Free of Compuware: Dynatrace, Keynote Merge to Dominate in App Performance

Quick: name a Boston-based software company with 1,700 employees, $450 million in annual revenue, and plenty of room to grow. Oh, and it’s also currently running a 26 percent pre-tax profit, according to its CEO.

That would be Dynatrace, which was spun out of Detroit tech giant Compuware last December after the latter was bought by private equity firm Thoma Bravo. Today Waltham, MA-based Dynatrace said it has acquired Keynote, another member of Thoma Bravo’s portfolio, based in San Mateo, CA. (The stats above are for the combined company.)

Terms of the deal weren’t disclosed, but the merger represents a consolidation in the field of application performance management—basically, techniques to make business software run faster on the Web and mobile devices. Dynatrace will keep Keynote’s office in Silicon Valley, as well as a presence in Detroit and other cities, says CEO John Van Siclen (pictured).

It used to be that application performance management was a very technical, little-known aspect of IT, Van Siclen says. “Now things have mushroomed,” he says. “It’s like the security business of 10 years ago, or the networking business of 20 years ago.”

Here’s the backstory. Dynatrace was started in Austria, focused on helping IT departments figure out why their businesses’ software applications were running slowly—and how to fix it. The company raised money from Bain Capital Ventures and moved to the Boston area in 2007, where it grew to become a $25 million business with just under 200 people. Van Siclen joined as CEO in 2008, and Compuware acquired the firm in the summer of 2011, almost exactly four years ago, for $256 million in cash.

Dynatrace became part of Compuware’s application performance management (APM) business unit—together with fellow APM companies Gomez and Vantage, which were also Compuware acquisitions—and Van Siclen ran the unit as general manager. Now, after the private equity sale, it sounds like Thoma Bravo is doubling down on APM as a major growth area of IT.

As Van Siclen puts it, there has been a “realization by a growing number of businesses that their future is digital.” Think of Citibank as a technology company with a banking license, he says, and Nike as a company with more software developers than apparel designers—not to mention the Ubers and mobile-first companies of the world. These businesses all need software that ensures their technology operates correctly and efficiently for their customers.

“Everyone needs to suit up,” Van Siclen says, when it comes to “driving customer engagement” with apps and websites.

Keynote, meanwhile, was a competitor to Gomez, which also has roots in Boston. The companies both developed technologies for testing and monitoring software performance—things like search transactions and shopping carts in e-commerce, or account transfers in banking. Keynote’s focus is on mobile apps and website performance. Its executive vice president Howard Wilson will serve as Dynatrace’s general manager of user experience and behavior.

Van Siclen says Dynatrace will integrate Keynote’s products over the next 12 to 15 months. “We’ll build a new back-end foundation to converge the platforms,” he says.

In the meantime, the company will maintain two different networks and user-experience platforms, in an effort to “leave no customer behind,” he says. Dynatrace’s big customers include Akamai, Microsoft, Yahoo, and AT&T.

What will it be like managing a team of 1,700, as compared to 200 in the old days? Van Siclen says he still has a “direct pulse” on what’s happening in product management, research and development, and sales, down to the details of go-to-market strategies, pricing, and packaging. He stopped being in the hiring loop for all employees after the company passed 100 people. “I’m involved with my direct reports and their direct reports,” he says.

Sounds like he’s taking the company’s continuing growth—and inevitable cultural challenges—in stride. “It’s really not that different,” Van Siclen says. “I have to delegate more.”

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