Cisco beefing up app monitoring portfolio with acquisition of Epsagon for $500M

Cisco announced on Friday that it’s acquiring Israeli applications monitoring startup Epsagon at a price pegged at $500 million. The purchase gives Cisco a more modern microservices-focused component for its growing applications monitoring portfolio.

The Israeli business publication Globes reported it had gotten confirmation from Cisco that the deal was for $500 million, but Cisco would not confirm that price with TechCrunch.

The acquisition comes on top of a couple other high profile app monitoring deals including AppDynamics, which the company bought in 2018 for $3.7 billion and ThousandEyes, which it nabbed last year for $1 billion.

With Epsagon, the company is getting a way to monitor more modern applications built with containers and Kubernetes. Epsagon’s value proposition is a solution built from the ground up to monitor these kinds of workloads, giving users tracing and metrics, something that’s not always easy to do given the ephemeral nature of containers.

As Cisco’s Liz Centoni wrote in a blog post announcing the deal, Epsagon adds to the company’s concept of a full-stack offering in their applications monitoring portfolio. Instead of having a bunch of different applications monitoring tools for different tasks, the company envisions one that works together.

“Cisco’s approach to full-stack observability gives our customers the ability to move beyond just monitoring to a paradigm that delivers shared context across teams and enables our customers to deliver exceptional digital experiences, optimize for cost, security and performance and maximize digital business revenue,” Centoni wrote.

That experience point is particularly important because when an application isn’t working, it isn’t happening in a vacuum. It has a cascading impact across the company, possibly affecting the core business itself and certainly causing customer distress, which could put pressure on customer service to field complaints, and the site reliability team to fix it. In the worst case, it could result in customer loss and an injured reputation.

If the application monitoring system can act as an early warning system, it could help prevent the site or application from going down in the first place, and when it does go down, help track the root cause to get it up and running more quickly.

The challenge here for Cisco is incorporating Epsagon into the existing components of the application monitoring portfolio and delivering that unified monitoring experience without making it feel like a Frankenstein’s monster of a solution globbed together from the various pieces.

Epsagon launched in 2018 and has raised $30 million. According to a report in the Israeli publication, Calcalist, the company was on the verge of a big Series B round with a valuation in the range of $200 million when it accepted this offer. It certainly seems to have given its early investors a good return. The deal is expected to close later this year.