BMC Completes ITM Acquisition

In a move that will strengthen its position in management applications for enterprise, BMC Software (NYSE: BMC) has acquired ITM software.

The acquisition of ITM is the latest in a series of strategic purchases by BMC dating back to at least 2004, as the company jockeys for position in the enterprise software management market.

The combined company will allow chief information officers (CIOs) to better see the business value of IT.

BMC is one of four giants dominating the enterprise-management software field, along with IBM Tivoli, CA (NASDAQ: CA) and Hewlett-Packard (NASDAQ: HPQ).

All four vendors are trying to move into what’s known as the business service management (BSM) or the IT Resource Planning (ITRP) space.

Forrester analyst Evelyn Hubbert defines BSM as an approach in which a CIO can look at the performance of key business services, applications and systems end to end and ensure they are tied directly to the enterprise’s business goals and objectives.

AMR director of research Dennis Gaughan said ITRP is an integrated set of technologies that aggregates information from multiple sources to provide user analysis and insight across six critical areas of management.

Those areas are strategy, demand, supply, people, money and risk.

This helps IT management run the business of IT, he told InternetNews.com.

ITM’s software product, the ITM Business Suite, has what the company calls the business-management database, on which an enterprise layers business intelligence for IT.

This gives enterprises “the ability to view and control and make decisions on that intersection of information,” Herb Van Hook, BMC’s vice president of business planning, told InternetNews.com.

The result is “a set of very high-level applications IT uses to run itself as a business organization within the enterprise,” Van Hook added.

For example, where most project management tools look at whether an enterprise has the right skills to deliver on the projects and whether it can meet deadlines, ITM “asks whether you’re doing the right projects; what is the business impact of this project versus that project,” Van Hook said.

Enterprises are increasingly looking at ways to run IT applications better, but generally they “use spreadsheets they have to cobble together and have to prepare a PowerPoint presentation once every quarter or so,” Van Hook added.

Dennis Gaughan, director of research at AMR, agrees that tools in this area are lacking. “There’s plenty of stuff to manage IT and operations and systems, but there’s a gap for something that rolls up the business value and shows you how much it costs, and that’s where ITM sits,” he said.

“They developed that integrated suite of software to answer the business-oriented questions CIOs are asking,” Gaughan added.

That wasn’t difficult for ITM’s founders, all of whom were “CIOs of large companies who felt they weren’t being served well enough by existing tools to run their organizations, and got together to develop the tools they needed,” Van Hook said.

BMC is bringing these executives on board after the acquisition.

Next page: Where it all began

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Where it all began

Both BMC and archrival HP have been on a buying spree over the past few years to flesh out their offerings.

In 2005, BMC bought identity-management specialist Calendra, based in Paris, for about $33 million in cash.

Last year, it bought two companies, RealOps, which develops software for automating IT processes, for about $50 million, and network device configuration vendor Emprisa Networks.

Earlier this year, BMC paid $800 million for configuration-change management and automation vendor BladeLogic (NASDAQ: BLOG).

Emprisa competed, among others, with Opsware’s Rendition Networks technology, and HP purchased Opsware last year for $1.6 billion.

Apart from Opsware, HP snapped up asset- and service-management software vendor Peregrine Systems for $425 million in 2005 and IT management software and services vendor Mercury Interactive for $4.5 billion in 2006.

The competition between BMC and HP was bitter enough that BMC CEO Robert Beauchamp blasted HP for buying out EDS in May, saying during BMC’s fourth-quarter earnings conference that HP had declared war on data system suppliers and integrators with the move.

EDS had historically been a good customer of BMC.

There’s nothing unusual for both BMC and HP to be in acquisition mode, because “all the large vendors have an acquisition component as part of their strategy,” Van Hook said.

However, BMC’s purchases have “very little overlap,” and it generally purchases partners so “we don’t really have to do too much in terms of product rationalization compared with what HP and CA do,” he added.

Its purchase of ITM will position it well against the other three players in the market.

Until the ITM purchase, BMC, like the other vendors, had siloed applications whose lack of integration “made it nearly impossible for IT organizations to share information and deliver consistent service levels for activities that span silos,” AMR’s Gaughan said.

Over the past three years, IT has been moving toward getting an enterprise-wide view of its assets, and this is driving the move away from silos.

While that has led all the enterprise systems vendors to “develop business-oriented technologies,” IBM’s tools and technologies are “fragmented across Tivoli and Rational,” while HP and CA are “in varying degrees of absorbing and integrating acquisitions,” Gaughan added.

Although ITM’s purchase is a “pretty important acquisition” for BMC and positions it well in the market, Gaughan warns that more work needs to be done.

“ITM is a small company, and there’s a lot of execution needed — can they scale this thing out to be able to drive it into the BMC customer base?” Gaughan said.

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