In today's LGBT+ VC Newsletter, we are excited to share market research and a thought piece by Kyle Roshankish, a member of our third cohort of fellows.
Kyle is a fourth-year student at Wesleyan University, a two-time track and field captain, and co-president of Consulting Pathways, his on-campus consulting group. Kyle is a fellow of LGBT+ VC and recently completed an internship at Volition Capital, sourcing and completing diligence for high-growth startups across B2B SaaS verticals. Prior to Volition Capital, Kyle interned at Emeritus as a global product operations intern where he implemented a knowledge management system to streamline the creation of courses offered. Before Emeritus, Kyle was a wealth management intern at Sullivan Financial, conducting cross-asset research to maximize portfolio growth during the global pandemic. He looks to graduate from Wesleyan as an economics major this May.
DEEP DIVE
The DevOps Market by Kyle Roshankish, LGBT+ VC Fellow
Tailwinds, headwinds, & the current state of the DevOps market
Introduction to DevOps
Software development began as an incredibly fragmented process. Before the creation of DevOps tools, businesses implemented a waterfall methodology, where once a team finished their portion of the project, they would hand it off to a completely separate team. With little communication, scaling IT projects efficiently and successfully became increasingly difficult. The project code was inefficient, deployment was unpredictable, and projects ran over budget and well past their timelines. The introduction of DevOps combined developer teams and operations teams under one roof to better streamline the workflow process of deploying software. Think of it as two teams, one writing and producing the software while the other monitors and alters it as needed. This is not to say all of these issues have been eliminated, but this iterative change greatly improved upon the previous system. Since its inception, DevOps startups have sought to build platforms and tools that contribute to the productivity and efficiency of software development, deployment, and maintenance, making the process less fragmented and more cohesive across the entire tech stack… And as a college athlete, I thought it was only fitting to compare DevOps software and team sports to help simplify their importance. [see thought piece below]
Market Snapshot
The DevOps market has seen significant growth, driven by the increasing need for digitization, workflow automation, and the integration of development and operational tasks. According to Markets & Markets, the global DevOps market was valued at $10.4B in 2023 and is projected to reach $25.5B by 2028, showcasing a CAGR of 19.7% during the forecast period. This growth is underpinned by the surge in cloud adoption and the shift toward digital transformation across industries.
Key Drivers
Think of your Amazon AWS, Microsoft Azure, or Google Cloud Platform as the key players in the cloud space. The public cloud segment currently has the largest market share, given its scalability and importance within a company’s tech stack, but other segments are container management, testing software, engineering optimization, and more. The demand for cloud technologies is driving the growth of DevOps as companies need faster and more efficient software delivery cycles. Gartner reports cloud computing spend will increase by 20.4% in 2024 alone, reaching a high of $679 billion. The demand for faster, more reliable digital services is at an all-time high, and customers expect seamless online experiences determined by the effectiveness of cloud technology. Artificial intelligence and machine learning, as well as emerging and ever-changing technologies, are also driving the sales of DevOps tools to help predict and solve potential issues or automate complex processes for business. For example, companies looking to track and reduce their carbon footprint can utilize DevOps tools to increase more efficient resource allocation and less wasteful processes. Furthermore, there is still tremendous human error in the development process, which can be mitigated using DevOps dashboards and analytics.
Tailwinds
Even with its tremendous growth drivers, the DevOps market faces significant hurdles. For example, cloud technologies face increasing regulatory compliance and data sovereignty demands, particularly in sensitive industries like finance and healthcare. Tight data regulations like HIPPA compliance, General Data Protection Regulation (GDPR), and Payment Card Industry Data Security Standard (PCI DSS) are proving difficult for software firms to expand their products. Economic downturns and fluctuations significantly impacted IT budgets, making it difficult for DevOps businesses to thrive. CTOs argue that investing in DevOps tools will increase technological productivity, given the inherent cost-saving and productivity-driving features of DevOps tools. Nevertheless, CFOs struggle to rationalize DevOps expenditures, especially when showcasing a compelling ROI for research and development spending is so difficult. More generally, human error also presents a potential obstacle, particularly given the pace of technological advancement outstripping formal education on DevOps functionalities.
Competitive Landscape
The competitive rivalry in the DevOps market is fierce, with major players like IBM, Microsoft, Oracle, and Amazon Web Services paving the space. Given the size of these companies, roll-up strategies are common within the DevOps space to remain a multi-tool DevOps market leader. Despite the extreme competition from the top, the threat of startups remains moderate. Partnerships, integrations, and feature accuracy remain key competitive advantages. Businesses maintain low bargaining power due to the various software tools customers demand. However, users have a high bargaining power with many providers on the market, and customers need tailored solutions for their tech stack.
Conclusion
The DevOps market is shaped by various factors, from regulatory challenges and economic pressures to technological advancements and environmental considerations. The benefits of DevOps—increased efficiency, faster deployment, and improved reliability—drive its adoption across industries. As companies navigate this landscape, they find innovative ways to leverage DevOps practices to stay competitive in the digital age.
