Microservices enable businesses to develop applications that provide a seamless user experience across devices and platforms. Small and legacy businesses without the infrastructure or resources to support massive data centers used to be at a disadvantage next to the big tech companies, but thanks to microservices, organizations of any size can build flexible architecture using Amazon’s or Google’s APIs to leverage their data assets.
Despite the effects of the pandemic, IT spend is expected to grow dramatically over the next five years. According to the Grandview Digital Transformation Report, spend related to transforming legacy IT infrastructure is expected to more than double by 2025. Microservices are a key piece of that agile transformation, and we see a host of interesting areas for potential investment in the years ahead.
Six Areas of Opportunity Around Microservices
- Container Management and Orchestration: though Docker and Kubernetes are the two most popular container tools on the market, there is a growing ecosystem of platforms that help organize, add, replace, and orchestrate containers and microservices across an infrastructure. The prevalence of open source solutions such as Kubernetes also highlights the possibility for more focused commercial solutions to grab market share.
- APIs and API Toolkits: As microservices become more popular, APIs are already becoming the standard means of communication that enable flexible architecture. Platforms that provide building blocks and API design capabilities will be important moving forward as more organizations embrace APIs to allow their microservices to communicate with each other.
- Service Mesh: A service mesh monitors API communications between microservices and provides dashboards for engineering and development teams to help them better understand how their microservices are communicating. This is still an early market, but, again, a prevalence of open source solutions like Istio and Envoy leaves open the possibility for more focused solutions to grab market share.
- Application Performance Monitoring (APM): As organizations begin deploying hundreds of microservices, it can be harder to troubleshoot issues. Similar to a service mesh, APMs allow businesses to monitor whether their overall applications meet performance standards, identify bugs and potential issues, and provide flawless user experiences via close monitoring of IT resources.
- Serverless Computing: Serverless computing is a new take on cloud computing that provides services on a usage basis. This market is expected to reach $7.7B in 2021, up from $2B in 2018. While it’s still early in its lifecycle, serverless computing has the potential to see rapid adoption from organizations deploying microservices that don’t necessarily want to pre-purchase units of server capacity.
- Container Security: Finally, as microservices and containers rapidly increase, the surface area of potential attacks will skyrocket. There is and will continue to be a need for robust security platforms to help protect containers and the API communications between microservices.
Where the Future of Microservices May Lead
Like the architectural flexibility that comes with Legos, microservices enable organizations to build agile IT infrastructure. However, their popularity does not mean they are without their difficulties. According to a 2018 report, 99% of those surveyed report challenges in using microservices, 87% of those in production report microservices generate more application data, and 56% report that each additional microservice increases operational challenges.
As Volition Capital considers the future of this space, we anticipate that tools that further enable and solve pain points for microservice architecture such as the ones highlighted above will see robust growth. We continue to uncover interesting companies that play in this space, and we intend to dive even deeper into this ecosystem of technologies in the months and years ahead.