Cisco, Opsware Team on Automation Software

Updated: As part of a multimillion-dollar deal, Cisco will distribute Opsware's Network Automation System under the Cisco brand and the two companies will work together to develop other network management offer

Cisco Systems will distribute Opswares automation and utility computing software platform as part of a multimillion-dollar deal announced Feb. 13 by the two companies.

Under the terms of the agreement, Cisco will distribute Opswares Network Automation System under the Cisco brand. In addition, Opsware and Ciscos Network Management Technology Group will work together in developing other network management offerings based on the Opsware platform.

Opsware offers a suite of products designed to enable businesses to automate the management resources within their data centers, from servers and applications to network devices and assets. The Network Automation System automates the operations of network devices, from provisioning and change management to compliance and security.

Financial terms of the multiyear deal were not released, though Opsware officials said Cisco will not be selling anyone elses automation software.

In a conference call Feb. 13 with analysts and reporters, Opsware CEO Ben Horowitz said data center automation is about an $8 billion market and that the deal with Cisco will enable Opsware to expand its reach within the market.

Cisco is the most important partnership the Sunnyvale, Calif., company has announced to date, and in terms of revenue, it could exceed the partnership Opsware has with services company Electronic Data Systems, Horowitz said. Based on the last quarter reports, the EDS deal is worth about $20 million in revenue to Opsware annually, he said.

"Cisco is probably the most influential IT vendor we deal with, all told," Horowitz said.

/zimages/2/28571.gifCiscos chief development officer talks company strategy. Click here to read more.

In addition, Cisco selling a network automation product could open up more markets for Opswares Server Automation System, he said. Given the tight linkage between servers and network devices in the data center, its difficult for businesses to automate the processes for one without doing the same for the other, Horowitz said.

Its server automation capabilities also made Opsware attractive to Cisco, he said. The average network automation deal for Opsware was in the $115,000 range, he said. The average selling price for server automation software was around $765,000, he said.

Horowitz said that Opsware wont see many direct benefits from the deal until the second year. Cisco is expected to come out with a Cisco-branded product—it will be labeled as a Cisco product "powered by Opsware," Horowitz said—in the middle of this year, and it takes the company about a year to get its sales force ramped up on new products. By the second year, though, Cisco will most likely be the second largest partnership in terms of revenue to EDS, and could surpass EDS.

Cisco also is creating a research-and-development team around the Opsware deal, which at first will broaden and deepen the Opsware product support for Cisco devices, Horowitz said. Having such backing—as well as access to Ciscos quality-and-assurance laboratories—will only help Opsware as it works to grow the capabilities of its products.

"The R&D work they will do will really pay off for us," Horowitz said.

He added that the Cisco deal—and the possibility that it will lead to expanded markets for Opsware products—should only help partnerships Opsware has with other vendors, such as Juniper and Nortel Networks.

In a prepared statement released Feb. 13, Cliff Meltzer, senior vice president and general manager of Ciscos Network Management Technology Group, said, "Opswares network configuration and change control management solution is an important extension to Ciscos Network Application Performance Analysis solution. This functionality helps customers automate configuration management across increasingly complex IT infrastructures, typically a manual and expensive process, and be able to meet regulatory and compliance procedures."

Editors Note: This story was updated to include comments from Opsware CEO Ben Horowitz.

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