Cisco is set to acquire AppDynamics, a privately held application intelligence software company, in a $3.7 billion deal.
US-based AppDynamics was founded in 2008 and filed for an IPO last month.
Its App iQ platform is used by companies, including telcos such as Bouygues Telecom, NTT and T-Systems, to analyse the performance of applications in real time.
Cisco has been a customer itself since 2013, when it rolled out the AppDynamics platform across 23 data centres to improve the performance of its cloud security arm.
AppDynamics is slated to become a new software business unit in its new owner’s IoT and Applications division when the deal closes, which Cisco expects to happen in the third quarter of its fiscal year.
AppDynamics will continue to be led by current CEO David Wadhwani.
Rowan Trollope, Cisco’s Senior Vice President and General Manager, IoT and Applications, said: "Applications have become the lifeblood of a company's success.
“Keeping those apps running and performing well has never been more important.
“Unfortunately, that job has only gotten harder, as IT departments and developers struggle with a tangled web of disconnected, complex data that's hard to understand.
"The combination of Cisco and AppDynamics will allow us to provide end to end visibility and intelligence from the network through to the application; which, combined with security and scale, and help IT to drive a new level of business results."