August 1, 2013

Very Good Things Come to Those Who Partner to Innovate

Word broke last week that networking giant Cisco was acquiring the Maryland-based cyber-security firm Sourcefire, (disclosure, a 3Pillar Global client), for $2.7 billion in cash. That’s a staggering valuation for a company that didn’t exist at the turn of the millennium.

In its press release announcing the Sourcefire acquisition, Cisco mentioned convergent trends like mobility, cloud computing, and the “Internet of Everything” as the main factors that make Sourcefire’s suite of products so vital to meet  a growing wave of online security threats.

Sourcefire’s acquisition is yet another example of the massive value that can be created in a short period of time by a company with equal amounts of technical foresight, market vision, and the dedication to create innovative products by any means necessary. It’s also further proof that for every acquisition of consumer-facing applications like Instagram or blogging platforms like Tumblr that sparks breathless reporting from the tech press, there are equally momentous acquisitions taking place elsewhere in the IT landscape.

Two similar examples from the last several months alone demonstrate this clearly. They are the acquisitions of two other 3Pillar clients, Eloqua and CARFAX. Eloqua, an automated marketing platform founded in 1999, was purchased by Oracle to bolster its cloud marketing solutions for $871M in December 2012. At the time, Eloqua was deployed to more than 1,200 organizations and 70,000 users. CARFAX’s parent company, Polk & Co., was bought by IHS for $1.2B earlier this year. As the “old guard” of these three acquisition targets, CARFAX grew from  a database of 10,000 records at launch in 1986 to a database of 10 billion-plus records at the time of its acquisition.

What do these three companies have in common? All of them provide best-in-class services in distinct market niches – cyber-security, marketing automation, and vehicle history reporting. And all of them were willing to look outside their own walls to find a software product development partner that could help drive product innovation and deliver positive business outcomes. The result? Nearly $5B of value creation.