A new CloudBees CEO took the lead this week, saying that delivering software through CI/CD tools like the ones the company sells has never been more important to businesses.
But the challenge Anuj Kapur will face, according to industry observers, is that enterprises have never had more CI/CD product options, including from newer vendors that have outpaced recent growth of CloudBees at a $1 billion valuation.
“I spent a lot of time in our AppDynamics business when I was part of Cisco really understanding the criticality of software and applications to the innovation agenda for Global 2000 organizations,” said Kapur, who was named president and CEO. on CloudBees. Previously, he worked as president of corporate development and strategy at SAP from mid-2020 to September 2021, and he served as chief strategy officer at Cisco from 2018 to 2020.
“Software can define an organization, or competitors’ software can destroy the organization … criticality has never been greater,” Kapur said.
Kapur’s predecessor, Stephen DeWitt, joined the company in February 2021 and will step down at the end of May 2022. DeWitt cited personal reasons for his departure in a blog post in early June.
Kapur said he expects his priorities in his first 30 days as CEO to be very similar to those laid out by DeWitt last year: accelerate product innovation, strengthen the company’s marketing strategy, achieve geographic expansion and measure the company’s global operations.
Under DeWitt, the company added 200 more employees, and its annual recurring revenue (ARR) grew from $100 million to $125 million. In December, CloudBees raised a $150 million series F round of financing at a $1 billion valuation.
DeWitt also highlighted plans for acquisitions. These resulted in the company’s purchase of UK-based stealth compliance automation startup Neuralprints, which became the basis of the CloudBees Compliance product.
Kapur did not rule out further M&A, but declined to specify revenue growth targets or in what direction he plans to push the development of new products upon his arrival. Kapur said DeWitt’s previously stated goal of a CloudBees IPO is “possible,” and the company will reveal more details about its product direction at its annual DevOps World conference next month.
The battle continues in the CI/CD market
Some industry observers have pointed out that younger competitors in the CI/CD tools market, including GitLab and Harness.io, have reached $1 billion valuations faster than CloudBees. GitLab was valued at $1 billion in September 2018 after seven years of operation; Harness will be valued at $1.7 billion in January 2021 after three years in business.
By comparison, it took 11 years for CloudBees, founded in 2010, to reach that milestone.
“Their tech debt is enormous,” said former Air Force and Space Force Chief Software Officer Nicolas M. Chaillan, now an independent consultant and member of several IT vendors’ advisory boards, including Harness. “It will be a big step up for them to compete with the likes of Harness, Weaveworks and GitLab.”
Chaillan said he was also invited to join the CloudBees Customer Advisory Board but declined. “I didn’t see them willing to listen and change,” he said.
Kapur says he is familiar with the “technical debt” criticism.
“I come from companies that are all at least 25 years old, and the most natural argument against [them from] companies that are less than five years old tech debt will effectively take you down,” he said. “If that’s the case, no company will make it past five years of operation and past $100 million in ARR.”
CloudBees’ target audience of large enterprises must contend with legacy applications and technical debt of its own, where Kapur sees many opportunities for CloudBees to apply its deep understanding of the legacy burden to help in modernizing IT operations.
“I was the executive sponsor for a major bank at Cisco, and they said, ‘100% of our revenues flow to 4,000 applications, and if you ask what percentage of those applications are containerized, truly cloud-native , truly multi-tenant across the board. multiple cloud environments, our guess would be 5%,'” Kapur said.
“Maturity varies across verticals, across companies within those verticals, and especially across geographies,” he added. “So I’m probably not going to over-index on the message coming from the best or hottest, most richly funded startups in the cloud-native space.”
CloudBees looks to lead businesses out of the legacy mire
This approach resonates for some organizations, such as the Department of Defense, where Jenkins is already a familiar tool.
“We have customers within the Department of the Navy that we support that use open source Jenkins and are also looking at other products,” said Rob Slaughter, CEO of defense contractor Defense Unicorns.
These products include GitHub, GitLab and Harness in addition to CloudBees, but Slaughter echoed Kapur’s point about the increasing criticality of software delivery through CI/CD tools. This means that organizations that previously only experimented with open source are now in the market for business support, he said.
“More and more organizations accustomed to using open source Jenkins are starting to look for supported alternatives,” Slaughter said.
However, CloudBees is also not alone in its commitment to meet established enterprise companies where they are — on-premises, with legacy apps and infrastructure to contend with — and usher them into the cloud-native era. That has been an IBM/Red Hat specialty for years, and an important part of VMware’s strategy. Other established IT vendors that previously focused on areas outside of CI/CD pipelines, such as ServiceNow, are starting to add support for them. Early movers in the Agile/DevOps era that started with on-premises software, such as Atlassian and HashiCorp, are increasingly focused on delivering cloud-based services.
A critical time for CloudBees software, and implementation
As enterprise software delivery practices mature and vendor competition increases, some vendor attrition has accompanied market growth. Previous IT automation winners, such as Puppet and Chef, have been acquired over the past two years following multiple strategy and executive changes unlike CloudBees’.
Too much change at the top could be cause for concern, analysts warn.
“Executive change at a rapid pace is never good in a rapidly changing space like DevOps,” said Larry Carvalho, an independent analyst at RobustCloud. “The success of other companies may be a reflection of consistent execution without turnover at senior levels.”
Still, CloudBees is well-funded, with an established customer base, and Jenkins still has great name recognition among businesses just starting to explore DevOps and digital transformation, said Jim Mercer, an analyst. in IDC.
“The blessing of Jenkins is that you already have customers, but the curse is that some people see you as a legacy vendor, and you have to prove them wrong,” he said. “At the end of the day, [executive changes like this] may be just a blip in the path, but they have to deliver — they can’t afford to wait.”
Challenge accepted, according to Kapur.
“The level of excitement I feel in the company is greater than I think the market is giving us credit for, and that’s OK,” he said. “I’d rather be underestimated than overestimated.”
Beth Pariseau, senior news writer at TechTarget, is an award-winning veteran of IT journalism. He can be reached at [email protected] or on Twitter @PariseauTT.