Global tech giant Cisco just announced the acquisition of US business software company AppDynamics for a whopping $3.7 billion which makes it one of the most expensive deals by the company. The founder and chairman of AppDynamics is Jyoti Bansal, a techie from India. Cisco’s recent moves suggest that it has been trying to move away from just a networking business to the software and services sector. Interestingly, the deal to bring AppDynamics to Cisco, just a day prior to when the company was set to go public. As far as the cost of the deal is concerned, it is very high for a company whose valuation is $1.9 billion. However, App Dynamics is one of the leaders in Software-as-a-service (SaaS) area. The company essentially brings in a wider strategy to Cisco, a company which has made its intentions clear by paying such a huge amount for a serious company.
Cisco has been trying really hard, to enter the software focussed shift, and that has been evident with its big money acquisitions of Jasper Technologies ($1.4 billion) and Sourcefire ($2.7 billion). According to an official announcement by Cisco, AppDynamics will be integrated into its tech stack so that the end to end monitoring can be done in a better way. This is a clear indication of a shift towards software-centric solutions. Cisco might also face the dilemma of single or multiple analytics engines for databases, networks and the cloud.
Rob Salvagno of Cisco said, “Digitization and the transition to the cloud are forcing the worlds of IT and business to blend together. In the digital economy, applications are critical. Combining real-time visibility and intelligence at the network, security and application layers is transformational for companies. It can provide them with insight into the state of their business and, most importantly, into the quality of their customers’ experiences. To drive this transformation, we are excited to announce Cisco’s intent to acquire AppDynamics, Inc., a leading privately held application intelligence software platform!”
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Meanwhile, the acquisition will create a lot of commotion in the Application performance management (APM) market. It also means more and more players in the APM market will try to get acquired by big companies, which essentially means there will be more offerings with better analytics and automation. However, Cisco is not the only big company which will trigger the trend, as companies like Microsoft, IBM, HP enterprise and others have been working in the field of APM solutions.
Salvagno added, “Together with Cisco’s industry leading digital network architecture, customers will now have an unprecedented end to end insight across their technology stack, from infrastructure to application. With this insight, companies will be equipped to improve customer experiences and accelerate revenue opportunities. The acquisition of AppDynamics also supports Cisco’s strategic transition toward software-centric solutions that deliver predictable recurring revenue.”