Source: CNBC

Today, Cisco said that it would buy AppDynamics, which assists companies in monitoring application performance, for $3.7 billion. This week, it would appear that the long-awaited IPO of AppDynamics has been called off in favor of the big acquisition. Also, it is not the first big acquisition of Cisco in recent times. The company has been very active after paying $1.4 billion for Jasper Technologies.

AppDynamics testing the waters of the IPO market for a potential acquisition

As new kinds of devices find their way onto the Internet, the notion of networking has evolved over time. Now, it seems that Cisco is continuing that move beyond its usual competency. To set a value for itself, AppDynamics may have been experimenting the waters of the IPO market as well for negotiations for a potential acquisition with larger companies. It is completely uncommon that companies are working to drop a filing as well as are intent to go public while doing acquisition talks behind the scenes.

In a release, the company said applications have become the lifeblood of success of the company. The company added that keeping those apps running and performing well has never been more essential.

“Unfortunately, that job has only gotten harder, as IT departments and developers struggle with a tangled web of disconnected, complex data that’s hard to understand,” said the company. Further they said that the combination of AppDynamics and Cisco will let them provide end to end intelligence and visibility from the network through to the application, which combined with scale and security, aid IT in driving a new level of business results.

This move is very necessary for Cisco, here’s why

AppDynamics assists it customers in controlling the performance of business apps that aid them in getting a deeper look into the guts and inner workings of their apps. Companies can spot performance issues and checkpoints more effectively by having a better overview. This may be potentially holding back transactions and other kinds of action.

The main notion is to catch problems before they became major problems and huge headaches for those companies. For Cisco, this means that it is going to get another touchpoint for companies and offer them a better stack to assist them in running their businesses. These kind of moves are pretty necessary for the company which declared in August that it would pare back 7% of its workforce. It is certain that the company is attempting to rejigger itself and bringing a new service like AppDynamics on board widens its portfolio of tools for potential clients.

Already, AppDynamics was competing with the likes of larger incumbents like New Relic and now, the new acquisition will bring Cisco into even deeper and further competition with other software providers in the world. So yes, it is a risky play for the company but it appears pretty certain that the company is willing to take those risks and figure out what it looks like next year.