vFunction is a company that enables enterprises to tackle application modernization and accelerate digital transformation. To learn more about the company, Pulse 2.0 interviewed vFunction CEO, Chairman, and founder Moti Rafalin.
Moti Rafalin’s Background
Rafalin is an enterprise software executive and entrepreneur. “I co-founded vFunction in 2017 with Amir Rapson (CTO) and Ori Saporta (Systems Architect) and serve as its CEO. With over 25 years of experience in the enterprise software market, previous roles focused on infrastructure, applications, and security,” said Rafalin. “Prior to vFunction, I co-founded and led WatchDox from inception until its acquisition by BlackBerry, growing the company over 20 consecutive quarters and establishing it as a leader in the secure enterprise mobility and collaboration space. Subsequently, I served as Senior Vice President at BlackBerry LTD. Prior to co-founding WatchDox, I was the General Manager of the Application Management Business at EMC. I also served in the Israeli Air Force. I’m a graduate of the Technion, Israel Institute of Technology, and I hold an MBA from Harvard Business School. I currently live in the Bay Area.”
Formation Of vFunction
How did the idea for vFunction come together? “In 2017 Serverless was the hot topic of the day. When we thought about its benefits we realized that it required event-driven and microservices architecture and so if your application was a monolithic application, which is how most of the enterprise applications were built over the past 30 years, you couldn’t take advantage of Serverless, only if you built new apps from scratch could you architect them to fit the serverless model,” Rafalin shared. “We then thought about ways to help accelerate the transformation of monolithic apps into microservices and found out there were no good tools for it. Most projects were manual, costly, and took a long time, resulting in a very high number of failures. The size of the opportunity was something we couldn’t resist… There are over 20 million enterprise Java monolithic apps. Even if 10% of them are to be transformed it represents a $10 billion per year opportunity. So we convinced our investors to make a bet on us that we could develop a technology to help accelerate this type of app modernization.”
The team also saw that the large cloud providers like Amazon, Google, and Microsoft were all trying to find ways to help customers get more value out of their core business applications as part of their move to the cloud. And this meant helping their customers modernize those apps.
“This type of modernization is crucial regardless of the cloud move. For example, if large banks don’t transform their monolithic applications into microservices, their business velocity eventually grinds to a halt as they are not able to deliver services quickly enough to be able to compete with newer, more nimble FinTech startups,” Rafalin added. “Another example is the automotive industry. We all know Tesla. It’s an electric car, but it’s really a software company. If you have a problem with your Tesla, from your iPhone or from your Android, you can order the parts and they’ll come to your location based on GPS, fix your car, and then you pay on your mobile. The whole experience is digitized. The traditional automotive industry isn’t able to deliver that experience because they’re sitting on these legacy monolithic applications that don’t allow them to innovate fast enough and deliver those types of services.”
Favorite Memory Working For vFunction
What has been Rafalin’s favorite memory working for vFunction? “Watching the faces of a very large customer when they saw the results of our POC. You could see and feel that we provided something that is very hard to provide…hope. After three years of making almost no progress in their modernization efforts, all of a sudden within a few weeks after deploying vFunction they saw huge progress,” Rafalin reflected.
Challenges Faced
What are some of the challenges Rafalin faced in building the company and has the current macroeconomic climate had any effect on the company? “The biggest challenge we face is the market education challenge,” Rafalin acknowledged. “Being first in the market to deliver game-changing technology to modernize applications has its advantages but also its disadvantages, especially in a market that is carrying many scars and skepticism from previous failed attempts. Fortunately, we are able to benefit from our amazing partners’ market reach – SIs and Hyperscalers to bring us into opportunities.”
Core Products
What are vFunction’s core products and features? “vFunction is the first and only end to end AI-assisted application modernization platform for architects and developers. It accelerates the transformation of complex monolithic applications into microservices,” Rafalin replied. “It helps assess, analyze, design and automate the decomposition of those apps into microservices and thereby eliminates the time, risk, and cost constraints of manually modernizing business applications. With vFunction, leading companies around the world are restoring engineering velocity, maximizing the benefits of the cloud, and gaining a competitive edge. ”
Evolution Of vFunction’s Technology
How has vFunction’s technology evolved since launching? “In April 2023, the company launched vFunction Continuous Modernization Manager, the first continuous modernization solution that enables architects to shift left to find and fix application architectural drift and prevent business catastrophes,” Rafalin explained. “In addition, the newest release of vFunction Modernization Hub has added advanced collaboration capabilities to enable modernization architects and teams to work together more easily. New analytics also pinpoint the highest technical debt classes to focus the refactoring priorities. vFunction Assessment Hub has added a new Multi-Application Assessment Dashboard to analyze technical debt across a broad application portfolio. On top of these, we have expanded our support to .Net applications in addition to our broad Java support, as well as added support for database stored procedures which significantly hinder modernization efforts.”
Significant Milestones
What have been some of vFunction’s most significant milestones? “While the company was founded in 2017, it operated in stealth mode until early 2021, when it announced a seed funding round and mission to modernize Java applications and expedite companies’ app modernization efforts. Since launching its platform in October 2021, vFunction has significantly outperformed its own projections, closing contracts with Fortune 100 companies, including two of the top five financial services providers in the US and several of the world’s largest software and security leaders,” Rafalin emphasized. “vFunction has also significantly expanded its channel and strategic partner program, collaborating with major cloud providers such as Microsoft Azure, AWS, HPE, Google Cloud, and global system integrators such as Wipro, Accenture, HCL, Mphasis, SCSK, TCS, Samsung SDS and many more to accelerate companies’ migration to the cloud.”
Customer Success Stories
When I asked Rafalin about some customer success stories, he cited the following:
1.) vFunction’s strong base of customers includes Intesa Sanpaolo, the largest banking group in Italy with over $1 trillion in assets, which experienced a 3x increase in release frequency, a 25% reduction in regression testing, and months of saved work using vFunction.
2.) vFunction also works with 2 of the top 5 financial services providers in the US, and several of the world’s largest software and security leaders, amongst other Fortune 100 companies.
3.) Typical customers are large enterprises undergoing a digital transformation in major verticals like financial services, automotive, telco, media, and government. Trend Micro is a great example of a successful customer who not only saw a major increase in engineering velocity and developer morale but a significant decrease in cloud computing costs, too.
Funding
In terms of funding, vFunction has raised a total of $38.2 million in funding from its Seed and A rounds. This latest funding round was raised on Feb 22, 2022.
Total Addressable Market
What total addressable market (TAM) size is vFunction pursuing? “There are tens of millions of applications out there that are monolithic and are not in the cloud. 81% of workloads are not cloud-native mostly on-premises but also in the cloud. In order to conquer the next frontier in cloud migration, you need to make it easier for customers to modernize their monolithic applications,” Rafalin analyzed. “The fundamental problem we’re solving is that if you think about the cloud today, cloud migration and adoption of the cloud, we are really in the early innings of that evolution. The workloads that are running in the cloud are mainly greenfield workloads and the low-hanging fruits that were relatively easy to migrate. Moreover, monolithic applications are not going away. New apps will continue to be developed as monoliths and only over time evolve into microservices. In the majority of cases it is not worth the overhead of developing microservices for V1 of a product, and so after a few years, as a natural evolution of software the transformation into microservices will come in”.
“You shouldn’t just move all your applications to the cloud as-is, but rather evaluate which ones require modernization in the sense of transforming them into cloud-native architecture. The more you modernize the more value you get from the cloud. Refactoring is needed in order to maximize the benefits the cloud has to offer, like elasticity, agility, accelerated engineering velocity, and cost savings,” Rafalin noted.
Differentiation From The Competition
What differentiates vFunction from its competition? “vFunction is the only app modernization solution that addresses the full lifecycle of modernization – from assessment through refactoring to continuous modernization,” Rafalin revealed. “Our technology is the first platform that enables architects to shift left to address architectural technical debt via AI-enabled automation that includes dynamic observability, static analysis, microservice design and automated extraction, as well as continued architectural drift detection. “”
Enterprises have amassed backlogs of thousands of legacy monolithic applications while also spending years decomposing and refactoring these applications one service at a time with 6-18+ months spent per application.
“This manual process is tedious, time-consuming, and prone to error. Adding to this complexity, all monolithic applications vary significantly in scale, size, and priority,” Rafalin affirmed. “vFunction presents a complementary approach to lift-and-shift and re-platforming options that are often pitched as a middle ground between legacy app maintenance and a more resource-intensive re-architecting, but many of those customers who have lifted and shifted to the cloud are now turning to vFunction to modernize their cloud-based monoliths.”
Future Company Goals
What are some of vFunction’s future company goals? “We are investing in global growth beyond North America and Europe as well as continuing to build deeper partnerships with cloud providers, global system integrators, and cloud-native platform providers,” Rafalin concluded.
