March 29, 2011
Cisco announced today its intent to acquire NewScale, a small, but well-respected automation software vendor. The financial terms were not disclosed, but it is a small deal in terms of money spent. It is big in the sense that Cisco needed the kind of capabilities offered by NewScale, and NewScale has proven to be one of the most innovative and visible players in that market segment.
The market segment in question is what has been described as “the tip of the iceberg” for the advanced automation suites needed to create and operate cloud computing services. The “tip” refers to the part of the overall suite that is exposed to customers, while the majority of the “magic” of cloud automation is hidden from view – as it should be. The main capabilities offered by NewScale deal with building and managing the service catalog and providing a self-service front end that allows cloud consumers to request their own services based on this catalog of available services. Forrester has been bullish on these capabilities because they are the customer-facing side of cloud – the most important aspect – whereas most of the cloud focus has been directed at the “back end” technologies such as virtual server deployment and workload migration. These are certainly important, but a cloud is not a cloud unless the consumers of those services can trigger their deployment on their own. This is the true power of NewScale, one of the best in this sub-segment.
We fully expected someone to acquire NewScale sooner rather than later and Cisco is a good home for it. Cisco has been quietly building its own cloud automation competency, acquiring Tidal Software for process automation, LineSider and Pari Networks for network automation, and now NewScale. We applaud all of these moves, but Cisco must get more aggressive with its acquisitions and clarify its vision for automation. As it builds this portfolio, it also competes with itself via a partnership with BMC Software and its VCE joint venture with EMC and VMware. It was wise to hedge its bets with multiple options during its exploratory stages, but as the market for cloud computing and automation continues to evolve, Cisco needs a consistent strategy around which all Cisco employees, customers, and partners can rally. In its bigger battles with the likes of Dell, Fujitsu, HP, IBM, and Oracle, this cohesive strategy is critical.
In any of Cisco’s three strategic directions for automation, NewScale is a great asset!
- artificial intelligence (AI)
- cloud computing
- infrastructure & operations
- service catalog