Networking giant Cisco on Thursday said it has agreed to acquire IT software management company Tidal Software for $105 million in cash and retention incentives.

The deal is the second in less than three weeks for San Jose, California-based Cisco, which last month announced its acquisition of Pure Digital Technologies, a privately held maker of camcorders for $590 million. (Cisco Grabs Pure Digital for $605M)

Palo Alto, Calif.-based Tidal is a major departure for Cisco, a switch and router company that in the last year has been on an acquisition binge buying a number of Web 2.0 application firms.

Last month Cisco touched off a turf war with traditional IT companies IBM, HP, and Microsoft with an announcement that it plans to remake the data center by integrating networking, servers, and storage. (Cisco Invades Server Market)

So Tidal, a 30 year-old IT applications management company, is an attempt by Cisco to enhance its capabilities with the kind of IT software resources that IBM and HP have long possessed.

“If Cisco is going to play in the same sandbox as IBM and HP it has to find a bucket and a shovel. Tidal is part of Cisco’s effort to catch up,” said Charles King, principal analyst with Pund-IT Research.

And that effort will continue, according to Hilton Romanski, Cisco’s vice president of corporate development.

“We will acquire our way into new markets when we need to or we will use investments and partnerships when those are more appropriate,” Mr. Romanski said.

And with the global recession stifling business opportunities for smaller companies, Cisco is taking advantage of what is undoubtedly a buyers market.

“There are good deals out there but just because something is cheaper does not make it any better. But we are going to be bold and very active,” Mr. Romanski said.

Tidal, which started operations back in 1979 as a services and consulting company, morphed into an application management firm in 2000.

The company is backed by Kleiner Perkins Caufield & Byers, JP Morgan Partners, Panorama Capital, Novus Ventures, and Vantage Point among others.