Cisco to buy Perspica and fold engineering team into AppDynamics

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The canaries in a coal mine

Cisco announced today that it intends to acquire Perspica, a machine learning-driven operations analytics firm that has raised $8.5 million. Cisco intends to fold Perspica’s team into AppDynamics, the company it purchased earlier this year for $3.7 billion.

Cisco did not share the Perspica purchase price.

All of these machinations have a purpose. Cisco is of course at its heart a networking hardware company. Over the past several years, it has been spending its considerable cash on hand — it had around $70 billion as of July, according to Ycharts — to buy companies and transform into more of a services company.

AppDynamics is at its heart an application performance monitoring company, meaning it helps companies understand how their applications are performing and what hardware and software relationships are affecting the performance. That has an impact on customer experience, and AppDynamics has taken that a step further by trying to understand the business processes behind the applications to improve those experiences more directly and also understand the influence of experience on a company’s bottom line.

That brings us to Perspica, a startup that is looking at applying machine learning to large amounts of operations data (not unlike Splunk), and surfacing problems when they appear. This fits rather nicely with what AppDynamics doing, and with Cisco’s overall data-driven strategy.

While AppDynamics CEO David Wadhwani says his company has its share of data scientists, this deal brings a new influx of talent (although they were not sharing exactly how many employees are coming from Perspica) and one that understands a particular kind of machine learning. Instead of analyzing the data after it’s placed in the database, Perspica brings machine learning to data in real time as it streams into the system, and for a company like AppDynamics, this could prove very useful, especially as they monitor increasing amounts of data from a variety of endpoints.

Cisco intends to apply Perspica’s domain knowledge around machine learning and streaming data directly to AppDynamics by embedding the engineering team with AppDynamics as soon as the deal closes, which is expected to happen some time in the second quarter next year. The idea is to help AppDynamics add a real-time intelligence layer to surface more data, more quickly.

As Cisco tries to transform into a software and services companies, it is also seeing a changing technology landscape with far greater complexity. It believes that artificial intelligence and machine learning can help cut through the complexity by letting machines deal with sifting through the growing mountains of data. Ultimately, it wants to be one of the companies at the center of this approach.

Just the other day, Cisco announced a set of services fueled by AI to help companies predict IT failures before they happen. When you put that together with the AppDynamics purchase and today’s acquisition, you start to see where they could be going with this.

These tools when taken as a whole could help customers understand what’s going on inside the data center at the network level, at a systems level, in the cloud and even at the business process level. It appears the goal here is to act almost as a systems integrator, providing a set of services to help customers understand every aspect of their systems and the impact on customers and the bottom line.

While Cisco’s hardware business may be in decline, if it has services like these in place, it could still thrive as a company.  For the short term, it has seen seven straight quarters of declining revenue. Time will tell if this is a viable approach, but it’s clear the company isn’t standing still. It’s making moves like today’s to build a new set of offerings and trying to look to the future.

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