Understanding the $28B Splunk Acquisition

Why Cisco is Buying Splunk and What the Deal Says About Data Protection Monitoring

The Bocada Team | October 16, 2023

Why Cisco is Buying Splunk and What the Deal Says About Data Protection Monitoring

Last month, Cisco made a corporate acquisition more than four times bigger than any other in the networking company’s 40-year history, acquiring cybersecurity company Splunk for $28 billion (USD) 

The transaction happened at a significant premium above recent price levels (Nasdaq: SPLK), strongly suggesting Cisco sees upside value in Splunk (even with the premium) that it believes will turn into future ROI.  

So – why did Cisco make the move, and what does it mean for others in the IT and cybersecurity industries? 


Obvious: Immediate Cybersecurity Relevance 

Cisco needs fresh revenue streams to drive continued growth (outside of core networking), and cybersecurity is one of the biggest networking-adjacent areas that is expected to grow at a +15% CAGR (compound annual growth rate) from 2023 to 2032. 

Buying Splunk instantly gives Cisco market-leading products in two categories (SEIM and APM/Observability) that are integral to modern cybersecurity, while maintaining a degree of vendor-agnosticism (because Splunk is designed to centralize, consolidate, and visualize/report on data from just about any source.) 

In Cisco/Splunk’s joint announcement about the acquisition, AI-powered threat prediction is mentioned as one important goal. 

Zero trust is another consideration. As the zero trust security framework continues to gain traction, one can see how Splunk could evolve to become a policy decision point (PDP) for the many policy enforcement points (PEP) Cisco already handles within a typical IT environment. 


Looking Closer: The Rise of Cloud Computing 

Cisco has seen the rise of public cloud services eat away at its aforementioned core business: on-prem networking products and services.  

Yes, Cisco owns WebEx, Meraki, and other cloud-based businesses and has itself shifted many of its software services to subscription (SaaS). But more than 50% of its revenues still come from core networking, which is not expected to be the growth category it once was (in part due to cloud computing). 

While Splunk has offered a cloud edition since 2013, its adoption has been slow. Cloud revenue was just 40% of total revenues in the most recent quarter (Q3 2023), and the company still very much depends on its installed (on-prem) product, Splunk Enterprise. 

Based on cloud revenue alone, the Splunk acquisition doesn’t seem to be a direct investment in cloud computing. 

That said, Splunk’s fate is directly tied to cloud migration initiatives in a very powerful way. 


Tools Like Splunk Help Manage Complexity 

As IT organizations inevitably shift into complex multi-cloud environments — now considered by many experts a best practice for security, reliability, and efficiency reasons — data volumes and complexity will grow by orders of magnitude. 

The sheer amount of disparate data – stored across different public cloud platforms and countless applications, devices, and endpoints – can and does reach fever pitch for many organizations, resulting in: 

  • Security vulnerabilities 
  • Poor response time (to detect and remediate threats) 
  • Compliance failures due to inadequate data protection 

Splunk has been one of the highest-profile solutions to tackle the challenge of managing that complexity by making big data usable — through centralized data indexing, correlation, visualizations, reporting, and automation.  


Bocada: Same Mission, Different Specialization 

Bocada helps backup operations teams ingest their disparate backup and storage metadata into a centralized database, normalize it, and then automate data visualizations, reports, incident tickets, and more. (Note: And if you want to use Bocada reports in Splunk, you absolutely can.) 

Sound familiar? What Splunk does for security teams, Bocada does really well for storage and backup teams. 

As IT environments continue to grow in complexity, tools that centralize and automate data for actionable insights – like Splunk and Bocada – will continue to play an outsized role in future-proofing IT operations. 

Bocada has pushed the envelope for what’s possible in backup and storage monitoring, automation, and data visualization for more than two decades, helping organizations embrace their complexity. Get in touch to request a demo or learn more.