DECISION MATRIX Decision Matrix: Selecting an Application Lifecycle Management Vendor Selecting an ALM suite provider in a fragmented market Reference Code: OI00068-002 Publication Date: March 2011 Authors: Chandranshu Singh, Tony Baer, Michael Azoff SUMMARY Catalyst As software development environments become increasingly complex and IT organizations continue to face budget pressures, application lifecycle management (ALM) solutions become part of the toolset necessary to manage development environments and distributed teams, and to ensure timely delivery of increasingly complex application software in a resource-efficient way. Ovum has developed this Decision Matrix report to help enterprises select the most appropriate ALM vendors based on technology strength, reputation among the ALM user community, and presence in the market. Ovum aims to provide a complete view of vendor capabilities, and advises on which vendors enterprises should shortlist, consider, and explore. Ovum view Delivery Management is increasingly gaining prominence to address growing software reliability concerns. HP, IBM, Microsoft, and MKS occupy the high end of the market and are the top overall performers. Decision Matrix: Selecting an Application Lifecycle Management Vendor © Ovum (Published 03/2011) Page 1 This report is a licensed product and is not to be photocopied HP and MKS have moved to the "shortlist" category since Ovum’s last Decision Matrix: Ovum believes HP's latest offering, HP ALM 11.0, with the leading position in the software quality management market, makes the company a formidable force in the ALM market. MKS advanced on the strength of its integrated platform and reach into the specialized, highly lucrative segment of the ALM market: embedded software in product automation and systems engineering. Atlassian, CollabNet, and ThoughtWorks Studios are smaller vendors with impressive ALM suites. Rally’s, Polarion’s, and TechExcel’s respective market positions have improved since the 2009 Decision Matrix report. Micro Focus is the sleeping giant of the ALM space. Key messages With economic recovery under way, organizations look for additional value from ALM investments. Regulatory Compliance and Agile adoption remain major drivers of the fragmented ALM market. SaaS, as a business model and an application delivery model, has had pockets of success, and ALM is one of these. Software development for mobile devices and embedded software development are red-hot areas. Application security, previously an overlooked area, has been prioritized by vendors such as HP, IBM, and Microsoft. ALM vendors are struggling to respond to the DevOps movement. Change and configuration management (CCM) functionality has been commoditized by popular open source tools. Decision Matrix: Selecting an Application Lifecycle Management Vendor © Ovum (Published 03/2011) Page 2 This report is a licensed product and is not to be photocopied MARKET DEVELOPMENTS With economic recovery under way, organizations look for additional value from ALM investments Since Ovum published its last application lifecycle management (ALM) Decision Matrix report in June 2009, the largest geographic markets for enterprise IT have gone through a severe economic downturn. Predictably, the downturn led to large-scale IT initiatives being shelved, and ALM was no exception. This downturn has again brought the age-old problem of better management of software development processes to the fore. It is common knowledge that IT projects often suffer with budget and schedule overruns and delivered functionality not meeting business requirements. Given the frequency of project failures, organizations have done well to look at alternative approaches to managing software development. The focus is not just on better execution of the traditional software development lifecycle (SDLC) from requirements to release, but also on areas such as application performance management, application security, and bridging the gap between development and operations. Furthermore, emergent solution delivery channels such as SaaS ALM have gained traction in the market. Although the overall ALM market has not grown appreciably in the past year, there are hot spots in areas such as Agile planning, complex/embedded systems development, and expanded take-up of tool offerings through the cloud. Spend rationalization has led organizations to look at ways to both maximize the benefits of existing ALM tool investments by re-examining their development processes, and to explore less capital-intensive options such as open source, cloud-based ALM. Additionally, organizations are keen to break up the siloed IT environment and bring the development function closer to the customer- or business-facing disciplines (or both) such as IT service management, with the overall goal of reliable and secure IT services and applications. On the supply side there is an overall trend towards broader integration, driven by the opportunities to upsell and to be the strategic tools provider that becomes the customer’s focal point for third-party tool integration. There is also growing support for enhanced collaboration and globally distributed development. Regulatory compliance and Agile adoption remain major drivers for the fragmented ALM market Research reveals that regulatory compliance across industry verticals is a leading driver for the ALM market. Compliance efforts lead to ALM adoption in two ways. Firstly, such initiatives necessitate changes to various business processes and application software that need to be Decision Matrix: Selecting an Application Lifecycle Management Vendor © Ovum (Published 03/2011) Page 3 This report is a licensed product and is not to be photocopied managed at enterprise level. This could mean hundreds or even thousands of application change requests for the development team. Projects of this scale require concerted effort across the organization and involve multiple stakeholders. The need for end-to-end visibility into the lifecycle that spans multiple projects and departments creates a strong case for ALM adoption. Secondly, organizations view ALM as an effective tool for strengthening the governance of development processes themselves. This is because ALM enables organizations to trace business requirements throughout the development lifecycle and further on to application code running in production environments, which creates audit trails for all process artifacts, tasks, and development team members. The software development landscape has shifted in favor of Agile development practices. However, the hype around Agile has died down, and organizations now take a pragmatic approach to Agile – there is no single, pure Agile implementation in practice. Therefore, Ovum now sees hybrid environments in which the development methodology adoption is governed by the constraints of the project. Meanwhile, Agile practices also continue to evolve as organizations pick Agile elements that best suit their requirements, such as continuous integration, test-driven development, and (electronic) whiteboards. Agile has also given impetus to related management practices such as Lean and Kanban. These techniques, Kanban in particular, have resonated well with the market, and vendors have followed up with tools to support these processes. Another crucial factor is the availability of skilled and experienced developers. Since its inception, the Agile movement has been led by developers who have wanted lightweight processes that facilitate software development without hindering developer creativity. Thus, organizations faced with skills shortages have not had much success with Agile. Agile ALM vendors have seen significant traction in the market; however, this is not based solely on the rapid rate of Agile adoption. It also has to do with the vendors being agile themselves and offering holistic solutions that couple products supporting Agile with superior customer support and end-user training at an attractive price. On a different note, Ovum expects that the recent consolidation activity in the Agile ALM market will continue, and the functionality offered by various Agile ALM tools will converge. Overall, the market for ALM tools remains fragmented along several fault lines. (See Figure 1.) On the demand side, factors such as the organization’s size and the complexity of the IT environment play an important role in determining buying behavior. The bottom end of the market includes many small and medium-sized enterprises (SMEs) and freelance developers, development teams with 10 members or less, and consultants. This segment typically has highly skilled developers who can work alone or in small teams, and prefers Agile methodologies and open source software. The next stratum is comprised of medium to large organizations that often look at ALM from a cost Decision Matrix: Selecting an Application Lifecycle Management Vendor © Ovum (Published 03/2011) Page 4 This report is a licensed product and is not to be photocopied containment perspective. ISVs are a special case, with presence across all size bands large, medium, and small; here developer productivity and tool interoperability remain key issues and, predictably, open source software is used heavily. Large, globally distributed enterprises are at the top of the pyramid; these organizations have existing and ongoing investments in ALM tools and rely heavily on advanced requirements engineering processes. This continues to be the most lucrative segment for ALM vendors in