Splunk Sees IT Operations Demand for Observability and Hybrid Cloud

Splunk is growing as organizations continue to need the IT operations and application observability technology the company provides.

Splunk reported its fourth-quarter and full-year 2023 financial results on March 1, showing strong gains. For the year, Splunk reported revenue of $3.7 billion for a 37% year-over-year gain as the company is seeing growth from both its cloud and on-premises users.

The Splunk product portfolio includes observability capabilities that span infrastructure monitoring, application performance monitoring (APM), AIOps, and security. A core benefit of observability according to research conducted by Splunk is that it can help improve digital resilience for organizations.

Related: Observability vs. Monitoring: Who Needs Which When?

"We believe observability is a massive growth opportunity for Splunk, and we're making investments to broaden and strengthen our portfolio of enterprise-grade observability solutions that provide monitoring across complex environments," Splunk CEO Gary Steele said during his company's earnings call.

How Splunk Observability Aids Digital Resilience

On Feb. 21, Splunk released itsDigital Resilience Pays Off research report, which identified a number of key IT operations trends. The report was based on a survey of 2,100 IT leaders.

The report found that organizations have on average 240 hours of unplanned downtime per year. All that downtime comes at a cost, with the average cost of downtime per year from lost revenue and productivity pegged at $87 million.

However, the report found that organizations with advanced digital resilience capabilities save an average of $48 million per year on downtime costs compared with organizations just beginning this journey, according to Steele. 

"The importance of resilience is also evident in my conversations with chief information security officers or CSOs, who tell me that the capabilities Splunk provides are critical for the effectiveness of their security operation centers, which are facing an increasingly complex and sprawling cybersecurity landscape," Steele said.

Steele also highlighted the fact that the U.S. federal government recently signed a multimillion-dollar expansion agreement to increase its use of Splunk to ensure the resilience of critical applications that benefit more than 100 million people every year.

The State of Observability in 2023 Isn't All in the Cloud

While the cloud is widely used, it's not the only place where Splunk's customers want or need to deploy observability technology.

Steele-Splunk

Steele said that in 2023 Splunk has reaffirmed its commitment to on-premises customers. He noted that those customers had been wondering about Splunk's long-term commitment to on-premises services, and Splunk has moved to reassure them that there will continue to be releases and feature enhancements.

"One of the things we're seeing is customers willing to expand and grow their on-premises footprint," Steele said. "What we do understand very clearly is that in this hybrid world, combining cloud and on-premises is an architecture that I think we'll see for a very long period of time."

What's Next for Splunk?

Looking forward, Steele hinted at a number of new technology initiatives that Splunk will be undertaking this year.

One such new technology will be a service that will make it easier to get data from operational technology environments into Splunk. Steele said the new technology will extend the Splunk platform into smart industry segments such as manufacturing, building management, transportation, and industrials. 

Splunk could also potentially grow its portfolio via an acquisition, though Steele doesn't expect to make any large moves to acquire another company.

"We really feel like we have the right product lineup to support continuing growth both with our existing customers and in new accounts," he said.