While you’ve likely heard of Terraform, you might not be as familiar with the company charged with its stewardship. HashiCorp is one of those fascinating technology providers that’s managed to stay relatively anonymous while also becoming integral to the operation of many enterprises’ IT infrastructure.
There’s far more to HashiCorp than just Terraform. The company touches nearly every element of application deployment, including security and secrets management, service discovery and service mesh, application scheduling, and, of course, provisioning and deployment.
HashiCorp recently wrapped up its annual HashiConf event in San Francisco, where it talked to developers and investors alike. HashiCorp tells a good story, one that you should know. Let’s look at some of its recent innovations.
Infrastructure Provisioning with Terraform
HashiCorp unveiled a series of exciting updates and features to Terraform that aim to enhance the capabilities of the popular infrastructure automation tool. These advancements are designed to cater to the diverse needs of platform teams and application developers within organizations.
Terraform is primarily used by platform teams to enable application developers within organizations. To empower these platform teams to operate at scale more efficiently, HashiCorp introduced new testing features into Terraform. The new capabilities allow platform teams to ensure that modules are thoroughly tested to prevent issues that might arise when application teams encounter edge cases.
Leveraging large language models (LLMs), HashiCorp aims to automate the creation of tests, suggesting relevant edge cases based on extensive definitions. However, due to the compute resources required for these capabilities, they are exclusively available as part of the Terraform Cloud offering.
This strategic move encourages users to transition from community versions to commercial offerings or even Terraform Enterprise self-managed customers to move to the cloud version. It’s a practical approach, as requiring massive computational resources would be impractical for most users. These AI capabilities serve as an incentive for users to adopt the cloud based Terraform product.
Another key announcement is the introduction of ephemeral workspaces. Many large organizations allocate a significant portion of cloud spending to development and testing environments. However, inefficient resource utilization and the persistence of unused infrastructure can lead to substantial waste.
HashiCorp addresses this issue with its new ephemeral workspace capabilities, offering a programmatic solution to clean up resources after a predefined timeframe automatically. This policy-driven automation approach reduces the burden on developers, who may leave resources running for extended periods.
HashiCorp is also introducing Terraform stacks, a significant enhancement to the core engine of Terraform. Traditionally, Terraform focused on orchestrating single workspaces and environments. Terraform now comprehends and seamlessly automates multi-environment orchestration with its new stacks feature.
Stacks simplifies complex workflows and enforces policies, streamlining the transition from development to testing and production environments. It encourages users to explore the benefits of Terraform Cloud and Terraform Enterprise for intricate multi-environment orchestration scenarios.
The updates to Terraform demonstrate HashiCorp’s commitment to empowering platform teams and developers with advanced testing, automation, and integration capabilities. These enhancements aim to streamline workflows, optimize resource usage, and bridge the skills gap, ultimately facilitating the adoption of cloud technologies and infrastructure automation across diverse organizational landscapes.
Service Mesh with HashiCorp Consul
HashiCorp Consul is a powerful and widely adopted open-source tool and service mesh solution designed to simplify and automate network infrastructure management, service discovery, and connectivity in modern, dynamic, and distributed environments. It is critical in enabling organizations to build and operate resilient and efficient applications and services.
The company released several significant updates to its Consul product to provide enterprises with improved efficiency and cost optimization.
One standout feature of the new version of Consul is “locality-aware routing,” available exclusively in Consul Enterprise. This feature targets the optimization of cost spend for organizations managing multi-network traffic.
In enterprise deployments, which often span multiple regions and availability zones, network traffic between these zones and regions can incur substantial costs. The value proposition here lies in maintaining large deployments while optimizing traffic routing within availability zones.
Another noteworthy addition is “HCP Consul Central,” a cloud-delivered service offering new capabilities for Consul users. This move is part of HashiCorp’s hybrid strategy to transition customers from self-managed to cloud-based solutions. While HCP Consul Central is delivered through HashiCorp Cloud Platform (HCP), it is not limited to HCP users alone.
Self-managed Consul customers and those using Consul in diverse environments can seamlessly integrate with Consul Central. This integration brings enhanced observability, lifecycle management, and integration APIs, enriching the overall experience and expanding HashiCorp’s ecosystem of technology partners.
Keeping Secrets with HashiCorp Vault
Vault is HashiCorp’s highly regarded and widely used open-source tool and platform for secrets management and data protection. It provides a secure and centralized system for storing, accessing, and managing sensitive information, including passwords, API keys, certificates, and other confidential data.
At HashiConf, HashiCorp unveiled a series of innovative solutions to address critical challenges in secret management and security. These announcements come as organizations increasingly navigate the complexities of cloud adoption and the need for robust security measures.
One standout solution is “Vault Radar,” designed to assist organizations in discovering and inventorying their credentials and secrets across their environments. This tool sheds light on where secrets are scattered and streamlines the onboarding process into HashiCorp’s Vault, a leading secrets management solution. This innovative product acts as an accelerator, facilitating the migration of existing secrets while simplifying the adoption of Vault.
HashiCorp is also dedicated to closing the gap between self-managed and cloud-managed solutions. In this endeavor, the company has integrated advanced data protection features into its cloud-managed Vault, aligning it with its self-managed counterpart. This move ensures that customers enjoy feature parity, regardless of their chosen deployment model.
The new “Vault Secrets” marks another milestone in HashiCorp’s offerings. Initially launched in beta, this product is now generally available, providing customers with a solution for managing secrets efficiently. Public pricing and tiered options offer flexibility to cater to varying organizational needs.
HashiCorp also introduced “Vault Secret Syncing,” a feature that simplifies secret management across fragmented environments. Many organizations use multipoint solutions for secrets management, creating complexity in change management, rotation, and auditing. Vault Secret Syncing allows organizations to consolidate secrets management within HashiCorp’s Vault, providing a unified workflow for these critical tasks.
These announcements reflect HashiCorp’s commitment to helping organizations streamline secret management, improve security, and simplify cloud adoption. The company’s focus on bridging the gap between self-managed and cloud-managed solutions underscores its dedication to meeting the evolving needs of its customers in an ever-changing technology landscape. Top of FormBottom of Form
Analyst’s Take
The market continues to respond to HashiCorp’s offerings. In a presentation to investment analysts, HashiCorp talked about its substantial progress in expanding the base of customers that spend more than $100,000, telling us that it added 800 such customers last year and over 50 in the first half of 2023. This growth trajectory shows that HashiCorp is on track to meet its targets for customer acquisition.
The company also highlighted the importance of maintaining high gross margins and steadily increasing margins for HashiCorp’s Cloud products. HashiCorp has successfully enhanced its cloud margins, aiming for the high 70% range in the long term. This indicates that HashiCorp is growing its customer base and managing its costs effectively.
Operating margins have also improved significantly, moving from a negative 32% to a negative 19%, and are expected to reach negative 17% in the upcoming quarter. HashiCorp is targeting breakeven in 2025, focusing on driving profitability and financial sustainability.
I only touched on a few of the announcements made at HashiConf in this column, but it should be enough to illustrate how significantly HashiCorp impacts IT infrastructure. It also shows why HashiCorp’s solutions have become integral to the DevOps and cloud-native ecosystem, helping organizations automate and manage their infrastructure efficiently, improve security, and enable the dynamic, scalable, and resilient deployment of applications and services.
While the company remains known primarily for Terraform, its expansion into adjacent areas makes Terraform more valuable while expanding the company’s overall footprint within its customers’ infrastructure. This will make HashiCorp nearly indispensable to the thousands of customers who depend on its technology. It’s a great story.
Disclosure: Steve McDowell is an industry analyst, and NAND Research an industry analyst firm, that engages in, or has engaged in, research, analysis, and advisory services with many technology companies, which may include those mentioned in this article. Mr. McDowell does not hold any equity positions with any company mentioned in this article.
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