CRN Interview: XebiaLabs CEO On Winning Against IBM And CA Technologies, Partnering With AWS, And DevOps Differentiation

Langone On The Record

Watch out IBM and CA Technologies, red-hot enterprise DevOps specialist XebiaLabs is coming off back-to-back years of more than 100 percent revenue growth with no expectations of slowing down after capturing $100 million in capital funding this week, according to XebiaLabs CEO Derek Langone.

The Burlington, Mass.-based company was named a 'Leader' in Gartner's 2017 Magic Quadrant for Application Release Automation alongside IBM and CA Technologies, with sales growing 117 percent in 2017. "We feel like if we're going to compete for new business against IBM or CA, we have a better than 70 percent chance of winning that business," said Langone, in an interview with CRN. "I feel like 100 percent growth or better from 2017 to 2018 is realistic."

Langone talks to CRN about where its new $100 million in funding will be invested, besting the competition and XebiaLabs' channel charge.

Is XebiaLabs winning market share from larger competitors like IBM and CA Technologies?

We see them quite a bit. That's the pond that we fish in – the global 5000 – that's also the installed base of IBM and CA. We feel like the architecture of our product is just more equipped to meet the requirements of enterprises. There's some pretty compelling architectural differences between our product and the IBM and CA offerings that allow us to win on technology in most cases. But really what works in our favor is the fact that, although IBM and CA are fantastic organizations, they're focus is so strained across so many different disciplines. They just can't be masters of everything. We are 100 percent dedicated to the market we serve. It's all we do and all we've ever done.

What is your DevOps differentiation?

The nature of using enterprise DevOps is still unknown. So we come in, not only with a terrific technology solution, but with the ability to really advise customers on how to be successful, how to build it from the ground up and how to take the incremental steps needed from both a technology standpoint and a process standpoint. It's getting the folks from an organization who are used to doing something one way for the past 10 years, to get them to quickly shift and do things a little differently and see the benefits quickly. That gives us an advantage. For the most part, we feel like if we're going to compete for new business against IBM or CA, we have a better than 70 percent chance of winning that business.

Explain your partnerships with the likes of AWS, Puppet and Docker?

Those are all complimentary technologies to ours. So AWS gives you ready-to-go infrastructure, but you've got to get your applications on to that infrastructure. AWS gives you some basic technology to be able to do that, but the level of sophistication and complexity of most of our customers and the applications they use far outstrips what AWS can give you for a lift-and-shift technology. So we fill that gap. We enjoy the partnership with AWS and, essentially, they're happy because we streamline the process to get big applications onto their infrastructure. We're happy because when they engage with a client that has too big of a project, they refer them to us and we engage with them to use our technology as the mechanism to get them to AWS.

Where do you plan to invest your newly acquired $100 million?

We're looking for opportunities where we feel like we're thin or opportunities for a new growth level. Largely, it will be put into engineering to basically give ourselves more horsepower so we can innovate faster and get further ahead of our customers' requirements. We do a good job to meet the requirements of large enterprises relative to their use of enterprise DevOps. We have the bases covered for compliance, and security, and regulated environments in a very sophisticated IT landscape that ranges from mainframes to the newest containerized applications. But we see that the needs of enterprises are evolving very quickly and we want to make sure we keep pace, and ideally get ahead of that demand and requirements so we're able to help customers really accelerate their journey.

Where else, other than engineering, will you invest in?

We're going to add a lot more headcount and level of sophistication to our partner program to make sure we're going out and courting newer partners and supporting the partners we have.

We're really trying to build scale through partners and really grow our business both from a technical capability standpoint as well as a go-to-market and revenue standpoint with partners as aggressively as we can.

Are planning to onboard many new channel partners in 2018?

Yes. We build a business in a sort of repeatable, scalable model through mostly direct selling, but really a lot of the $100 million funding will go towards building out our alliance strategy. So that's both on the reseller-referral side – so we've got partners in that scope that are big systems integrators like Capgemini and Accenture – down to more specialized resellers that focus on developer technologies and enabling organizations to streamline the way they build and deliver software. Then on the other side of the balance sheet, technology partners. We have a lot of connection points to other technologies that are required in order to have enterprises move software from development to production.

What type of channel partners are you seeking?

We're looking for partners that are selling complementary solutions. So partners that sell things like application performance monitoring, automating testing, or continuous integration. Some of the technologies that are a part of the journey from development to production, those are good partners for us to align with. It's a great equation for those partners as well because they'll have a new set of valuable technology to introduce to their customers.

Also the big systems integrators that are looking for technology solutions to streamline the work they do with their big clients, giving them our technology to be able to streamline how they help their clients achieve enterprise DevOps, or cloud migration, or migration to containers, and just sort of evolve their IT landscape.

Do you expect to increase annual revenue by over 100 percent in 2018?

Yeah. We've had similar triple-digit growth from 2015 to 2016 as well. We've been on a great trajectory of growth. I'd love to take credit for all of that, we've made some smart moves as an organization, but the reality is that the market shifted favorably for us. Big organizations have now realized, 'I have got to implement a more streamlined strategy for getting my applications, which have become critical to my business and really the conduit by which I reach my customers, I've got to get more organized in how I build and deliver them.'

It sounds simple, but when you're the size of Bank America and you have 2,500 applications that you use to run your business and it costs you $250 million a year to build those applications -- it's a massive undertaking to put some streamlining and standardization in place. We really make that easy.

What's your message to the channel?

We're a fun company in a really interesting and important space. It's not as trendy as big data or cloud computing, but if you think about the average bank in America spending $250,000 building software to run the bank -- which has absolutely nothing to do with lending money, which is their core business -- we're taking a big chunk out of that expense and making it that much more efficient. That is what's going to give us longevity for the future. The same problem that those banks have, airlines have, and retailers have, and healthcare organization have. They're really trying to figure out how to lower their expenses and deliver more value to their own customers through software. It's mission critical. … The market is just now really starting to accelerate and it's growing exponentially. So I feel like 100 percent growth or better from 2017 to 2018 is realistic.