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Cisco Intersight folds in Terraform Cloud amid SaaS revamp

Cisco has expanded its partnership with HashiCorp and readied a SaaS-managed Kubernetes service as it vies for a share of the software-centric market for cloud-native apps.

Cisco's Intersight hybrid cloud management tools will add a dash of SaaS to renew its appeal to enterprise customers moving to cloud-native apps.

Like other incumbent IT vendors, including VMware, IBM Red Hat and Microsoft, Cisco has had to recreate itself over the last five years to stay relevant as DevOps and cloud computing became the norm for many businesses. The networking vendor has made a plethora of cloud-oriented software acquisitions under CEO Chuck Robbins since 2015, including CliQr, AppDynamics, Perspica, ThousandEyes and Banzai Cloud.

One result of that buying spree was the Cisco Container Platform (CCP), launched in 2018, which packages Kubernetes-based hybrid cloud management tools for customers that want to use the container orchestration framework alongside traditional VMs. Cisco also added IP from its software acquisitions to the Intersight data center management portfolio, including the Intersight Workload Optimizer, which builds in Turbonomic cloud management and AppDynamics AIOps features.

Now, Cisco will add SaaS-based management to the mix with the Intersight Kubernetes Service (IKS), announced in December and slated to ship next week, along with an expanded partnership with cloud-native software vendor HashiCorp. IKS will succeed CCP, which based the Kubernetes control plane in a cluster of VMs on premises, with a managed control plane in the cloud.

"IKS takes that on-premises Kubernetes and converts it to a SaaS service," said Vijay Venugopal, head of product management, cloud and compute software at Cisco. "There's no control plane to set up -- you log in to, go to the Kubernetes tab ... and in a few clicks you can create a cluster in a public or private cloud."

Intersight pulls HashiCorp close to Cisco

As it prepares to ship IKS, Cisco deepened its partnership with cloud-native software vendor HashiCorp, both technically and commercially, with this week's launch of the Cisco Intersight Service for HashiCorp Terraform Cloud.

Cisco had already supplied integrations for its data center software and network devices into Terraform infrastructure-as-code tools, but this new service will make Terraform Cloud for Business available to customers through the Cisco price list and sales channels.

Mark Bowker, ESGMark Bowker

The new product automatically deploys and configures Terraform agents within Intersight customers' on-premises data centers, and automatically handles lifecycle management for those agents. It can accommodate both on-premises and cloud-based infrastructure-as-code deployments in one centralized view that treats on-premises data center and edge resources as cloud regions and micro-regions. Users of the service will receive support up to Level 3 from Cisco engineers.

This is the first and only such commercial partnership between Cisco and any infrastructure-as-code vendor, and no others are currently planned with HashiCorp competitors, Venugopal said. HashiCorp officials said they don't have any equivalent deal with another on-premises data center software vendor.

To analysts, the deal seems like an obvious trial run for a potential merger between the two companies.

"There's no question Cisco is a potentially major [suitor] for [HashiCorp]," said Mark Bowker, an analyst at Enterprise Strategy Group, a division of TechTarget. "They're showing their hand a bit by making them a preferred partner, and it's easy to see a connection there if they see enough demand."

Stephen Elliot, IDCStephen Elliot

HashiCorp was considered a ripe acquisition target in the past, until a $175 million round of funding last year pushed its market cap over $5 billion and quieted those discussions. HashiCorp's co-founders have said they'd like to take the company public. Still, Cisco is more than big enough to absorb HashiCorp, even at its higher valuation -- Cisco's free cash flow in 2020 was $14.66 billion.

"Cisco grew up a hardware company, and it has to work to remain relevant in these conversations through software and partnerships," said Stephen Elliot, an analyst at IDC. "There's a number of areas Cisco could buy some more assets, including CI/CD and potentially other IT ops tools like Splunk and Sumo Logic."

Cisco reps declined to comment about whether a HashiCorp acquisition is in the works, and HashiCorp officials did not respond to a request for comment.

Cisco's competitive challenges

Cisco still faces strong competition from the likes of VMware, Microsoft and IBM Red Hat, all of which can appeal to considerable enterprise install bases with their own approaches to cloud-native tools.

Cisco's shift to SaaS-based management for hybrid cloud and Kubernetes isn't unique among those competitors. VMware has a similar centralized SaaS for hybrid cloud Kubernetes management in VMware Tanzu Mission Control, for example.

Some of these players, especially IBM Red Hat, established an early lead in Kubernetes management that will be difficult to beat, according to Bowker. Red Hat OpenShift has built in Kubernetes since version 3.0 in 2015.

It's IBM and Red Hat's game to lose.
Mark BowkerAnalyst, Enterprise Strategy Group

"It's IBM and Red Hat's game to lose," Bowker said. "Enterprises have also invested a lot in VMware and Cisco, but for teams building new applications, Red Hat has an advantage."

However, Cisco has one potential edge in cloud-native apps -- their network-intensive nature. Container-based microservices, which require complex interconnections between distributed application pieces, will force enterprise IT pros to consider new network architectures, from software-defined overlays to service mesh. Cisco's network expertise could appeal to customers from that perspective, Bowker said.

"It depends on who's running the IT organization," he said. "Those that take an application-down approach [to digital transformation] will focus on developer tools, but for those with an infrastructure-up approach, Cisco could have a strong play."

Still, the company has more integration work to do between parts of the Intersight portfolio beyond tying in Terraform, IDC's Elliot said. For example, the Intersight Workload Optimizer does not yet have a Terraform integration, though a Cisco spokesperson said it's on the roadmap.

"Cisco has to build up those connective tissues," Elliot said. "They need to keep stitching that quilt [of software products] together."

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