Introducing Redpoint’s Software Testing Landscape

Redpoint’s market map of software testing: a $32B market being reshaped by DevOps and machine learning.

Why it was kept

The passages Kyle kept lay out the investment case: testing is ‘shifting left’ (earlier in the development cycle) and ‘shifting right’ (into production, via feature flags, canaries and A/B tests), dedicated QA teams are giving way to developers who test their own code, multi-device testing is growing with mobile and IoT, and ML and computer vision are the likely source of the next generation of tools.

As Kyle captured it

• Introducing Redpoint’s Software Testing Landscape by Astasia Myers at Redpoint
  • Software Testing is a large and growing market. It is experiencing Devopsification including increasing automation, expediting time to value, shifting left and right, testing APIs, and streamlining team structures.
  • We believe the software testing market is ripe for disruption and are particularly excited about new solutions that leverage ML and computer vision to improve QA’s workflows.
  • Based on Marketsandmarkets research, we estimate the application testing software and services market achieved $32 billion in revenue in 2017 and forecast it to grow to almost $70 billion in 2023, a 14% CAGR. Software testing services represent the largest component at over 70%, but it is the slowest growing sub-category at a 13% CAGR. Test automation software accounts for about 24% of the market, while the faster growing API testing market is the most nascent at 1% share.
  • Devops and multi-device testing represent the two largest market trends. Devops best practices emphasize agile development and automation. Amazon stated that it performs 50 million code releases a year leveraging DevOps. With increased pressure to push code, we predict QA teams will use mechanized test generation and execution embedded in CI/CD pipelines to keep up with shortened software development cycles.
  • Testing is shifting left and right.
    • Shifting left allows code to be tested earlier in the life cycle. The practice not only helps catch bugs sooner but also prevents developers from spending time on code that will be found to be erroneous later in the lifecycle.
    • While not applicable to all software types, services are well-positioned to shift right, a practice of testing in production environments. By using live production traffic to test a new service prior to its broader release, teams can determine if the new release will cause slower response times or deviations away from CPU and memory consumption.
    • Twitter’s Diffy, A/B testing, blue-green deployments, canary releases, and feature flags (like LaunchDarkly) can facilitate testing in production by routing a small percentage of live traffic to new instances to test functionality.
  • We also observe a movement from dedicated testing teams to testers embedded in development teams. For advanced teams, developers take on more testing responsibilities, which will require even more frictionless and fast testing tools.
  • With the rise of mobile and IoT devices comes multi-device testing. Consumers’ shift away from desktop and web to mobile requires specialized testing solutions.
  • Notable raises include Insight Partners Venture Partners’ $165M Series B investment in Tricentis last summer and OpenView Venture Partners’s $31M investment in Applitools in April, 2018.
  • Significant advancements in ML and computer vision will produce modern software testing solutions. During our channel checks we often hear it is hard to find and retain high-quality QA talent. ML-based test automation will reduce testers’ test generation and execution burden, improving retention and mitigating headcount loss.