cannot offer. As such this is something of a business development tool (and, hey, at least they don't need to give the starter product away for free). Splunk is giving customers the following in the package:

Real-Time Log Search and Analysis

• Universal collection of log data regardless of format or location
• Monitoring and alerts
• Reports and dashboards

I put it to Splunk spokespeople that perhaps this is an indication that they're not getting the traction within larger enterprises that they hoped for. They pointed to operating results to negate that view - the company just announced one of its most successful quarters in history which saw, in addition to the 600 new customers in Q4, Splunk reaching $450.9 million in revenue in its fiscal 2015 year and ended the past quarter with a 49% increase in year-over-year results.

It's an interesting move for Splunk and it will be fascinating to watch it play out. On a much broader note, I'm starting to wonder about these standalone tools that derive insights from machine data. Insights are great, but without the ability to actually operationalize some outcomes from those insights, it strikes me that we're only seeing a small part of the puzzle. Far better, in my view, a logging and analytics solution as part of a broad infrastructure management platform.