Deal Radar 2009: Sonoa Systems

Last year, I wrote a piece called SaaS Impact on IT Infrastructure as part of the Trend Radar 2008 series. In the last 16 months, SaaS has really taken off, with over 500 companies in the space. Concurrently, the operational complexity of managing SaaS in the enterprise has also escalated. Today’s Deal Radar looks at a company that addresses some of this complexity.

Sonoa Systems provides analytics, management and governance solutions for cloud services and APIs. Their technology helps customers understand who is using their service, who their best customers are, how they can protect sensitive data, whether they are in compliance and how they can enforce service-oriented architecture (SOA) policies and ensure scalability. This technology can enforce policy on any XML-based traffic at very high levels of scale and flexibility.

Chet Kapoor, founder and CEO, has spent 20 years in leadership positions in software and hardware companies. He was VP of Content Management and Search Products at IBM and VP/GM for the Integration Group of BEA Systems. In addition, he was CEO of Gluecode, an open source application server company acquired by IBM. Passionate about ‘the consumerization of enterprise IT’, Chet was also previously VP at webMethods and has held various positions at NeXT.

Sonoa was founded in 2005 and is based in Santa Clara, CA.  The company raised a $12 million Series A from Bay Partners and Norwest Venture Partners in May 2005; a $16 million Series B led by SAP, Juniper, and NetOne in October 2006; and a $10 million Series C led by Third Point Ventures as well as current investors Norwest Venture Partners, Bay Partners and SAP Ventures in June 2008. The money raised was used to expand customer acquisition activities.
 
Sonoa was founded with the belief that networks would become ‘service aware’ as the best way to handle many of the requirements around policy enforcement on traffic flow. Just as routers and ADCs covered many of the operational and mediation issues with Web traffic, networks would handle many of these issues with XML as the Web evolved to have much higher volumes of XML traffic due to cloud computing and mobile apps. SONOA is an acronym for “Service Oriented Network Oriented Architecture”

When Sonoa was founded, the early “XML appliance” market players were focused on XML security and firewall needs and on enforcing internal services security and acceleration. At the same time, cloud computing started to emerge and mashups, Amazon EC2, SaaS started taking off, making XML even more interesting as a way to tap into resources and mix and mash data from outside the firewall. With consumer companies and developers leading the way, many opportunities were created, but unique issues arose.

Sonoa’s goal is to address these issue by providing the visibility, management and governance required to make cloud services and APIs as robust, compliant and scalable as internal on-premise applications. Sonoa ServiceNet is deployed as a proxy between providers (API) and consumers (enterprise application or mashup), serving as a single point of control over service policy. It uses a network-router design that supports the high concurrency required by the cloud with extremely low latency. Unlike other solutions, it is configured and administered without writing code and available as on-premise software, a hardware appliance or a hosted cloud service. 

The company claims it is different because it has a huge focus on business-level analytics, giving clients a way to drive the business such that they leverage Web services and APIs. The technology is user-friendly and the deployment turnaround time is quick. 

The cloud computing market is expected to be over $100 billion. Sonoa believes its opportunity is around the edge of this market as an ‘enabling technology’ for companies that want to leverage cloud computing without getting burned on compliance, security and performance. Sonoa caters to enterprise providers, enterprise consumers, SaaS customers and media content syndication clients. 

The company started with XML appliances but soon began shipping the appliance on VMWare. This led to OEM arrangements with IBM. The company began to get traction with customers that expected the capability as a subscription-based cloud service or wanted to get started in a short time, without the issues of deploying software or hardware on-premise. The company believes this flexibility in deployment options as well as its ability to offer hybrid models has helped increase Sonoa’s business.   

The company declined to provide revenue details but currently has approximately 50 customers. These include JPMorganChase, Sterling, Pfizer, MTV Networks, Warner Music Group, Innotas, QuickArrow, mBlox, InfoNgen and Cast Iron. Sonoa also focuses on selling to the enterprise and is involved in several OEM deals, including one with IBM. On-premise appliances range from $40,000 to $80,000, with both on-premise and on-demand also available under subscription pricing. 

With the recession’s ‘survival of the fittest’ mentality driving businesses to rework costs and find new revenue, Sonoa has found it can meet the needs of enterprises opening up Web services to customers or partners who want to use cloud services and SaaS to reduce costs and increase time to market. 

Recommended Reading:
Forbes Column 08: Deconstructing the Cloud
Deal Radar 2008: Elastra
Deal Radar 2008: AmberPoint

This segment is a part in the series : Deal Radar 2009