Visualize the last puzzle you worked on. Now, remember how good it felt when you snapped a key piece into place. The fit was snug, it completed a strategic section, and opened up new areas to be assembled. This is how I feel about Cisco’s plan to acquire Viptela—a company that delivers cloud-based Software-Defined Wide Area Networking (SD-WAN) solutions.
Our job is to empower our customers’ digital transformations with the right networking solution that gives them with the best choice for their business model, talent and needs. From a solution perspective, Viptela extends Cisco’s SD networking strategy into the WAN environment in a significant way. It does this by combining Viptela’s cloud-first network management, orchestration, and overlay technologies with Cisco’s industry-leading routing platforms, services, and SD-WAN capabilities. For customers, the acquisition simplifies management, increases digital business agility, and reduces costs.
From my perspective as Cisco’s Chief Digital Officer (CDO), Viptela is also a great fit because the company and its people bring us closer to achieving our vision of delivering recurring value to our customers and the ability to consume that value on a subscription basis.
Much of Viptela’s revenue is subscription based. This means the acquisition will increase the percentage of recurring revenue for Cisco. Further, the SD-WAN market opportunity is projected to reach $6 billion by 2020 at a compound annual growth rate (CAGR) of 76%. * As we increase our share of the SD-WAN market, our recurring revenue will also increase.
Press and analysts like the acquisition. A TechCrunch article stated, “[The acquisition] fits with the service-oriented focus of [Cisco’s] recent purchases, enabling the company to switch from a pure network hardware business, which has been its bread and butter to a services revenue based on the subscription model.”
Per my last blog, we’re not there yet, but we’re one puzzle-piece closer to transforming our business model. Let me know what you think about Cisco’s latest strategic acquisition and our digital business transformation.
* Gartner, 2017