Lew, do you tell people that you augment their existing management tools or replace them?
We're still not yet at the point where there's only one tool for the environment. For advanced digital customers, we're the primary tool for visibility. We talk about one customer that is a large retailer. I wish I could use their name. They went from zero relationship with New Relic to fully deployed on our APM mobile product, our server monitoring product, our browser monitoring product and our Synthetics product. Our Synthetics product is similar to what that old Mercury Interactive stuff did in the past. It's the modern version of that. They self-deployed on all five of those products in 90 days and became a million-dollar-a-year subscriber without any professional services.
Can you imagine trying to deploy something that broad and comprehensive with an on-premise technology in 90 days without a ton of PS {professional services} help? I don't think you can do it even with PS help with most of our competitors' products. Then you’ve got to think about the ongoing cost of managing all that. That's just an enormous burden and cost that we don't think our customers have time to undertake when they should be in the business of building great customer experiences.
Let's say you have a customer that has a hybrid environment and they've got applications that are not running in the cloud. Your solution covers the cloud-based and all applications in that hybrid environment, but are you telling them to use traditional tools for the core stuff they're never going to move?
No. We, in fact, support any web application that's been built within the last 8 to 10 years. Regardless of what environment it runs in, it's a candidate for New Relic. We've got a very strong advantage and lead in digital because digital projects are newer, so that's how we typically engage with customers. We'll become that comprehensive platform to monitor everything about the digital environment. Then the IT team sees how great New Relic is and they bring us back to standardize across the rest of their web application environment. Eighty percent of that today may be on-premise, but they have a plan to move more and more of their workloads to the cloud and they love that New Relic can see all of the applications, irrespective of what environment they run in. That's particularly valuable for multi-cloud strategies as well, where you want to see your application performance across Microsoft's cloud versus Amazon's cloud, for example.
Who do you see as your core competitors?
I would put them in a couple categories. We have APM competitors and that APM market, as you said, has been around for a while. You can look at analysts' reports to see who those players are. Not all of them have a SaaS offering. There's one or two that claim to have a SaaS offering but the vast majority of their business is on-premise.
We feel we have by far the best cloud security story in our space because it's our business, whereas our competitors might straddle with an on-premise and a cloud offering. They won't invest the same in cloud security. They'll just go the easier path: Just use our on-premise offering and we won't be as rigorous on how we secure our customers' data in the cloud.
We feel like our fundamental advantage is the cloud architecture that we have and our complete commitment to it and our ease of use. It's super important. Gartner did a study a little over a year ago, I believe, and it was a very disappointing study to me. It said that the typical APM enterprise customer spent $800,000 and three and half people on average use the product, which is just catastrophic in my mind.
That's why we believe digital is a team sport. We don't want it to be a couple of specialists that want to hold onto their very specialist-oriented tools. We want to liberate our category so that anyone with a stake in the health of the software or what customers are doing in software ought to be using New Relic. It delights me to see that we have customers with more than 1,000 active users. What that creates is a cultural change in our customers. When they see what's going on in their software and their customer experience in the software, they're more proactive in making it better.
On that theme, what have you done from a UX, ease of use, feature-functionality perspective to make the tool more embraceable, as it were?
It's core to our strategy. When I started New Relic, I looked back at my experience with Wily, which was a great success and still does very well. But I recognized that Wily was the kind of product that only three specialists could use and it meant Wily had to invest a lot in training our customers on how to use the software. When I founded New Relic in 2008 the challenge was making, at that time, an APM product -- but then all of our products -- so easy to use that our salespeople are taking orders from people who are already using the product.
Here's the test case for it. Can we reach small and medium businesses with this product? You can't cost effectively reach SMB with a hard-to-use product. We started off servicing SMBs largely as a forcing function to make the product as easy to use as possible. Some of the hardest software work I've ever seen is making incredibly complex, sophisticated software that's still easy to use -- complex in the implementation and what it does but easy to use for the customer. It's not by coincidence that we started there and it forced us to have an easy-to-use product.
But it turns out enterprises don't confuse that SMB success with not being relevant to the enterprise. Our enterprise business is now a larger portion of bookings than our SMB business and it's certainly growing much faster because they need easy-to-use software too. They're sick of the shelfware. The chief designer of the company sits closer to my office than the president or the CFO because I care so much about ease of use.
I want to go back to the competitive side of things. Do you believe the traditional companies can't make that migration to the cloud, that they won't be able to evolve their products?
It would be a lot to say they can't and that it's impossible. I think they've got some serious headwinds, structural headwinds. They've got, in some cases, decades of history and a customer base that is expecting to use products that are built a certain way. They've got a lot of architectural history. You can't just take an on-premise floor space, throw it on the web and expect it to be a cloud offering. Salesforce is the early example, going up against Seibel. Over time, the pure-play cloud company wins out in those scenarios. Think about the combination of their business models, how they run their businesses, their strategic decision making and the technology debt they would have to overcome. They would have to have an enormous amount of fortitude to pull it off, and that fortitude would be really sacrificing short-term business success in order to pull it off. That's hard to do.