Cisco’s planned acquisition of security analytics and observability player Splunk for $28 billion has sent shockwaves through the enterprise IT industry. The news comes as IT professionals and analysts assess the potential benefits and risks for both companies.
Rumors surrounding the acquisition first emerged in February 2022, when Splunk was going through a leadership transition and experiencing slower revenue growth. However, under the leadership of president and CEO Gary Steele, Splunk has since returned to healthy growth. This led to a decline in merger rumors, but now it seems that Cisco is determined to acquire Splunk.
The acquisition is expected to bring together two companies that have been making significant investments in observability and security analytics. Cisco entered the observability market with the acquisitions of AppDynamics and ThousandEyes, and it recently released its Full-Stack Observability platform. By adding Splunk to its portfolio, Cisco aims to offer comprehensive observability capabilities, combining application performance monitoring, digital experience monitoring, logs, and security information and event management (SIEM).
Analysts believe that the combination of Cisco and Splunk makes sense in terms of security and observability. However, questions arise about their capabilities in the field of artificial intelligence (AI). Neither company is seen as a leading player in applied AI, and both will need to catch up in that area.
Another concern is the pricing structure of Splunk’s products. Customers have been looking to move away from Splunk due to its high costs. In the acquisition, Cisco will need to address this issue and make Splunk’s pricing more flexible and understandable. Additionally, the companies will need to work on enhancing Splunk’s hybrid cloud approach, as it currently aligns with only AWS and Google Cloud’s marketplaces.
The cultural impact of the acquisition is also being discussed. Some customers and industry insiders fear that Cisco’s involvement could lead to a further decline in Splunk’s culture. They believe that Splunk’s culture has already been deteriorating over the years, and Cisco’s influence could exacerbate the situation. This could result in talented employees leaving the company.
However, there is optimism that the acquisition could bring positive changes to the security analytics market. Some analysts believe that if Cisco can integrate ThousandEyes, AppDynamics, and Splunk together, it could offer a unique capability in the security space. But others point out that both Cisco and Splunk have had difficulties integrating acquisitions in the past, and they need to focus on consolidating their offerings.
Overall, the Cisco-Splunk acquisition has generated both excitement and concerns within the industry. As the companies move forward with the integration process, it remains to be seen how they will address the challenges and capitalize on the potential synergies.