Shifting to the Cloud
As orgs shifted operations to the public clouds, their capex dropped, which enabled them greater business agility. The scale and elasticity of the clouds empowered orgs to deliver online experiences with fewer service interruptions. The virtualisation of the clouds was the cornerstone of the rise of DevOps, which in turn facilitated greater innovation and higher velocity software releases.
Most would probably agree that the hyperscalers were the biggest value generators of the 2010s. The greater business agility, greater service, and greater innovation, each emanated from the public cloud providers. The problem that has ensued, however, is that operating in the cloud has led to increasing levels of complexity.
The speed at which compute instances can be spun up and down, the highly distributed nature of modern application architectures, and the increasing layers of abstractions (VMs > containers > serverless), have resulted in significant additional complexity that has become a bottleneck for future productivity. Hence, despite the huge value generation in recent times, there is still a huge amount of value to be unlocked.
Exacerbating the situation is the structural talent shortage of software developers, which can be traced back to the unmodernised educational systems. And the impact of this talent shortage has been magnified by the COVID-19 pandemic, whereby consumers suddenly expected a step-change improvement in their online experiences.
With this in mind, any org attempting to modernise is battling rising complexity with an insufficient number of software developers. So, in the intermediate-term, the only solution is to increase the productivity of the existing developer base.
The Rise of DevOps
The philosophy of DevOps emerged to increase productivity with principles of little and often and close collaboration between devs and ops. However, as the demand for apps surged, devs found tools to speed up their workflows. For the majority of DevOps teams, this has now resulted in disparate tooling, leading to unwanted siloes that actually impinge on team productivity.
The latest idea in DevOps is to create an end-to-end platform to help manage the full lifecycle of an application, dissolve any tooling siloes, and increase transparency and collaboration. The goal is to minimise complexity and increase productivity. Many orgs are attempting to set this up in-house. The problem is that this in itself requires high-calibre talent and is costly to maintain.
Big tech names like Google and Meta have the resources to run a sustainable DevOps platform model in-house. However, for the rest, this isn't typically feasible. Instead, it makes more economical sense to outsource this to a VSDP, or Value Stream Delivery Platform. VSDP is a new term dubbed by Gartner to recognise the need for a holistic platform that can provide all the necessary tooling in one place. This is why we really like GitLab's long-term prospects.
GitLab is one of few VSDPs that serves every stage of the application lifecycle (development, deployment, monitoring) but with an unparalleled breadth of features. It has achieved this feature breadth via a rare level of open-source engagement, whereby they encourage OSS community members to contribute, and organise themselves in a way that efficiently sifts through, evaluates, and implements these suggested improvements. This is a core component of GitLab's strengthening flywheel-like moat.
To summarise all of this, VSDPs appear to be the logical evolutionary step within cloud computing to resolve the issues of complexity and productivity. Outsourcing the DevOps platform to a VSDP, will ensure DevOps teams can cost-effectively deliver better software faster. Removing siloes and getting more out of devs could be the next great value unlocker. Meaning leading VSDPs like GitLab, could emulate something similar to what the hyperscalers gave the world during the 2010s, by being the biggest value generators of the 2020s. We think this is a strong possibility.
For institutional investors looking for tailored in-depth reports or additional comments related to GitLab or DevOps more broadly, feel free to drop us a message at [email protected].
Individual reports covering GitLab and/or DevOps include the following:
Part 1: GitLab - Huge Potential Value Generator (September 2022)
Part 2: GitLab - Huge Potential Value Generator (September 2022)
Part 1: Cloud, SaaS, & DevOps (August 2022)
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