Rick McConnell: How Partners Helped Double Dynatrace from $1B to $2B ARR

Rick McConnell
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[00:00:00] Rick McConnell: It really isn't just about observability anymore. It is about an end-to-end ecosystem of software that works well together.

[00:00:07] And especially as you evolve to an agentic world it is it is Dynatrace providing input on what is happening in your software environment to other partners like ServiceNow. Yeah, like AWS like Atlassian like GitHub e even Nvidia.

[00:00:26] Chip Rodgers: Rick, as a CEO I think it's really interesting, everything I know about you is that you're a huge supporter of partner ecosystem. So from, cloud providers to, system integrators and they , maybe 70, 80% of deals are, partner attached. Even

[00:00:42] Rick McConnell: more than that now. More than that? Yeah. Yeah. More than 80% of our deals go through partners

[00:00:46]

[00:00:50] Chip Rodgers: Hey everyone, Chip Rodgers. Welcome back to another episode of Inside Partnering and , we're here at re:Invent. And it's been a busy week, huh?

[00:00:59] Rick McConnell: Absolutely. [00:01:00] What what an amazing vibe overall aura huge number of people, incredibly energizing.

[00:01:07] Chip Rodgers: That's fantastic. Yeah. So I am so excited to be joined by Rick McConnell. Rick is CEO of Dynatrace, and, Rick, first of all, welcome.

[00:01:15] Rick McConnell: Thank you so much. Thanks Chip for having me. Appreciate it. I'm delighted to be here.

[00:01:19] Chip Rodgers: Yeah, so just by way of quick introduction for everyone, Rick is CEO of Dynatrace for the last four years, and done phenomenal phenomenally well with Dynatrace.

[00:01:28] Previous to that with Akamai for about 10 years. 10, 10, 11 years. Yep. And Cisco as well. And did. It's like huge growth at Akamai and the above. Yeah. All the above.

[00:01:39] Rick McConnell: No, that's that's true. Akamai was Akamai was about a billion dollars in revenue when I joined, and three and a half billion when I left.

[00:01:45] So, uh, We did a nice job of building that business over a decade. Dynatrace was just under a billion in revenue in a RR when I joined four years ago, and we're now rapidly approaching 2 billion, so I've almost doubled over that [00:02:00] period. So, uh, We're excited about that as well. So, uh, As uh, as um, the evolution has, has continued, it's really all about growth and driving opportunity and of course value for customers.

[00:02:10] Chip Rodgers: Yeah, that's fantastic. I think. Dynatrace is really uh, and, and your presence here shows it. I mean, It does.

[00:02:17] Rick McConnell: Yeah. We've got our uh, we've got our booth uh, behind us. Um, really, Really great uh, great traffic. It's great to be here.

[00:02:24] Chip Rodgers: Yeah. Yeah. And huge you're a huge presence in the AWS ecosystem.

[00:02:28] Yes. And I think observability is critical for any cloud, cloud customer and especially as we move into the AI era. So your thoughts on that?

[00:02:40] Rick McConnell: I could talk about this for a long time so, so keep me, keep me honest here on uh, on how far I go but, but let me maybe attack it in a couple of different ways.

[00:02:49] Yeah. First of all the cloud is driving enormous growth. It is also driving enormous ex an enormous explosion of data and massive increase in its complexity. [00:03:00] And it is rendering the ability to run software environments manually simply impossible. Yeah. You simply can't do it the way you used to.

[00:03:09] Where you add hordes of people looking at screens in a network operation center that were looking for the needles in the haystack because it's too hard to find the needles in the haystack of why your software load is no longer working. You have to be able to use an AI powered observability platform to assist you in those analytics.

[00:03:30] To assist you in the rapid evaluation, triage and resolution of issues. And that's precisely what Dynatrace does. That was the first part of the answer. The second part of the answer is around AI which Chip you mentioned. And in that second part of the answer, take everything I said about cloud native and throw it on steroids.

[00:03:52] Yeah. Because now you're developing software loads even more rapidly, you've got even more data. Further data [00:04:00] explosion, look at what's happening regarding data center build outs and the amount of data that's getting delivered on a daily basis. And it is rendering observability even that much more mission critical as a result of it.

[00:04:11] Chip Rodgers: It is. And, ai I think for a lot of a lot of companies, it's still, it's so new and there's so many moving parts and it's a little bit of a black box, so you've gotta be able to figure out what's going on.

[00:04:24] Rick McConnell: Absolutely. What what observability really is going to do in the future, if you think about it, is it is going to help us in many ways at Dynatrace to achieve our vision.

[00:04:36] Our vision is to help large organizations deliver software that works perfectly. Now, they may, that may be utopian, the nirvana. Do you ever. Why

[00:04:47] Chip Rodgers: not?

[00:04:48] Rick McConnell: Why not? It's a vision after all. But you, you wanna get to the point where your software works as, as well as it possibly can?

[00:04:54] Yeah. Why is that? It's because as end users, as consumers, we all expect software to work [00:05:00] perfectly. Do you ever get into your mobile device and try to make a bank transfer and say the service is down. Who cares? I'll come back later. You're frustrated that it doesn't work or buy something online and you can't do it at that moment.

[00:05:12] You're gonna go to a different vendor to do and then that vendor is gonna lose the customer, at least for that at last sale. So we've lost patience and we expect software to work perfectly, and in fact, the world demands that we do. So all of this is running observability critical.

[00:05:27] As we move to the future, what is so exciting about observability in my view, and of course I'm biased being at Dynatrace, but as you move to the future, we really ascribe to the notion of autonomous operations really driving the opportunity around observability. And what that means is that a reasonable percentage of incidents can be avoided completely through agentic AI ecosystem and infrastructure consisting of multiple different

[00:05:56] organizations, agents working together to, in some [00:06:00] sense auto prevent and auto optimize your environment to as well as auto remediate issues that occur in that environment to resolve issues before they become customer impacting. Yeah, and that's what really gets exciting about it because now you get to the point where a reasonable percentage of your incidents may never have occurred.

[00:06:20] And you may have resolved them automatically or autonomously through an observability system overseeing that environment.

[00:06:27] Chip Rodgers: Terrific. Terrific. It's giving comfort to uh, both, both to your customers, but also to their customers. Right. End customers. It's really, it's making everything work smoothly.

[00:06:37] Rick McConnell: It absolutely is.

[00:06:39] At the end of the day, organizations are in business to deliver services to their customers. Right, right. And, and so the health of a. Uh, Of a um, software environment to an airline isn't for its own health. It is so that passengers can buy tickets, find the gate, locate their bag, [00:07:00] wherever it might be, around the planet, hopefully with their airplane and with them.

[00:07:04] These are the kinds of things they want just by way of example. And it is the efficacy of that data that becomes so critical and in an era of AI where you are trying to leverage AI in an agentic world. To ensure the software is always working incrementally, you wanna ensure that the data that is being provided is accurate, and this is what Dynatrace really focus focuses on and why our partnership with AWS is so critical.

[00:07:30] Yeah. Because we really we really leverage that environment to enable these ecosystems to work together in a very fundamental way to deliver not just software that works great. But software that is also trustworthy in delivering answers that you can rely upon. Because if you can't rely on the underlying answer, then the action that would be taken autonomously is not the right action.

[00:07:54] Right? Right. So you have to start with trustworthy results, and this is Dyna Dynatrace's superpower. [00:08:00] This is really what we do the best.

[00:08:02] Chip Rodgers: That's awesome. That's awesome. So that's a good segue. Our audience is partner leaders, partnership leaders, and they're always interested in. How do we work within, how do I work with partners?

[00:08:12] How do I work within a partner ecosystem? You just mentioned we're here at re:Invent with AWS what a great partner AWS is. Talk a little bit about the value of that relationship with AWS and why it's valuable.

[00:08:26] Rick McConnell: We provide the Dynatrace service on top of the AWS platform. Yeah. So AWS is fundamental to the existence and the workability

[00:08:36] of Dynatrace and so it's very fundamental for us to deliver and deliver a service on top of AWS and partner with AWS. We also have a joint go to market with AWS. So we co-sell existing customers who want an observability solution and AWS is trying to assist their customers in delivering observability, and they'll come to Dynatrace to [00:09:00] facilitate that.

[00:09:01] So that's another key part of the story. We just announced here at the show an integration into, into uh, Amazon Bedrock, which is targeted at enabling customers to develop, deliver, and manage agents in an agent environment. And those agents, you want to be delivering accurate, trustworthy data.

[00:09:24] So observability becomes mission critical, right? For Dynatrace to ensure that those those agents are delivering valuable and trustworthy data on which you can rely. Yeah. And that is just so critical. So this continues to be, I think, exemplary of us evolving the partnership in a very important way, all the way through a AWS re:Invent and the announcements that are being made here.

[00:09:51] Yeah.

[00:09:51] Chip Rodgers: Terrific. So Rick, as a CEO I think it's really interesting, everything I know about you is that you're a huge supporter of [00:10:00] partner ecosystem. So from, cloud providers to, system integrators and they , maybe 70, 80% of deals are, partner attached. Even

[00:10:10] Rick McConnell: more than that now. More than that? Yeah. Yeah. More than 80% of our deals go through partners inclusive of inclusive of AWS Yeah. But also global system integrators are very large for us in terms of overall demand for the platform.

[00:10:23] We sell to the global 15,000 and the vast majority of our ARR revenue comes from the largest of the large type customers. And these all have partnership engagements with them. One of the reasons for that is because it really isn't just about observability anymore. It is about an end-to-end ecosystem of software that works well together.

[00:10:45] And especially as you evolve to an agentic world it is it is Dynatrace providing input on what is happening in your software environment to other partners like ServiceNow. Yeah, like AWS [00:11:00] like Atlassian like GitHub e even Nvidia, like others that are very much attuned to what's happening in this world.

[00:11:09] You can imagine that um, to take a very simple example, let's say that your environment is about ready to run out of storage. On AWS as a cloud, let's say that we see that through our AI powered platform. Do you really need somebody to manually provision more storage in AWS? You really don't. Yeah, you would be doing that all the time.

[00:11:35] Why not do that automatically? How would that happen? We would essentially provide a message through series of APIs, maybe through an MCP server. To an AWS agent. The AWS agent would then take it from there, provision more storage, provided the requisite notifications to a customer, and it would've all happened automatically to avoid a potential customer impact or end user impact by running outta storage.[00:12:00]

[00:12:00] Again, very rudimentary example, but there's no reason that that process that I just described can't happen in an automated way through agents working and interacting back to the original point. It is that interoperability of those partnerships and those engaged elements that form the foundation for an ecosystem that is really constructive.

[00:12:23] Chip Rodgers: Our audience will really love hearing this because there are many CEOs that really don't get the partnership story or they just don't put a lot of emphasis on it, and you're very articulate about the value and why it's so important and it is important. Right.

[00:12:37] Rick McConnell: I, it it's essential. And, And I, I mean, Chip to your point.

[00:12:40] It is uh, if it wasn't essential before, and I always thought, thought, sort of, thought it was essential before. It is especially essential now. Yeah. Uh, There're just, there are no other ways uh, around it to avoid it because of the, of the mission criticality of getting this all right. And everybody's driving [00:13:00] to an explosion of AI capabilities.

[00:13:02] Yeah. But, But you have to have observability overseeing those AI capabilities to ensure that they work. Right. And, And that is the real foundation of, of what observability, or let's say AI powered observability can do, is to ensure the efficacy and trustworthiness of the content and, and the answers that are being delivered.

[00:13:23] Chip Rodgers: Fantastic. Amazing. Well, so, you know, Again, we're here at uh, at re:Invent. What's uh, what's on your, on your plate for the rest of the week with uh, with AWS and others?

[00:13:34] Rick McConnell: It is obviously for me, maybe not, obviously for me, but it is all about all about customers. Yeah. All about alliances and all about partnerships.

[00:13:43] Yeah. And for, all the customers that are here, they get to meet with a number of different vendors and developers. So it's great to leverage their time here. I can. I can do probably five times the number of meetings in person that I could do if I were flying around the globe. [00:14:00] Yeah. Trying to do these meetings.

[00:14:01] So it's really a productive environment to do that. Alliances, same thing. I've just expressed the criticality of these strategic alliances in interoperating, so that's incredible. Useful. And then in partnerships with GSIs and others they're all here and they're our biggest partners to, to sell more Dynatrace.

[00:14:19] At the end of the day, of course, we're driven by financial objectives and others as other organizations are, without a doubt. But what really stimulates my passion and my excitement, my energy is delivering meaningful value to customers in a way that really benefits in a sort of a globe as a whole.

[00:14:38] And that's what that's what I get. That's what I get as passionate about as anything else.

[00:14:42] Chip Rodgers: Well, There is a high correlation between the benefit you deliver to customers and where your revenue goes. So

[00:14:48] Rick McConnell: that's exactly well, there's a great uh, that, that is a great correlation and it's nice because uh, you can achieve both objectives usually at the same time.

[00:14:55] Yeah,

[00:14:55] Chip Rodgers: it's fantastic. Rick, thank you so much for spending some time and sharing your thoughts about [00:15:00] Dynatrace, and congratulations on the massive success. And , and , let's go Uh.. enjoy the rest of , re:Invent.

[00:15:07] Speaker 3: Let's do it. Thanks so much, Chip. Yep. Pleasure. Pleasure talking to you.

[00:15:10] Chip Rodgers: Thank you, Rick.

[00:15:11] Speaker 3: Yep. Cheers. And thank

[00:15:11] Chip Rodgers: you all for joining again, and we will see you next time. Remember to like share and subscribe, see you everybody

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