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Sumo Logic takes in $80 million to streamline big data for IT operations

June 1, 2015, 11:30 AM UTC
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Photograph by Getty Images

Businesses aren’t just looking at the rise of big data as a way to help make better marketing or sales decisions. They are also tapping into that explosion of data to better optimize their data center and IT operations.

Sumo Logic wants a piece of this big IT operations market, and on Monday will announce that it landed an $80 million funding round, which brings the company’s total investment to $160.5 million. The startup, based in Redwood City, declined to comment on its valuation.

There’s a ton of data being generated by the increasing number of familiar devices, like thermometers and automobiles, now going online, as well as the increasing use of phones and tablets to access Internet apps, Sumo Logic president and CEO Ramin Sayar explained in an interview.

The type of data created by these devices is known as machine data, and that is exactly what Sumo Logic wants to analyze. Inside this machine data are vast amount of log files, sensor data, and server information that provide an audit trail, which can give a company a better sense of how well their devices and data centers are performing. If a problem affected a particular connected device or a server in a data center, the organization’s IT team can scan the machine data and pinpoint the error. However, with so much data, analyzing that vast body for one small error can be time consuming and complex.

That’s where Sumo Logic comes in. Sumo has a machine-data analyzing system, hosted in Amazon Web Services, that companies can use with their own internal or cloud-based databases, according to Sayar. Once connected, the startup’s technology can scan a company’s machine data and find patterns or detect anomalies that could help IT staff better understand their infrastructure and see where problems may be lurking.

Sumo Logic faces competition from legacy IT players like IBM, Oracle, and SAP, explained DFJ Growth co-founder and managing director Randy Glein, who invested in the startup. But perhaps its biggest competitor comes from San Francisco-based Splunk (SPLK) , who went public in 2012. Technology analysts frequently compare the two companies when talking about the log-management space and its future.

What distinguishes Sumo Logic, however, is its easy integration with the cloud, while Splunk is used for “strictly on-premise deployments,” said Sayar. The bet is that as companies consider moving their IT infrastructure to cloud-service providers like Google or Amazon, they will be more inclined to use the Sumo Logic’s machine data-analyzing services. It should be noted that Splunk also has a cloud version of its service.

The startup plans to use some of its new funding to boost employee headcount from 250 to 400 by the end of its fiscal year. It counts Netflix, McGraw Hill, and Kaiser Permanente among its roughly 500 customers.

Their investment base is expanding, too. DFJ Growth led the new round, along with new participant Institutional Venture Partners and previous investors Greylock Partners, Sequoia Capital, Sutter Hill Ventures, and Accel Partners.

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