Cisco may have declared itself with regard to its growth and cloud strategy. Thursday late, they announced they’re going to acquire ThousandEyes, a company with a big name in “experience monitoring”, meaning quality of experience (QoE). Monitoring, particularly monitoring related to QoE, has good potential to serve as the centerpiece of an “ecosystem”, something that could combine with Cisco’s previous AppDynamics deal to help differentiate Cisco as it faces increased open-model competition. It also raises an interesting point, which is that the Internet and public clouds are a growing part of almost every enterprise’s digital storefront, but something out of their direct control.
The Internet and cloud computing have complicated a QoE and monitoring problem that was already complicated enough to be rated among the top four problems in CIO surveys I’ve done over the last five years. QoE measurement in a company network is a matter of network QoS, application performance, server load, and other factors. It’s been common to insert monitoring agents at various places to measure QoE (user response time and variability) and to pin down any factors that are creating QoE issues. If we assume that we have Internet access via web servers or mobile apps, cloud front-end handling with various policies for scaling under load or positioning processing in the same geography as users, and then we hand off to the traditional back-end piece of the application…well, you can see the problem.
Maybe you can’t, because the biggest challenge here is that you can’t stick agents in someone else’s infrastructure. What ThousandEyes has tried (with good success by most accounts) to do is to monitor things like the Internet and cloud infrastructure at critical places and create a kind of map of QoE-related parameters, which can then be combine with whatever specific monitoring the user can deploy. This is the literal “thousand eyes”. They also offer software-hosted agents that infrastructure owners (like users) can install, a kind of “private eye” extension. The real and virtual worlds combine in today’s application, and they combine to influence QoE. That has to be reflected in any QoE monitoring.
Cisco, of course, has the ability to gather a boatload of good QoE-related data from its own network products, and the network, of course, is the best place to get a general idea of what’s going on, QoE-wise, because it connects everything. You might not be able to measure specific transaction response times easily without deep inspection and correlation, but you could tell whether arriving packets at a server were queued or how long it seemed to take for transit. But AppDynamics can do a lot more, even to the point of looking inside the code (where it’s accessible) to see where specific bottlenecks are.
OK, this lets you do a really great job of monitoring QoE in all its guises and disguises, but how does that help Cisco avoid commoditization? That’s the (rumored) billion-dollar question. Would ThousandEyes’ revenue, at Cisco’s multiplier, be accretive to share price? Probably not by itself. Would Cisco’s salesforce be able to sell enough extra “eyes” to make the transaction a positive? Possibly, even perhaps more-than-possible. Could other factors make it a killer deal? That’s also possible, because Cisco can add a lot of AppDynamics and network data to the mix.
Knowing something has gone wrong with QoE, knowing roughly where it went wrong, and being able to call the responsible team to work on it is valuable in itself. “It’s raining, so bring in the laundry.” Knowing something looks like it will go wrong, and you have a more effective response. “Got the south 40 plowed yet; looks like rain.” But how about being able to do the right thing in either situation, without intervention? Rain takes in the laundry, threat of rain schedules plowing. Efficiency.
The question is how far along that value chain Cisco might be comfortable going. Cisco’s Application-Centric Infrastructure model is more than just recognizing (or even anticipating) conditions, it’s about policy-based responses. How would “Application-Centric-Universe” sound in marketing pitches? Your infrastructure, your cloud, your Internet, your user’s devices…all of this could be touched by Cisco’s mighty hand. Doesn’t just the thought of that pitch make you want to run out and sell?
Networks, data centers, and applications are all piece-parts. Sure, you can try to sell someone a piece of their IT pie, but if someone else is offering the pie, ice cream, and a seat for you to enjoy, it’s going to resonate. Business buyers want business solutions, not the building-blocks needed to assemble them. QoE monitoring could give Cisco the core of an experience-guarantee ecosystem, and that’s what CIOs are likely to be very interested in hearing.
The theory that the ThousandEyes deal is “to make a deeper push into software” as CNBS says, seems a bit simplistic at best, and downright lame at worst. You can only make money on an acquisition by doing more business after than before, relative to what you paid. Sticking a “we’re into software” sticker on Cisco’s annual report isn’t going to cut it, and I think Cisco knows that.
Does it know how far it needs to go, though? I raised that question earlier, and it’s a good point to close with. Cisco’s ThousandEyes excursion deep into experience management builds value steadily as you move from monitoring current conditions, to anticipating issues, and on to dealing with them. So does the cost and time needed to move. Starting small is always a possibility, but it gives more agile opponents an opportunity to step ahead, and the company with the first big move gets to define the competition. Being bold is also a possibility, but that puts Cisco where it doesn’t want to be—responsible for developing a market.
I’m betting on the middle ground—QoE monitoring plus AI analysis to predict issues before that happens. I think Cisco would be comfortable with that, and that the market would reward the initiative.
https://www.appdynamics.com/product
https://www.cnbc.com/2020/05/28/cisco-acquires-thousandeyes-to-make-deeper-push-into-software.html
https://blogs.cisco.com/news/cisco-corporate-news-announcement-may-2020