IT ops pros weigh benefits, risks of Cisco's AppDynamics APM deal

IT operations teams ponder the fate of AppDynamics' application performance monitoring technology after it's acquired by Cisco, which has stumbled in recent efforts to diversify in cloud.

One of the most popular IT operations management software tools has been snapped up by a legacy networking vendor whose most recent software-based efforts to expand haven't panned out.

IT pros who use or have recently evaluated AppDynamics application performance monitoring (APM) software understand Cisco's move in acquiring the soon-to-be-IPOed private company and diversify its business. They also acknowledge AppDynamics' monitoring tools for infrastructure could become stronger from the deal. But it's not lost on them that Cisco also acquired Piston Cloud, Metacloud and CliQr, in an attempt to get the ill-fated Intercloud effort off the ground over the last three years. However, Cisco shut down those efforts in December.

To an IT purchaser of software products who watches such deals from the sidelines, questions about whether AppDynamics could suffer a similar fate are fair, said Daniel MacDonald, architect and principal technical lead for a New York public utility agency. MacDonald recently evaluated AppDynamics APM for an IT operations management software project that has been tabled for now, but he'd be cautious if he evaluates the product again down the road.

"There is concern, but I would give [Cisco] the benefit of doubt if they provided strategy and roadmap," MacDonald said. "Otherwise, I would probably wait on buying it."

So far, MacDonald said, the strategy behind Cisco's purchase is sound.

"The networking hardware business is dying, and with IoT and containers, data routing and network will rely much more heavily on software-defined networks," MacDonald said. "Tools [like AppDynamics APM] are a big component necessary to give insights into this world."

We hope that when we select the communications link between two nodes, AppDynamics will allow us to see all the networking infrastructure it goes through and where slowdowns are. Right now we have to look at separate tools for that.
Nuno PereiraCTO, iJET International

Cisco's long-term role in the cloud world remains unclear, said Nuno Pereira, CTO of iJET International, a risk management company in Annapolis, Md., and an AppDynamics customer. AWS X-Ray, which launched at last year's re:Invent conference, already looks to him like a strong competitor for AppDynamics.

However, Cisco's networks interconnect multiple cloud providers' data centers; the combination of AppDynamics software and the data flows Cisco's networking gear can access could generate powerful multicloud monitoring use cases, Pereira said. At the very least, he hopes this will flow back into AppDynamics with more fine-grained insights into the network infrastructure.

"In the future we hope that when we select the communications link between two nodes, AppDynamics will allow us to see all the networking infrastructure it goes through and where slowdowns are," Pereira said. "Right now we have to look at separate tools for that."

More M&A likely in IT ops management market

AppDynamics is a hot commodity in IT operations management software, as APM tools have begun to expand to offer full-stack monitoring. AppDynamics was headed for a $100 million initial public offering (IPO) of public stock when Cisco swooped in with a whopping $3.7 billion offer that AppDynamics investors clearly couldn't refuse.

The company's strength and the fact that CEO David Wadhwani will stay on are encouraging signs as Cisco takes another run at the wider IT market from its networking niche, analysts say.

"It's always the case when a company you're aligned with gets acquired -- you wonder what's going to happen," said Milan Hanson, analyst at Forrester Research.

Forrester advises clients to do exactly what Cisco is trying to do -- diversify and branch out in their IT efforts, and deploy tools that can bridge traditional IT silos.

"It's really too early to say, but AppDynamics adds a lot of value," he said. "I have trouble imagining them being crushed in the next year or two."

AppDynamics had 1,975 customers as of last October, according to its IPO prospectus. Cisco is among those customers, along with Expedia, eHarmony, Hallmark, the Container Store and, which are listed on the AppDynamics website.

IT pros should expect further consolidation ahead in the IT operations management software space, particularly application performance monitoring, Hanson said, though a deal this big from a company such as Cisco isn't likely to happen again.

"There are a lot of players in APM, some of them very new," he said. "It's likely we'll see some APM vendors joining forces and customer bases, becoming stronger in combination."

Beth Pariseau is senior news writer for TechTarget's Data Center and Virtualization Media Group. Write to her at [email protected] or follow @PariseauTT on Twitter.

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