Cisco To Bolster Service Orchestration Portfolio With Tail-f Systems Buy

In a bid to bulk up its cloud virtualization portfolio for carriers, Cisco Tuesday revealed plans to acquire Tail-f Systems, a provider of network service orchestration solutions.

Cisco will pay $175 million in the deal, which is expected to close in the fourth quarter.

Sweden-based Tail-f Systems makes software that helps carriers more quickly deploy and provision services and applications on their networks. According to Cisco, Tail-f's technology can work with either traditional hardware-based networks -- even if those networks include gear from multiple vendors -- or with software-defined networks.

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Hilton Romanski, senior vice president and head of business development at Cisco, said service orchestration technology is becoming increasingly important as carriers struggle to manage the "explosive growth" of video, voice and data services on their networks.

Many carriers, meanwhile, also feel pressure to deploy services more quickly to fend off increased competition from over-the-top (OTT) service providers like Google or Skype.

"Tail-f will help achieve our goal of aiding customers in their quest to simplify and automate network management, enabling service innovation and deployment acceleration," Romanski wrote in a blog post Tuesday. "The acquisition of Tail-f accelerates Cisco's cloud virtualization strategy of delivering software that increases value to our customers' applications and services, while supporting Cisco's long-standing commitment to open standards, architectures and multivendor environments."

Zeus Kerravala, principal analyst at ZK Research, said the fact that Tail-f can be used with non-Cisco gear will be a big win for Cisco in the carrier market.

"Tail-f is known for its multivendor capabilities, so this will allow Cisco to get their foot in the door with telcos that are not primarily Cisco-based," Kerravala said. "In some ways, it's recognition by Cisco that these multivendor environments are becoming more common."

Technology from Tail-f is used today by major carriers, including Deutsche Telekom and AT&T. In fact, Tail-f in February was among the first group of networking vendors tapped to lead AT&T's Domain 2.0 strategy, which is aimed at transitioning AT&T's network to include more virtualization and software-defined networking technology.

In addition to Tail-f, Ericsson, Metaswitch Networks and Affirmed Networks were selected by AT&T in February to help drive Domain 2.0.

Cisco, however, was not among the selected vendors. Research and trading firm MKM partners in December deemed Cisco an unlikely candidate for the Domain 2.0 program, given AT&T's focus on deploying white-box-oriented architectures.

Bruce Flitcroft, CEO and founder of Alliant Technologies, a Morristown, N.J.-based Cisco and AT&T partner, said Cisco's acquisition of Tail-f is definitely a strategic move, given how important orchestration technologies are becoming to carriers with the rise of software-defined networks.

"Everybody needs things to scale. Everybody is building their own ITSM [IT Service Management] platforms that are automating more and more elements. As we move intelligence away from the device itself and up to the controller centrally -- which is one of the primary objectives of IT for the next decade -- you need more orchestration software and better controls," Flitcroft said. "There are a lot of companies buying up a lot of little pieces of code and software, and cobbling them together right now to build automated managed services."

While larger enterprises are also embracing service orchestration as a way to speed services delivery, it's largely a carrier-focused technology, Flitcroft said. As a result, Flitcroft doesn't expect Alliant to do much business with the Tail-f portfolio.

"It's really geared toward having the carriers outsource work to Cisco," he said.

Cisco said Tail-f employees will join Cisco’s Cloud and Virtualization Group, headed up by Gee Rittenhouse, vice president and general manager, upon the close of the deal.

PUBLISHED JUNE 17, 2014