Over the most of this decade, the IT systems management software sector has reached a classic state of maturity. Two industry giants – HP and IBM – have galvanised their already strong positions by devouring numerous smaller competitors.
But two hardware independent software companies, CA and BMC Software, which at various times looked like they would become the consolidated rather than the consolidators themselves, have continued to stand shoulder-to-shoulder with these giants in the systems management space.
BMC, in particular, has shown real buoyancy in recent years, as it has patiently executed on a strategy that was hatched in 2002 and supported by a set of judicious acquisitions. Revenues that were stuck in the $1.4 to 1.5 billion range for three years have risen to $1.73 billion in fiscal 2008; and growth for the first half of 2009 is running at 12.2%.
In light of the economic downturn, growth expectations for the full year may now have been scaled back to “high single digits”, but Bob Beauchamp, BMC’s CEO, thinks that the company is tapping into a fundamental demand that will remain strong.
CIOs are telling him that while overall IT spending will come down from its previously envisaged level, the IT purse-string holders are actually going to increase spending on the business service management (BSM) software that is BMC’s forte.
There are good reasons for this. Organisations want to focus on automating as much as possible of their IT systems management, largely to drive down costs. But they also want to wrestle back control of the complexity that has come with the widespread adoption of virtualisation technologies.
Those priorities have dovetailed with BMC’s product strengths: First, the Remedy systems management platform for ITIL-based standardisation, that has evolved from the company’s 2002 acquisition of Remedy from Peregrine and the internally developed Atrium configuration management database (CMDB) and tools integration suite. And, secondly, the company’s service automation service line, the centrepiece of which is BladeLogic, BMC’s April 2008 purchase.
Those have fuelled some strong numbers. In the first six months of the company’s fiscal 2009, sales of new software licences were up 17.4%, with the rapid take-up of virtualisation, a boon.
“There is a realisation [among customers] that the management architectures that were built for the client/server era – the OpenViews, Tivolis, BMC Patrols and Unicenters of this arena – were never designed for the kind of objects they need to manage in a virtual world. “[With virtualisation], the scale just explodes,” says Beauchamp.
“Companies are making the decision to move away from those models and build a standardised platform for IT management that will scale with them into the future,” he says.
The ease with which virtual environments can be brought online has in many cases lead to ‘virtual sprawl’. And that has created management overhead. “We’ve been hearing what is almost fear among customers: All the savings they are supposed to get through in capex through virtualisation is being more than offset by opex [in people-intensive management tasks].”
He maintains that customers don’t want virtualisation tools, per se; they want to manage both virtual and physical environments with the same tools. “So all the disciplines that have existed in the physical world need to be ported to the virtual world. But it would be back to the bad old days if the way customers handled it was with 25 new widgets. Therefore they want a single platform to manage both physical and virtual, consistently.”
Mid-year, BMC announced that nine of its product suites would manage the entire virtualisation lifecycle, from deployment through to de-commissioning. “The complexity of the management needs to dissolve into the same basic disciplines that have always existed in [enterprise systems management].”
But there is another concern for customers: a realisation that they might want to run a mix of virtualisation hypervisors. “Today customers might be using VMware, but they don’t want to be locked in to a single architecture. So BMC will abstract the hypervisor [layer] so you don’t have to buy different tools for VMware, [Microsoft’s] for Hyper-V or for an open source hypervisor.”
ERP for IT
But while virtualisation management is a huge market driver, that is in many ways a gut-reaction to virtual sprawl. Rather, the most important message that BMC is hearing from the market is the pressing demand for a standard management platform. “CIOs are telling us they want ERP for managing IT,” says Beauchamp.
And underpinning that platform is the CMDB technology. “The CMDB is probably the hottest piece of technology I have seen in the management space in the last 20 years. Executives recognise they need
a common, unified way of managing incident management, problem management, change management, asset management, as well as service-level management.”
BMC’s decision in 2002 to create an integration technology (Atrium) that would enable all of its core management tools to sit on top of a single CMDB, now looks inspired. “That was revolutionary for us – our most strategic technology. So today, for any BMC product that comes out, the BMC product engineers only have to write the integration into the integration architecture, rather than write point integrations between different products.”
For customers, management becomes more visible, more pro-active. For example, Visa, where downtime costs the company $1 million a minute, reduced the number of trouble ticket cases by over 70%, and in one division of Motorola alone savings amounted to $32 million over a nine-month period as a result of a reduced number of incidents.
But there has been one element missing from that ‘ERP for managing IT’ approach – a means of linking the people activities of the IT department to the systems management platform.
“You can’t really say you are going to be an ERP for IT without something like [IT resource planning],” says Beauchamp, who in June completed the acquisition ITM, a vendor of IT project and resource management technology that provides a single view of IT project and service portfolios, financials, operations, teams, vendors, compliance and IT demand. Developed by three former CIOs, the tool draws on information in the BMC CMDB, and that ability to deal with real information makes it different from many rival tools that report on projects and resource status by simply asking the individuals involved.
Such initiatives have lifted BMC’s standing among customers. While in the previous decade, BMC would be selling to systems and database administrators, company reps are now much more likely to have a conversation with the CIO, CTO or chief architects, claims Beauchamp. That is because that level of executive is having to architect from a service management point of view with processes that will scale. “That is what is different now. We used to be in the boiler room, we are now on the bridge.”
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