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IT service management upstart says incumbents are ripping off their customers

Business service management is a strategic approach to managing enterprise IT functions, but what BSM vendors are really selling is a collection of tools: configuration management databases, application dependency mapping tools, identity management software and more.

Inevitably, most vendors that sell in the space have built up their BSM suites through acquisition. BMC – identified by Forrester Research as the market leader when it last addressed the BSM space in 2007 – got the ball rolling in 2002 with its $350 million acquisition of the Remedy service management toolkit from Peregrine.

The intervening years have seen HP pick up systems management provider Mercury Interactive – whose tools it has refashioned into a BSM suite – for $4.5 billion, CA acquire half a dozen companies in the BSM space and IBM grow its suite with the acquisition of Consul and MRO.

Earlier this year BMC continued the trend with its $800 million acquisition of BladeLogic, and most recently Novell entered the fray by acquiring BSM pure play Managed Objects.

The fact that the BSM industry is built on acquisition means that customers are being ripped off, argues Steve Cotton, CEO of BSM young pretender FireScope.

Firstly, he says, the acquirers need to make up for the acquisition fees in their profit margins, leading to inflated licence and support fees. “Those costs have to be recouped,” he says.

And secondly, Cotton explains, this approach to building applications creates Frankenstein’s monsters whose complexity translates to longer installation times and greater management costs for customers.

These bloated BSM installations will be first against the wall when the approaching wave of credit crunch-triggered IT budget cuts kicks in, Cotton argues. “Organisations are becoming really sensitive about the amount of money they spend, and there is a deep sense of frustration with BSM,” he says. “And the incumbent BSM vendors’ products require so much work that they are pricing themselves out of the market.”

Of course, Cotton believes that his company will be the beneficiary of this BSM cull. Cotton claims that FireScope can offer the same functionality as the systems management giants for a fifth of the total cost.

“We built our BSM suite ourselves from the ground up, so the cost is significantly less,” he says. Install time too is reduced; FireScope customer Credit Suisse allegedly reported a two-week roll out of functionality that had taken nine months using another vendor.

Today, the company’s revenues are below $10 million, but Cotton expects growth of between 300% and 400% in the coming year.

There are challenges ahead for FireScope, however. Firstly, while its price point allows it to pitch BSM to smaller organisations than have traditionally been addressed by the BSM market, it is another question whether there is any demand. “I don’t think small and mid-sized businesses know what BSM is,” admits Cotton. “But they do have business services and they are dependent on their IT assets, so there is potential.”

Another problem is that bloated and overpriced as enterprise BSM deployments may be, critical systems depend on them. Organisations may therefore be reluctant to dispose of their existing kit – a fact that Cotton acknowledges despite his fighting talk.

“I can’t go in and tell people to get rid of all their HP gear, for example,” he says. “But I can say, ‘I can make this stuff actually work for you’.”

Further reading

Demand for standard IT management drives growth at BMC

Service management
The key to quality IT delivery. An Information Age Research Report in association with Numara Software
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