At Splunk’s .conf24 user conference in Las Vegas, Cisco’s Chuck Robbins appeared onstage in several different guises. First, at the Venetian Resort hotel and casino, the CEO of Splunk’s new parent was his usual urbane, formal self as he welcomed partners of the machine-data analytics company.
In March, Cisco’s $28 billion acquisition, announced last November, had been completed more quickly than expected. Today, partnership will be key to its success, said Robbins: the critical element.
Later, at Caesar’s Forum on the Strip – now baking in 43 degrees (110 degrees F) of heat – the CEO bounded onstage in an out-of-character hoodie to tell the audience of whooping 'Splunkers' that partnership with them, and with former Splunk CEO Gary Steele, stood at the core of the deal.
It was all done with a sprinkle of good humour, of a kind familiar to Vegas veterans who are used to being sprayed with water in the desert streets. But was it all just mist?
On the evidence of .conf24, Robbins’ repartee with Steele, now General Manager of the software company and President Go-to-Market at Cisco overall, suggested a mutual admiration and trust. Enough to convince Robbins to wear a hoodie, in fact, but it seems unlikely that he went as far as roaming about as Buttercup, Splunk’s pony mascot.
In between, however, Robbins and Steele seemed more serious and restrained as they faced the press in a side room. There, they revealed the inner workings of the deal, and addressed fears that the hardware giant might break a software company that is loved by its users, partners, and employees.
The future
Do people still love Cisco – 25 years ago, the world’s most valuable tech company – quite as much? Not according to its stock price, which has been underperforming this week, despite Robbins closing the deal early.
By adding insight and intelligence, Splunk makes Cisco more convincing as a software and data play for the new age in which the big three topics of AI, security, and observability will be essential. But on Day One of the event, at least, observability was mentioned noticeably less than the other two.
So, what does Cisco bring to Splunk – apart from bigger investment muscle, perhaps? Robbins said:
It opens up a broad range of opportunities for 'Splunkers'. It gives a whole different data set to work on, a whole different challenge intellectually, relative to understanding insights about the network, the insights coming out of Cisco’s security products, the AppDynamics portfolio stuff, and our ThousandEyes. It's a broader set of things that they get to work on. And I think that culturally, and from the purpose of what we believe about our communities, there is very much an alignment.
An intriguing perspective: $28 billion to give coders more to play with? Steele expanded on Robbins’ point:
I think the important thing about this acquisition that is hard for people to see is that, because the cultures are so similar, the teams already feel very aligned. It is incredibly collaborative. So many people already know each other. It's crazy the number of people that have worked together in the past or their paths have crossed. I think it's an environment that is more conducive to doing cool things.
Earlier in the day, an unverified figure was floated of 75% crossover between existing users. Robbins added:
This is one big [pause]… company that we are all part of. Then Gary agreed to take on being President Go-to-Market for the entire company. That should be a great example of how we think about this. It's not about a Cisco takeover.
Apparently not. Then Steele added:
At the end of March, literally the whole company came over [to Cisco]. And the only person whose job title changed, across our whole reporting structure, was me. One person across 8,000 employees.
CX
At this point, it is worth reminding ourselves that Splunk warned it was cutting seven percent of its workforce – 560 staff – last November, barely weeks after Cisco had announced its intention to acquire the company. (That’s roughly one employee for every new customer that partners have since brought in.) However, the then-CEO Steele said the decision was rooted in macro-economic uncertainty, and unrelated to the deal. At Caesar’s Forum, he continued:
I start with the customer experience […] and Splunk customers, they are dealing with the same people. It's not like we said, ‘You’re not dealing with a Splunker anymore, you're now dealing with the Cisco rep’. The Cisco rep is in the room, but you’re still dealing with the team that helped drive the outcomes. We’ve been very thoughtful. There's been no change in the economics delivered to customers. There's been no change delivered to our loyal partners. We've really embraced this broad ecosystem to make sure that it doesn't feel like it’s changed.
To which Robbins added:
Any change the customers feel has been positive.
Be the change you want to be, it seems. So, what about the financial implications from day to day? How will they work for Cisco, Splunk, partners, and users? Robbins said:
From the beginning, we said this is about revenue synergies. There will be some cost synergies…but the fundamental issue is that I believe we should spend the first twelve months ensuring that we're doing all the integration we need.
Words that might make M&A historians blanche. But on the conference stage earlier, Robbins was clear that the purchase would mean nothing but a positive integration on all sides, informed by lessons from previous deals. Not the protracted, one-way digestion of a smaller player, in other words. He continued:
We're delivering on the ground – as Gary said, where the Splunk side is continuing to deliver the innovation in its portfolio, and Cisco is continuing to deliver the innovation in our portfolio. But at the same time, we're delivering integration after integration after integration, so that customers are receiving more value than they were before.
The ultimate value that we see from the integrated innovation, is that the Splunk partner community has a real advantage in delivering all that, because they’ve been working with the Splunk enterprise platform. And we're going to provide more integrations from that into the Cisco portfolio, picking up the Cisco product line and seeing new sources of data coming in.
Not to mention revenue, of course. So, what about that all-important Splunk brand – emblazoned on every hoodie and t-shirt in sight? Steele said:
How do we ensure that this vibrant, powerful, highly connected community that has passion and love for Splunk – that that passion and love continues under the Cisco brand? It’s simple, the branding doesn't change. So, what will be Splunk will be Splunk – it won’t be ‘Cisco Data Analytics’ or something weird. It won’t be that! We'll continue to bring together these passionate users in a way that they feel like they're getting the support they need from the company, and they can continue to flourish and do cool things with Splunk.
However, earlier in the day at the partner conference, Steele said something onstage that seemed out of place amidst the chutzpah: “We need to convince partners, by moving the ball down the field, that we are an innovator”. I asked him, who was the ‘we’ he referred to: Splunk, or Cisco? And why would partners need convincing on the subject of innovation? Jumping in quickly, with a glance at Robbins, Steele said:
If you look back at the history of all acquisitions, what oftentimes happens is innovation slows down. But what we will be doing is continuing our pace of delivery, and continuing that pace of innovation that delivers great outcomes for customers. And that is going to prove to everyone that that pace of innovation will continue to accelerate under Cisco, versus slow down. Nothing more than that.
Also at the partner event, host Gretchen O’Hara, VP of Worldwide Channels and Alliances at Splunk, observed that Cisco will be the “rocket fuel” for Splunk. What did she mean by that? Was she referring to greater investment, for example? Steele responded:
In many dimensions, Cisco accelerates us. And most predominantly, when I think about our long-term mission of digital resilience, in a lot of ways the assets that exist within Cisco help us move forward in a meaningful and compelling way.
So, what is that? He said:
It's usability all the way down at the network level. It helps us understand, for example, whether there is some form of network outage that's affecting some end-user application. Or it helps us understand lateral movement, or what we're doing in threat detection. So, what Gretchen was referring to is that acceleration that you get when we have these amazing assets from Cisco, that drive us on this journey.
At this point, Robbins jumped in, saying:
You can't underestimate the power of Gary being as deeply integrated into what we're doing here as he is. He's leading the integration, right? And in a traditional acquisition, we would not have done that. But Gary has led the integration. Now Gary is running all over the market for the entire company. He's completely involved in every decision that is being made at Cisco level. Not just at Splunk level. That's a big difference from most acquisitions. I think that's going to be huge, relative to how we ensure success of this.
Roadmap
The roadmap and everything that Splunk was doing before are still the priorities in this new context, Steele explained:
What happens in most acquisitions is people throw that out the window. They just talk about it. They sit in conference rooms and contemplate life, and talk about what that integration should look like, but they do nothing. But we’ve been very focused on, again, making sure that we're delivering on the critical commitments to our customers that we made with our roadmap. So, how do we get to ‘one plus one equals three’? There's one dimension which is product. But the second dimension is our paths to market […] especially where we still have a relatively small footprint.
In very big strategic markets, Cisco has the boots on the ground to bring Splunk into those markets that, traditionally, we just haven't gotten into. Then we've also had this collaborative effort to open the doors to 5,000 Cisco customers that have not any Splunk experience. So, it's very specific, very tactical, and measurable. To get to ‘one plus one equals three’, innovation is the next step. And leveraging that to go to market.
Robbins was philosophical, saying:
When you spend $28 billion, my belief is you should make sure that you're actually delivering on the strategic vision that you believed was possible, as opposed to cutting immediately. We had increased R&D built into our model when we made the acquisition.
My take
On the conference stage later, Steele asked CEO Robbins what he wanted people to remember from the conference – the big takeaway message. Robbins replied: “We want to be the Splunk you love, only better.”
But the truth is bigger and more interesting than that. Splunk – founded in an age when Cisco’s stock, in every sense, was no longer seen as sexy – is teaching its new parent how to be a software company.
