A $1.9 billion deal to acquire BroadSoft is a significant boost for Cisco to become a major player in the “future of work” market. This is another step in the network gear giant’s efforts to diversify itself away from a stagnating hardware business.
Cisco went after BroadSoft, whose software is used to manage communications and ease workflows, in an effort to push into the collaboration market. “This acquisition of BroadSoft actually gives us the most comprehensive set of collaboration solutions for our customers,” Cisco CEO Chuck Robbins told CNBC.
BroadSoft has traditionally been selling its call centre software to large telcos like Verizon and AT&T. However the main appeal of this deal is BroadSoft’s unified communications products, which enables group chats, video conferences, document sharing and other features key to the “future of work” area of communications.
Done right, the acquisition can lead to new opportunities through cross-selling; BroadSoft has more cloud-based services, but Cisco has the heft and the name. Cisco now faces the challenge of how to integrate its meeting and collaboration tools with BroadSoft’s call centre software. Analysts have pointed out potential compatibility issues: Spark is built on a highly secure architecture where each action is encrypted. As it stands there’s a lot of overlap between Cisco’s Spark and WebEx products, and BroadSoft’s Team-One.
Done right, the acquisition can lead to new opportunities through cross-selling; BroadSoft has more cloud-based services, but Cisco has the heft and the name.
Back in 2007, Cisco jump-started its position in enterprise collaboration and communications by buying WebEx for $3.2 billion. WebEx has remained a key feature to Cisco’s product, although the company has been on a M&A spree since the 2016 election. Cisco announced last year it had dedicated $150 million for investment in companies that will help build its work collaboration product, specifically Spark. To that end, Cisco acquired a data-search outfit Synata, whose technology will be used to improve search within Spark, as well as cloud computing startup CliQr for $260 million, in a move designed to ease automation and management of application policies across the entire data stack.
The combined Cisco and BroadSoft now faces competition from two companies with equally significant resources: Amazon (Chime) and Microsoft (Skype for Business). But Cisco is determined to make its new fortunes in the communications arena, and has proven it is not afraid to spend the necessary cash to do so. We wouldn’t be surprised to see Cisco go after more unified communications deals in the months and year to come.
We wouldn’t be surprised to see Cisco go after more unified communications deals in the months and year to come.