Hello everyone, thank you for joining. I'm Heather, your Webex host for today's event. In a moment I will turn things over to the speakers, but before doing so I have a few housekeeping notes to cover. Please note you've been muted; should you have any questions, please submit them by using the Q&A panel which is found at the bottom right of your screen. When submitting a question, please be sure to select All Panelists, and if you happen to experience any issues, please reach out to me directly. With that, let's get started.
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Thank you, Heather, and thank you everyone for joining us today. I'm Sami Badri, Head of Investor Relations at Cisco. Today we have a pretty good lineup, and we are waiting for Amit to join us. He'll join us very, very shortly. He's just having a little bit of issues joining in, but I wanted to get this panel started just so we can present all the information we have for you today. So welcome to today's Cisco's Tech Talk on Observability and Applications. I'd like to introduce today's speaker, Liz Centoni, currently our Executive Vice President and Customer Experience Officer at Cisco. In her role, she leads a 20,000-person team who helps customers transform, differentiate, and accelerate their business value through a broad portfolio of software, subscription, and lifecycle services. Liz will give a presentation after which there will be a Q&A session.
If you have questions, please enter it into the Q&A panel which you can find at the bottom right hand of your screen in the Webex window. Before we begin, I'd also like to remind everyone that today's call relates to Cisco's observability and applications businesses only, and that no new financial information regarding Cisco's overall business is intended or implied. We make forward-looking statements which are subject to risks and uncertainties outlined in detail in our documents filed at the SEC, including our most recent filings of Form 10-K and 10-Q. Actual results may differ from statements made today. And then just to introduce Amit's title, Amit Daryanani, who will be hosting the Q&A session of this presentation, is a Senior Managing Director at Evercore ISI covering the IT hardware and network equipment sectors.
I'm now going to hand it over to Liz Centoni, and Liz, you can go through our presentation slides, and we'll be joined later by Amit.
Thank you so much, Sami. Amit, I'm hoping you can join soon. Looking forward to the chat. Thanks. Hello everyone, and thanks for the time, and thanks for the interest in a topic that's near and dear to me. I'll start with a presentation as Sami talked about, and then we can go into Q&A. When we think about observability, I'd like to start with what this actually means to our customers. What it means to our customers, I mean, think about any application that you have. This is really around what you want is a most secure and delightful experience. Anything from a food ordering application to the application that you use for your cars, for that matter.
And what our customers tell us is their biggest challenge is that they need to be able to deliver this optimal and secure experience, whether it's their customers, their partners, or their employees. They have three major challenges. One is they have way too many tools in their environment. I've talked to customers who have anywhere from 10 to probably about 150 different tools in their environment. What it means for them is when there is an issue, and before you can even actually experience that, they want to be able to solve for that. But when they have this many tools, the time it takes, or what they call the Mean Time to Resolution, is very high. And that means a bad customer experience. Given that there's multiple teams that are involved in this, your network teams, your security teams, your application teams, they're all sitting in different silos.
They have their own tools, and it causes friction among these teams that are trying to figure out where exactly is a problem. Most of the time, what they're looking for is a Mean Time to Innocence, as we kind of jokingly call it, but it's really around how do we give our customers the visibility and insights into their entire application landscape, whether that's the end-user device, whether it's a mobile app, whether it's a web app, whether it is the application, network, internet issues, security issues. You have to tie this in context to the business as well, because one thing to keep in mind is our customers get a lot of alerts, incidents, and events. How do they actually prioritize what really matters to the business?
That's where we focus on, is where we tie it to the business context, whether that business context is around impact to the revenue, whether that business context is around cost, whether that business context is related to security risk, or even overall the customer experience. So when we talk about full-stack observability, it includes everything from networking to infrastructure across multiple clouds, on-prem, public clouds, private clouds, the application itself, security, and the end user. You need to be able to bring this all together to be able to deliver that capability in terms of what our customers want as a very differentiated experience so they keep their customers happy. You keep customers happy, they continue to buy your products. If you don't, there's in some cases a lower barrier to entry where they can move on to a competitor's product.
What we focus on is, again, on how we take the unique assets that Cisco has across everything, networking to infrastructure, application, security, and be able to deliver this visibility and insights and enable our customers to be able to take action tied to the business context to be able to deliver the solution. Over the last few years, we have been shipping a wide variety of use cases. What you'll see us talk about is more around how these use cases enable our customers' business outcome. We simplify for them by integrating capabilities within Cisco that deliver these use cases. We've got a comprehensive set of use cases that are differentiated also because we have assets in Cisco across all that actually come together to be able to deliver this.
So with anything observability, you need to be able to observe applications, whether they're traditional applications, whether they're hybrid applications, or whether they're cloud-native applications. And customers want to know, what is this going to cost me? How do I actually optimize those resources? Because more often than not, when an application is deployed, it's deployed with a significant amount of system resources because you want to make sure that the application can perform at its highest level. But most often, that application in runtime doesn't really need all those resources. So we provide capabilities in helping customers optimize not just the performance, but the right cost as well, whether that's on-prem or in the cloud. We bring together capabilities across networking and observability to deliver what we call the best digital experience monitoring.
I'll go into that in a little bit. In Business Risk Observability, it's mostly about how do we keep the application secure, not just when the application is deployed, but in the development of the application itself. Like API Security comes top of mind there. And then AIOps, which how do we bring together to tools that IT has and make IT's life easier as well. So before I go into details on these use cases, in the last, I think, Investor Day that we had, we talked about the significant size of this market. We got into the application performance monitoring space with AppDynamics. It was an acquisition that we made a few years ago. And today, the way we look at the market is more around APM is still a large and fast-growing opportunity.
It's more than $9 billion in terms of TAM today, and it's growing at a double-digit. It's expected to reach about $11 billion in 2027. We also see where customers are moving towards is around how to blend APM together with network performance monitoring and security monitoring to create what we call the full-stack observability opportunity. And while we see customers moving towards FSO, there's a number of customers who just even need an APM solution. So our focus is on, we'll meet customers where they are, if it's just an APM solution with AppDynamics or a full-stack observability capability that includes APM as well as network monitoring and security monitoring as well. While cloud-native application monitoring is growing fast, an interesting bit of information is that in our customers' environment, 85%-90% of the current addressable market is still focused on traditional applications.
This is a place where AppDynamics does really, really well. It is a very differentiated capability. For us, as you can see, the opportunity growing from $33 billion-$48 billion, again, it's defined by the importance that our customers place on observability as part of delivering the best outcome to their customers as well. When we think about kind of the key market trends that we see, I've been in the observability space for about the last four years. There are three things that our customers are increasingly focused on. One is the drive towards end-to-end platforms because this is really around the focus on end-to-end visibility across multiple environments, whether the application is deployed on-prem, whether it's deployed in the cloud, or it's actually spread across on-prem and the cloud as well.
The objective of driving towards multiple use cases is, again, to reduce the complexity and reduce the tool sprawl that's out there because the focus is really around how do I get to use case to resolve the issues as fast as possible, to get to Root Cause Analysis as fast as possible. What we built is the Full-Stack Observability platform that brings data together from multiple of these domains, whether that's the application, networking, multi-cloud infrastructure, cloud services, security, endpoints. Think about this as everything that impacts the performance of an application. We bring data across all of those domains to provide that visibility, insights, enabling our, and again, tied to business context, enabling our customers to address the issues that impact, whether it's revenue, cost, or even security risk, for example.
The second thing that we see our customers moving towards is an increasing focus on the role of AI/ML. Now, I do want to say that as much as everyone wants to talk about generative AI, and we do as well, predictive AI is something that we've had in our portfolio for a long time. One of the things that AppDynamics does really well is around doing a dynamic baselining around the application behavior. This is based on machine learning and AI that we've done for quite some time because you're munching together gobs of information that allows you to look at dynamically, not just at a point in time around the application behavior. And we've done that for not just dynamic baselining. We've done that for anomaly detection.
Now, with generative AI, we get the opportunity to develop capabilities to, again, monitor LLMs, cost of those LLMs, and make it easier using natural language to be able to access capabilities in the portfolio and simplify it for our customers as well. I'll touch on it a little bit. Interestingly enough, we see more and more customers viewing AI and generative AI capabilities as a key differentiator. The third one is one that we've talked about for the last three plus years around this convergence of security and observability. Interestingly enough, we see cloud adoption driving that convergence between observability and security. AppSec is a great example of that, bringing together dev, sec, and ops as the three different personas coming together.
So that shared telemetry or that shared data between those teams and creating that frictionless instrumentation across the use cases are becoming increasingly important to our customers. Interestingly, initially when we talked about it, very few did. And now you'll see across the board, across all the vendors in the space, talking about how Dev SecO ps need to come together to deliver the best experience. And what we've done is delivered capability around application security through the entire lifecycle of the application, from development to runtime, truly delivering DevS ecO ps for that matter. Why are we differentiated?
The most comprehensive observability solution requires us to require any vendor to bring together capabilities across everything that addresses the application, anything that the application has a dependency on, and the ability to do it across, whether it's hybrid, whether it is around on-prem, and also the ability to do it across applications that are hybrid and cloud-native. We do that today. We've got long-term leadership in certain application categories like SAP monitoring. I'll touch on that a little bit on why this is truly important to customers because it actually hits their pocketbooks pretty significantly. And tie that to the business context. I know I keep emphasizing on that business context.
And that's increasingly important because the speed at which you can actually resolve issues and get to root causes fast as possible can only be delivered when you actually be able to tie it to the things that matter most to the customers, the ones that have the most business impact. And this is a unique capability that Cisco delivers that I haven't seen any of our competitors do, an ability to deliver that end-to-end customer digital experience, which is called digital experience monitoring and things like session replay, cost insights, and resource optimization like I talked about. It really is around how we bring in the best capabilities that Cisco have, the assets that we have across applications, across networking, and security. And on the go-to-market side, it's not just around technology. On the go-to-market side, it's the trust that customers put in us.
If you look at our larger enterprise install base, every customer actually needs these capabilities. Working together with our own sales machine and our partners and the ability to be able to take this to customers with delivering the business outcomes, these are all the things that we're differentiated on. While we still have the Splunk acquisition pending, and I was a lead on that Splunk acquisition from day one, there is a Better Together story with Splunk that I'll touch on towards the tail end of the presentation that I'm super excited about because it gives us the opportunity to cover even more around the end-to-end capabilities that our customers need across this multi-hybrid cloud environment.
The data between what Cisco has and what Splunk has allows us to deliver insights, enabling customers to take action not just in a reactive way, but in the future in a proactive way as well. Before I get into kind of details on our use cases, I thought it would be good to hear from what our customers say. I picked a small subset of our customers and what they say about Cisco AppDynamics and full-stack observability. Here's Vodafone, who will tell you that you can treat the problems at the source, not just manage its symptoms on the front end.
This is important because you want to treat the issues systemically, not just address the root cause to be able to, and that's what we do with our Full-Stack Observability solution because of the deep visibility and insights and being able to pinpoint where exactly the issue is, whether it's on the infrastructure, whether it's in the network, whether it's actually related to latency or traffic issues in the internet, whether it's a third-party service that you're using from another SaaS service for that matter. First Abu Dhabi Bank will say is we needed complete visibility across everything that's happening within our application. This goes back to what I talked about before. It's not enough to just have Application Performance Monitoring because it gives you a limited view of where the issues are. So the application developer is saying, "Actually, you know what?
It's not within my application. I'm good." And the network person is saying, "It's not within my network. I'm good." But the ability to deliver that end-to-end visibility is important in a financial sector or in any sector for that matter, to be able to have and be able to take action and address what's happening with the application. EasyJet is a great example of where they've gained real-time insight and control over the observability data because this data is sitting in different places, and every silo has visibility into just their specific domain. And the benefit of this across to everyone who's involved in delivering the best application experience is that they now see a common set of correlated data. So they're spending less time on saying, "It's not my issue," and more time on what the organization needs.
How do we get to root causes fast as possible, reduce any performance impact or security impact on the end customer, keep the end customer's trust, keep them happy, and focus the team on doing things around creating new capabilities versus trying to dig in and understand where an issue is? So just a couple of three customers that see the value proposition of what Cisco AppDynamics and full-stack observability offer. Another one is around. This is from Gartner. And I would love to read this out around how Gartner recognized Cisco. Or so, Gartner talks about how Cisco was recognized by customers on Gartner Peer Insights as a customer choice in the recent December 22, 2022, for application performance monitoring and observability.
When you take this combined with what you see from our customers, the vision and strategy that we've had for Full-Stack Observability and what it means in terms of bringing together these assets, simplifying for our customers, is not just showing with what our customers tell us, what our customers talk to Gartner about as well. That is really good to see primarily because over the last couple of three years, the engineering teams have done a fantastic job in delivering capabilities, not just what we organically, on top of the asset that we purchased about 5-6 years ago as well. Here I'd like to pivot and go into a little bit more detail around what is included in Full-Stack Observability. I'll start with the platform. Our focus on building this platform was really around how do we reduce the tool sprawl?
Instead of having 10-150 tools, how do we help our customers have fewer tools? Our customers are not going to go down to just a single platform or a single tool, but fewer tools helps them reduce the total cost of operations. It helps reduce the friction between the teams. It gets to root causes fast as possible, which means you need to be able to have a platform that can actually ingest data at scale from multiple different sources as well. And we do that. MELT stands for Metrics, Events, Logs, and Traces. So we collect data from multiple of these, and we combine that for a single entity view for a multi-dimensional visibility. This single entity view is unique to Cisco's observability platform, and it allows us to find that needle in a haystack much faster than what you would find with other platforms as well.
The ability to do that cross-metrics, events, logs, and traces troubleshooting allows us to be able to find that anomaly detection and get to root cause faster. The way we built this platform is we built this open. We actually had it native OpenTelemetry-based and API-driven and extensible as well. You'll see that later around how we empower solution developers like third parties develop on top of our platform. At last count, we had about 20 developers who have developed applications on top of the Cisco observability platform, in addition to those 7, 8, and increasing number of use cases I showed earlier that are on our platform as well. This openness is something that customers absolutely will rally towards because it gives them optionality to even take something that's unique to them and build a use case on an application on top of that.
So this is where the flexibility that we provide with the Cisco observability platform is around, hey, you build your own applications. You can extend the applications that we build or partners build as well with their own modules and with things that may be your secret sauce and even create some of those custom experiences to differentiate to whether it's our customers' employees, whether it's their partners or their end customers as well. What the observability platform delivers is a number of use cases. I talked about eight of them before, eight to nine, and they keep increasing. These are the four that when I go out and see customers that they want to talk about the most. It's SAP monitoring, Business Risk Observability, which is mostly around application security, Digital Experience Monitoring, and AIOps. So let me go into each of them in a little bit.
On the SAP monitoring with AppDynamics has been something that has always been unique and differentiated because customers want to be able to have real-time insights into their SAP environment. They want that visibility into what are the bottlenecks in the SAP transactions and be able to root cause and address that issue as fast as possible. Now, why is this so critical? Why is this a use case that focuses just on SAP? Because just one minute of downtime in a critical application like SAP can cost the average enterprise almost $10,000. So yes, it's got an impact as far as experience is concerned, but the cost, when you think about multiply that by about times 60, and it starts to hurt really, really soon. The next one is around Business Risk Observability.
This is really around how do we secure both traditional and cloud-native applications and workloads and resources as well? And tie that to business context because helping our customers secure their applications and data, whether it's in development and runtime, is absolutely important. I mean, think about yourself. If an application that you're using and if that organization, that enterprise loses your credential, loses your data, your trust in them falls down pretty significantly. This is what we're enabling for our customers. Just an example of this is where we provide capabilities like understanding API security dynamically, not just when it's developed, but through the runtime of the application.
And we also integrate this with vulnerability assessments and risk data from our security portfolio, where we can provide customers with a risk scoring, a real-time risk scoring of applications and all the services that make up the application, which helps them understand which application, which services have the highest likelihood of being exploited. And when you tie that to business context, they can address the ones that have the highest impact on their revenue, the highest impact on their risk profile, the highest impact on cost, and the highest impact on user experiences as well. Now, as part of this Business Risk Observability, and you can see the pace at which we're organically developing capabilities, this was organically developed. What we recently announced is our Data Security Posture Management, and it actually ships in a couple of three months out there.
It's really around providing Gen AI-powered data security and data lineage, how we detect sensitive information, discovery of compliance violations, analyze the root cause, and take action. As you can see, within every use case, the capabilities on how we bring Cisco capabilities organically, what we've developed to be able to address critical needs of our customers as they look at the security assessment of their entire landscape that impacts the application. This is a great example of where DevOps teams and SecOps teams need to be able to work together versus working in silos. By delivering this, we help SecOps do what they need to focus on, on the compliance.
We enable DevOps to do what they do best in terms of delivering creatively new features and capabilities, and reducing the friction between the two of them is enabled by the capabilities that we deliver. So I think I need to go a little bit faster so that we leave time for Q&A as well. The second one and the one that our customers use a lot is around customer digital experience monitoring, where it took five hours of war room with multiple teams because these teams had to look at everything from the end user device, whether it's a mobile or browser or it's a desktop or a gaming app, for example, whether it's an API endpoint. Is it a network issue? Is it an internet latency? Is it a jitter issue? Is it an issue around some of the services? Maybe it's a payment service.
Maybe it's an authentication service from a third party. Is it in the data center? Is it the application itself, right? The application code, the front end of the application. It took 5 hours prior to us bringing together customer digital experience monitoring because all of these things have to work together in concert to be able to deliver that flawless experience. And when you don't have the capability like a Cisco Full-Stack Observability, it takes you 5 hours because you've got to look across all of these siloed domains and find that needle in the haystack on those issues. And now with Cisco FSO, it takes less than 15 minutes to triage.
With some of the work that we're doing, especially with Gen AI capabilities that I'll touch on, we're reducing that amount of 15 minutes to near real-time and going down the path of predictive where we can give our customers insights into potentially what could cause issues across this entire set of areas that impact the application performance so that they can proactively address these issues as well. A couple of things that we added recently with Cisco Digital Experience Monitoring is around Session Replay. The way to look at Session Replay is like, think about it like Netflix. You have access. Our customers get access to millions of user sessions. As you're going through, clicking to the next page within any application, a customer wants visibility into that.
But this is across millions of user sessions that are available for viewing, and you can narrow it down to the problematic sessions. In fact, one of the... it's that simple. In fact, one of the features that our customers like as well is we're able to actually pinpoint rage clicks as well. Think about the time you're just clicking really hard, being frustrated with the application. We can provide that capability through millions of those user sessions to our customers to be able to address issues that are out there. On the AIOps side, we know the pressure on IT teams is higher than ever. And so we announced Cisco AIOps. That's coming up pretty soon. It's a solution that really provides actionable insights to improve IT operations and helps IT to, again, improve the Mean Time to Detection and Mean Time to Resolution as well.
Because IT teams really, what their focus wants to be, they want to focus on correlated faults while streamlining the incident response and change management as well. In Generative AI, we are embedding AI more fully across the Full-Stack Observability portfolio. We already do monitoring of Gen AI models and APIs. As someone who would like us to experiment across multiple models, the cost adds up pretty soon, right? So this capability of being able to compare model costs, doing what-if analysis, and a lot of CEOs love this idea in terms of monitoring the usage so that they can charge back as well. What's coming up is how, we recently announced our natural language interfaces to query. So instead of learning our detailed query language to be able to query the application performance, we've simplified it significantly.
This allows also faster adoption of the capability. For the customers, obviously, faster meantime to resolution as well. We'll have our AI assistant coming out pretty soon in a matter of months here. Again, as I talked about, by identifying incidents and similar signatures from the past, we're looking to get to root cause as close as real-time and moving to predictive as well. A couple of follow-on is around... I think I touched on this already, is around how we do manage the responsible use of OpenAI. Upcoming, we have support for Claude and PaLM 2 support coming up. And the same thing for how do you... if you're using Claude and PaLM 2 as well, managing cost of that and optimizing the application experience. So we'll support Bedrock and Vertex AI as well.
When I talked earlier about extensibility of our platform, so I started with the platforms, went into use cases, and I'm going to close with the platforms as well. These are what we've had shipping so far in terms of what partners have built and what's coming up as well. We have about... we recently announced 8 more new partner applications across multiple categories: business insights, networking and infrastructure, AIO ps, ML Ops. So we'll have a total of 20 partners on it pretty soon. I think since we launched the platform, that's about 1 module a week. So when there's interest in, hey, how much of this is inorganic and how much of that is organic, this is all organic development as well. Now, as I close with this in the platform, I would love to touch on Cisco and Splunk because I'm sure there's interest in...
Why did we acquire Splunk? And with Splunk, we'll be able to deliver even more, more so than what I talked about, because we'll make our customers much more secure and more resilient than. And this is truly a better together story across security, going from detection to prediction and response to prevention. Every customer wants that in observability, delivering the best and the most secure digital experience monitoring with that operational efficiency because you're still looking for, how do I optimize my OpEx? And really around, if you look at the amount of telemetry that Cisco gathers, whether it's around networking, security, observability, you take the amount of data and the platform that Splunk has, bringing those together, not just around enhancing the current use cases, but delivering new capabilities and use cases, truly unlocking data's true value.
The combined breadth and scale of data across Cisco and Splunk is something that I think that we have very few peers in the industry, not to mention a great team, great leadership, and great culture. You've heard Scott talking about how we look at acquisition and the team culture and leadership, equally important. Overall, we're super committed to how do we bring the best of both to accelerate innovation and bring the best experience to our customer wherever they are on their observability journey.
So as you can see, driving better value and outcomes for our customers around efficiency, the security and observability that I talked about earlier in terms of coming together, AI-driven analytics, and in the SOC, what the next generation SOC is going to look like, moving from threat detection and response to truly prediction and prevention, using the power of AI to extend that detection and response, and truly enabling digital resilience and business-driven optimization. Again, I can't say enough about the data, the breadth and scale of the data across these domains and being able to provide insights and enable our customers to take actions tied to business context as well. And with that, I'll hand it over for questions.
Yeah, great. And then Amit, I'll hand it over to you to go through some questions.
Then towards the end, I'll lean on the Q&A box and the Webex for questions from the audience. But Amit, I'll hand it over to you.
Thank you, Sami. Thank you, Liz. Apologize for my IT issues. I really hope no one was able to live track my rage clicks while I was trying to log onto the system. Listen, Liz, before we get into some of the observability stuff that you've talked about, along with running the applications business, you were given a new hat to be the Chief Customer Experience Officer at Cisco recently. In that release, there was a very notable statement that part of your mandate is to leverage emerging technologies like AI to better serve Cisco's customer base. I think we're all looking for good use cases of what AI can perhaps do in terms of kind of satisfying your customers.
So I'd love to kind of understand what does AI mean for you, for Cisco, and how do you integrate that as a Chief Customer Experience Officer going forward?
Yeah, good to see you, Amit. And thanks for taking the time and the interest in this topic as well. Stepping back, I look at AI in three different ways, right? Internally, how we use AI. And we'd love to actually showcase that at some point in time because everybody talks about the most normal use cases or the most oft-used use cases like my engineering teams do, right? So you use Copilot, whether it's for code generation, whether it's for test case generation, faster troubleshooting. Those are things that a lot of people already know about. And then on the other end of it is in customer experience, actually, we already...
We've used AI in terms of AI-powered tech support, in terms of providing self-service that customers may want, text scraping and statistical modeling to enable faster automation and problem diagnosis as well. But we also use it extensively across all functions, from our HR function to our sales function. I mean, think about a salesperson looking through thousands and thousands of probably potential pipeline. As we bring together data from other sources, we can focus that account manager's focus on pipelines that deliver probably higher probability in terms of converting that pipeline. So we use it extensively across the board. And this is something that we talk to our customers who are looking for, like you said, what are those use cases out there? I look at AI as automated inspiration in terms of how do we do content generation, for that matter? How do we do localization of that?
We look at AI as the co-creation of it, right? We're continuing to deliver new use cases. You can see that across our portfolio, whether it's in the observability portfolio, in the security portfolio, is a great example of what we've done with AI assistants and for firewall policy management. In using natural language, you can talk to a firewall, and it actually talks back to you. It makes the admin's job much faster. We also create tech for AI. If you look at our silicon, our G200, it was specially built for AI workloads, for the scale that these AI workloads need. Same thing with our optics, same thing with our systems as well.
And we just recently launched a capability called Motific, which is a tool that enables our customers to go from, "I have intent, I have FOMO, I have a strategy." 97% of our customers will say that. Only 14% are about ready to deploy it. So how do we accelerate that in terms of helping them from intent? And that includes everything from responsible AI assessments of the different models and capabilities that you're using. And so when you look at Cisco, where AI is something that we've extensively used in our portfolio before, we're talking about how do we bring more Gen AI capabilities and take that to the next level as well. Within the CX portfolio, I mean, at the end of the day, what we're looking at is what our customers do is complex.
Across our domains, we were in multiple domains: networking, security, observability, collaboration. It's complex. My focus really is on the CX side: how do we build on what we've already created with AI, using some of the newer capabilities of Gen AI to make things less complicated for our customers? Because the complexity is not going to go away. It's more around how do you make it less complicated? How do you deliver kind of use cases that address problems that allow customers to go focus on where they need to create new, to drive new revenues? And that's what's going to be my focus in this space. Maria Martinez, who ran Customer Experience, is a good friend. She's built a fabulous organization and truly brought in what great customer experience is. So I'm working with a foundation that's fabulous already. Perfect. Thank you for that.
As you were sort of talking about the observability portfolio that Cisco has and some of the value prop, it seems very exciting for sure. The question I get fairly often from investors, at least, is what does Cisco's heritage, Cisco's networking business bring uniquely to this portfolio as you go forward versus why shouldn't this be a standalone entity? So maybe just talk about how does this observability portfolio get benefits and leverages Cisco's networking base? Yeah, so I think it's only recently, Amit, maybe over the past couple of years that we've started to talk about and we laid out our vision about 2-3 years ago around why full-stack observability matters to deliver the most secure and the best application experience. Now, take any application that you use most often, right? I use food applications pretty much every other day.
Now, to be able to, for me, to have the best experience out there, underlying it is not just about the developer who's built the application and how do you monitor the application performance monitoring? Because that application is dependent on a number of things. It's dependent on the network. It's dependent on the internet. It's dependent on third-party services that that application may use. They might not build their own kind of authentication service. They might not build a number of services that they leverage from elsewhere. So this is assuming that everything needs to work together in concert to be able to deliver the best experience out there. And we know more often than not, there's always going to be an issue, right? So you can't just have an APM capability. You need to understand network monitoring.
You need to understand security monitoring to be able to pinpoint the issues. Today, in most organizations, these are sitting siloed. They're sitting with different personas out there. What full-stack observability does and why it has a place in Cisco is without the networking part, without the security part, there's no way you can deliver that secure and the great experience. Because without getting the data from those domains and visibility into what exactly the issue is, you'll find most people trying to point to someone else saying, "It's not my problem." In the meantime, the customer's experience suffers. If the customer has a bad experience, especially where there's other options out there, the barriers to entry are pretty low for where they might switch to something else. Customer experience, truly, it's a...
I would say it's a boardroom KPI and not just a KPI for the technology folks within the organization. So you'll see other vendors in this space adding capabilities on networking and security, but that is something that's core to Cisco. And bringing together these assets is, in a way, that we're doing to enable that is unique to us.
Got it. And Liz, I think historically, at least, Cisco has kind of gone about selling observability products as sort of point solutions to different customers. And part of this is that your customer itself ran this in silo, so that's what you had to do. Do you think there's an appetite from your customers and from Cisco as well to actually sell this more of an end-to-end solution as you go forward? There absolutely is. And it's not just for customers who don't have a large IT organization.
I was talking to a customer a couple of years ago in the financial sector. They have 30,000 developers, right? So it's a pretty sizable organization. And they have one of every flavor of tools out there, many of them that we've sold to them as well. And my conversation with the CIO there was around, "Okay, so you're expecting your team to integrate this and bring all of these assets together. They have a network monitoring. They have a log monitoring capability. They have an application monitoring. In fact, they have 3 flavors of the application monitoring tools." And his response to me was, "That's not where I want my developers focused. I expect a company like Cisco to be able to do that." He's not going to go down to one tool, but he doesn't need 140. He needs fewer.
And he needs an open platform that can actually ingest from different tools that he has or a platform that actually can provide on the egress side data to some other portal that he may be using. And that's what we're seeing more and more, because it becomes the total cost of operation of running all of this is pretty high. The friction between teams is pretty high. Getting to root cause analysis takes much longer. So we see more and more customers, not just the medium, small size, but larger customers as well, saying, "I want this as an end-to-end capability. I like my developers focus on what they do best, developing capabilities that I can actually generate new revenue versus them trying to integrate what I expect folks like Cisco to deliver for me.
But I want to be able to have it open and extensible because I want that optionality. I may not use that optionality, but I want that optionality."
That makes a lot of sense. And one of the other things in the portfolio, I think, as I kind of stepped back and looked at that portfolio that you have today, a lot of it was done inorganically, I think, up until this point. So Splunk is going to be a big part of that as well. It gives you a lot more than just observability, for sure. But as you think about the roadmap going forward, what are the things that you think your customers say, "We wish Cisco had these products or services or offerings"? And how do you kind of go between doing something organically versus inorganically going forward now?
So I would say yes, we started, absolutely started our entry into this space with application performance monitoring with AppDynamics. But the product has evolved significantly with we've got a fabulous engineering team that has even just our partner module. We deliver one module a week. The pace of delivery of features and capabilities has been tremendous. And we look at this and it's not just around what our customers ask us, what we think that they could potentially ask us, for example. And I'll use session replay as a good example. I don't think our customers came to us and said, "Hey, I'd like to understand, for example, rage clicks." And we knew that we actually experimented a little bit with it internally in terms of session replay, where you can look at every session and you can understand the user's journey as they traverse through the application.
We experimented with it and found that it was a real hard thing to do. So we went down and looked for a tech and talent for a tech and talent acquisition, and we integrated that team and integrated that capability. It's already in the product. So it's always going to be a combination of organic plus inorganic where it makes sense.
Great. I think we're up. We have about five minutes left, so maybe I'll turn it to Sami to see if he can answer some of the questions on the Q&A side.
Yes. Thank you, Amit, and thank you for moderating. And Liz, again, great presentation as well as good Q&A. We have one quick follow-up regarding one of the slides. The question is asking to clarify the difference between the $9 billion APM versus the other figures shown for the 2024 market sizes.
Maybe just some clarification on what those figures are referring from an earlier slide.
I think it's like, so on the slide, and I'm looking at this right now around the market opportunity, what you see is on the top of $33 billion and $48 billion, those are the full-stack observability TAM out there. And then $9 billion is when you look at the APM space itself, that is more around incorporated in that full-stack observability. And maybe what we do is we show that a little bit more clearly. It's something that I see pretty much very often.
So I know if you look at this and you go, "Okay, how should I look at the $9 billion?" And what you see in here is like the current TAM that we have and what we see as an opportunity for us is to expand with things like application security that are sometimes included in FSO and not included in FSO. So we'll clarify that in the slide in a way that it shows the APM piece of that $9 billion much more clearer in that overall $33 billion TAM, which is a full-stack observability total addressable market.
Great. Thank you, Liz. And then we got another question regarding Splunk close timing and antitrust, which I'll take on. Please refer to our last quarterly conference call for a timeline and guidance on that.
Things haven't changed since our last conference call, so that's the place to look based on our public-facing disclosure. With that, I want to conclude, and I want to thank everyone involved in getting onto this Webex. Thank you, Liz, again, for your time. Amit, thank you for moderating. Thank you all. If you have any questions, please shoot them my way. My email can be found on the Cisco IR website. Then I'll hand it over to Heather for some closing remarks. Please go ahead.
All right. Yes, I'd like to thank everyone for attending this event. We hope you found it informative and valuable. A special thanks goes to our speaker and panelists for today. With that, I hope everyone has a great day and goodbye.