I love the smell of acquisitions in the morning: BMC Gets BladeLogic

March 18, 2008

I love the smell of acquisitions in the morning: BMC Gets BladeLogic

The great thing about acquisitions is that it provides a lot of fodder for bloggers and pundits. And there have certainly been a lot lately. For example, just yesterday BMC finally got a data center automation company. It almost had landed OpsWare when HP swooped down and landed the deal. Now BMC is planning to purchase BladeLogic for about $800 million. This acquisition allows BMC to claim that it has all of the pieces to elevate its position in the data center automation market along side HP — its biggest rival. It also helps BMC demonstrate that it can use its cash to fund growth. BMC has more than a billion dollars in the bank and was under pressure to do something with the cash to fuel growth.

BMC has an interesting challenge. Much of the company’s growth has come from its acquisition of Remedy Software — which provides help desk automation solutions. While the company might have used Remedy as the center of its future strategy it decided to try for a bigger play. In 2004 it announced its Business Service Management strategy focused on providing measurement and management of IT resources from a business impact perspective.

The BladeLogic acquisition is a continuation of this strategy. BladeLogic adds more data center automation software into the platform. While this is a good move for BMC is not without risk. BMC has some much bigger and stronger competitors who seem the same potential for helping customers create a next generation computing environment. HP, for example, has a jump start on BMC through its Opsware acquisition. Ospware, now part of HP’s Business Technology Optimization (BTO) platform, adds to the depth of the HP management portfolio. In addition to HP’s some significant software assets for data center automation but HP has at least 15 of experience in both its consulting and outsourcing organization. In addition, HP picked up some significant talent from the Opsware team. IBM has been building its service management platform for years both through development and a slew of aquisitions too numerous to mention (I would definitely leave a couple dozen out if I tried). IBM has begun to leverage its resources to build a significant in Service Management portfolio under the Tivoli brand. Tivoli has been working over the last few years to rearchitect these assets into a platform. Some interesting assets that IBM has put into the mix include management software such as Netcool and Micromuse to ISS Solutions for security management. IBM has a significant consulting, services, and outsourcing organization in management as well.

Two other companies that BMC has to be worried about: CA which has been quitely rearchitecting its managment platform over the last few years with good results and EMC which has been buying management assets over the past several years and is putting together a potentially powerful platform.

Why is data center automation and service management suddenly the rage?

The next generation data centers is a big deal because organizations are trying to consolidate the number of data centers they are managing and they are trying to make those resulting data centers more efficient in terms of resources and energy. These companies also want to be able to treat all of their systems and software as though they are a set of assets that can be moved around and reused in a safe and predictable way. At the same time, existing data center technology has been aging. During the tech downturn during the last recession, companies stopped buying and updating their infrastructure until they figured out how to absorb what they had already bought. While customers were doing this, massive changes were happening in the industry — most notable has been the rise of virtualization –everything from grid computing to server virtualization to desktop virtualization. Now, combine virtualization of resources with the ability to manage this combination of resources as though it were an integrated environment based on business needs. This is where we are headed. It is little wonder that the acquisitions are happening. I think that it only the beginning of the big players buying the resources they need to win.

About Judith Hurwitz

Judith Hurwitz is an author, speaker and business technology consultant with decades of experience.

One Comment
  1. […] This week BMC announced it had secured the purchase of ITM Software, a business management provider. BMC is a publically traded data center automation company that competes directly with CA Inc, HP, and IBM. It’s clients include DELL, Home Depot, and Toyota. Over the past two years, BMC has been busy snapping up different IT companies, such as Proactive Net (June 2007), RealOps (July 2007), and Emprisa Networks (October 2007). It’s wholly-owned subsidiary, Bengal Acquisition Corporation acquired 96.7% interest in BladeLogic. […]

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