Tjeerd Edelman

Dec. 29,2022 | Software, SaaS, Splunk

Splunk fiscal year end is coming up this January 31^st and as a result, many deals are set to renew or are aggressively pursued by the sales teams to close as net new business.

Splunk is a clever play of words, it is derived from the word “spelunking which means exploring the information of caves. It was developed by Rob Das and Eric Swan in 2003 as a search engine for the log files that are stored in the infrastructure of a system. The main goal of the founders was to market this developing technology in bulk so that it can be deployed in almost all kinds of use cases possible. Splunk went public on April 19^th, 2012, with a $17 strike price reaching $220 a share in April 2020 but currently trading at ~$85 a share.

Splunk centers around the following capabilities:

• Splunk creates analytical reports with interactive charts, graphs, and tables.
• Splunk is easily scalable.
• Splunk can automatically find useful information enclosed in your data.
• It helps in saving your searches and tags.

The market has widely adopted Splunk, which has led to tremendous growth in their annual revenue. Only 10 years ago this was $121M and it has increased with more than 2,220% to $2,674M. And although Splunk’s growth has trailed off the last few years, with some negative growth numbers in late 2020, they are still a significant force to reckon with. Splunk’s Q3 (October 31^st, 2022) results were impressive, beating analyst expectations.

• Splunk has been increasingly pushing its customers away from “Ingest Pricing” 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. Particularly the Cloud Annual Recurring Revenue showed a rapid 69% CAGR.
• In Q3, Splunk also increased its customers with ARR over $1 million by 19% YoY to 754. Two notable wins were a 3-year multimillion-dollar contract with a department of the U.S federal government and an expansion agreement with a major telecommunications company based in Japan.

The above supports statements made by Steven Zolman – founder and owner of NET(net) – calling out Splunk as a disruptive supplier in his 2020 Thrive Ultimatum Series and mentioning our team referencing Splunk as the #2 technology supplier to watch because of 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.

Pitfalls

The above “slicky interface” statement drives the biggest pitfalls of using Splunk:

• Pricy – Splunk becomes expensive for very large data volumes.
• Slow – When searching data over long-time range, or large amounts of data, Splunk can become slow.
• Limited – Dashboards are useful but quite static and show KPIs only therefore not as reliable as other tools.
• Steep Learning Curve – Splunk is a complex tool with a reputation of poor usability outside of specific IT use cases

The bottom line of Splunk Enterprise (on premise) and Splunk Cloud (hosted) is that the “enterprise out-of-the-box concept” of Splunk is deceiving. Scaling hardware with increased usage, adding storage to support your data mining habits and low adoption rates can make Splunk expensive over time or cost-prohibitive to start.

The IT sector is continuously attempting to replace Splunk with new open-source options, which is a challenge faced by Splunk. As mentioned above, Splunk's FYE is January, it makes this this month a particularly great time to claim value if you have an agreement or renewal on the table.

This is why we are advising all clients to work with us to review your Splunk contracts 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.

About NET(net) 

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, NET(net) has the expertise you need, the experience you want, and delivers the performance you demand, resulting in incremental client captured value in excess of $250 billion since 2002. Contact us today at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1-616-546-3100 to see if we can help you capture more value in your IT investments, agreements, and relationships. 

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