How fast can Splunk diversify from IT ops?

Today most of Splunk's revenue runs through IT operations, but the company is landing higher level conversations and becoming more of an analytics play.
Written by Larry Dignan, Contributor on

Splunk is known as a big data analytics play, but 90 percent of its business is tied to monitoring and capturing information technology log files of various flavors. How the company diversifies into uses beyond core monitoring will be key to its growth prospects.

The company, which reported solid earnings on Thursday, outlined a bevy of interesting use cases.

  • An online gaming company is using Splunk to analyze how customers are arbitraging their betting.
  • A automaker is using Splunk to analyze output from their electric cars.
  • iRhythm, which makes medical devices, is indexing data from patient uses, defects and compliance.

Those stories about Splunk uses, which revolve around the big data story, are the future of the company and its platform. For now, Splunk is really about monitoring IT operations. IT operations accounted for 30 percent of Splunk's revenue in the first quarter. IT operations, applications management and security account for 90 percent of Splunk's revenue.

Splunk's conference call on Thursday was the first one where the case studies highlighted all went beyond its core IT operations market. The shift is notable because if Splunk can expand beyond its IT manager audience the growth potential is great. Splunk can start working non-IT executives and verticals.

Will Splunk expand beyond IT operations? Probably. Splunk CEO Godfrey Sullivan outlined the way the company's technology works its way into customers' ecosystems.

  1. First, Splunk is in for IT operations.
  2. Then, there's a data boom with terabytes of information and Hadoop. 
  3. C-level execs start asking what else Splunk can do. 
  4. Splunk works its way into enterprise architectures. 
  5. Splunk's technology finds more uses.

Sullivan said:

I see this as a very interesting time for us as we move from being an IT search vendor to operational intelligence in the category we've been trying to define and create, is actually starting to emerge, more and more people are writing about it, we're being invited into C level conversations and the like. So it poses challenges for us because the use cases tend to be very different, just like the operational side of business intelligence has a lot of diversity to it.

In other words, Splunk is becoming more of an analytical engine. "A year ago we were meeting with departmental managers and our champions. This year most of the meetings are at the CTO, CIO or VP of engineering level as Splunk is expanding from core IT to mission critical operational analytics," said Sullivan.

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