In 2019, we called out Splunk as a disruptive supplier (with a specific focus on security in the financial services industry) in our "Thrive Ultimatum" Series as one of the Top 10 Disruptive Technologies to watch.
In 2021, we named Splunk as the #2 technology supplier to watch - largely predicated on its growth in the enterprise space as a tool for searching, monitoring, and otherwise deciphering the growing amount of machine-generated data via its slick web-style interface.
Although there has been some turmoil in the executive ranks, and the stock took a serious hit (just recently posting a 52-week low) in Q4 2021 after CEO Doug Merritt stepped down (no reason given), which came only 7 months after CTO, Tim Tully, resigned, annualized revenue for its fiscal year ending 31 Jan is expected to increase significantly, and cloud-based revenues are expected to be up disproportionately, so those are good signs of the continued market acceptance of Splunk.
Having said that, this space is extremely crowded with highly funded and capable competitors, so the long-term success of Splunk is still not a given. Many of these competitors also originated their service as a cloud offering while Splunk is arguably still struggling with this transition, leaving a residual market inference that these competitors are creating more integrated and comprehensive security solutions that are a welcome departure from a SIEM-only core focus like Splunk.
Certainly, our clients are still very active with Splunk, and that activity has shown only minimal signs of slowing down due to some of the challenges illuminated above.
From its own employees, Splunk has a Glassdoor rating of 4.1 out of 5, with a 78% recommend to a friend score, and employees openly criticize the company's growing pains as it migrates to the cloud, and struggles to balance the company's performance culture with the realities of WFH.
As mentioned above, Splunk's FYE is January, and given the backdrop of the other information provided herein, it makes this January a particularly great time to claim value if you have an agreement or renewal on the table.
Pricing
Splunk has historically priced by what they call "Ingest Pricing" measured by GB/day data volumes for various deployments and traditionally offered perpetual licenses that could fetch volume discounts of higher than 67% after 100 GB/day, with a fairly standard 20% annual support and maintenance rate. Term licenses are generally available for about a third of the cost, making the term license option more attractive for deployments that are planned to be less than 3 years in duration.
Splunk has been increasingly pushing its customers to its Cloud Subscription Option with "Workload Pricing" measured by Splunk Virtual Compute units (SVCs) which offers license allocation based on the capacity consumed of compute, memory, and I/O resources. Known as Splunk Cloud, this offer is an AWS-based service that delivers all of the functionality of Splunk Enterprise with all the flexibility and supplier lock-in of Software as a Service (SaaS).
Splunk promotes workload pricing as ‘designed to better align cost and value’ as the Number of SVCs required to power your workload is largely driven by the search composition, quantity, frequency, and indexing, irrespective of ingesting volumes, but total costs can be negatively affected by poor consumption, resulting from sub-optimized business processes and/or poorly constructed search arguments, leading customers to often find that there is a significant work effort that needs to be performed to continually optimize the consumption of their workloads to minimize cost and risk, while maximizing the realization of value and benefit.
As Splunk continues to transition to a consumption-based model, it will force existing customers to jettison existing assets and to rebuy current entitlements, not just once, but nearly every year, making any existing Splunk customer’s next deal a “make or break” deal for value and budgets for years to come.
This is why we are advising all clients to work with us to review your Splunk contacts and proposals now and to contact us to learn more about how our market-leading price benchmarks, our proven industry best practices, and our skilled optimization and negotiation services can help you save 32-60% on Splunk.
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