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BMC Software acquires BladeLogic to round out business service management portfolio

Megan Santosus
Enterprise software company BMC Software Inc., announced a definitive agreement on Monday, March 17 to acquire BladeLogic Inc., a provider of data center automation products. Houston-based BMC will spend approximately $800 million to purchase BladeLogic, a company that currently has revenue of $62.7 million.

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In a conference call, BMC President and CEO Bob Beauchamp said that his company has coveted BladeLogic for quite some time. As a provider of products that focus on business service management (BSM) – everything from service desk, to change management, run book automation and configuration management databases (CMDBs) – BMC was attracted to BladeLogic's server and application provisioning tools. The companies' two product lines, said Beauchamp, represent "a compelling strategic combination."

BMC is getting a company with two-thirds the value at half the price.
Andi Mann,
research directorIDC

Since its founding in 2001, Lexington, Mass.-based BladeLogic has grown consistently, earning a nod from the research firm IDC as the fastest-growing vendor in the server provisioning and configuration management space: a $533 million market projected to grow to $1 billion by 2011. BladeLogic has several high-profile customers from various industries including financial services (Morgan Stanley), retail (Wal-Mart Stores Inc.) and pharmaceuticals (Merck & Co. Inc ).

The goal is product synergy. BMC's BSM products enable IT to manage services from a business perspective, while BladeLogic's products automate critical yet repetitive IT processes such as server and application provisioning, patch management, configuration management and audits. "BMC and BladeLogic technology is complementary," said Beauchamp, who added that BladeLogic products will become a centerpiece of BMC's service automation strategy going forward.

Complementary BSM technologies
As these companies join forces, observers see potential but also note that the move is belated. According to Andi Mann, a research director at the IT advisory firm Enterprise Management Associates, "This is an overdue reaction to HP's deal to buy Opsware last year," Mann said. In that deal, HP sought to combine its own BSM products with Opsware's data center automation tools. Ultimately, both companies seek to carve out a leadership position in the burgeoning IT process automation space, Mann added.

With the move, BMC may have the upper hand, argued Mann. While Opsware's technology was superior as compared with BladeLogic, BladeLogic fits better into BMC's current product portfolio and overall strategy. "BladeLogic has great technology in server and application provisioning and maintenance that fits into BMC's service automation strategy," he said.

And BMC seems to have fared better financially as well. HP spent $1.6 billion to buy the $100 million Opsware, a price that was 16 times earnings, while BladeLogic's $800 million price tag is a mere 10 times earnings. "BMC is getting a company with two-thirds the value at half the price," Mann said.

Leapfrogging the competition
In any event, BMC's acquisition of BladeLogic places greater pressure on industry rivals CA, IBM and Symantec Corp. "This deal leaves those companies out in the cold," he said. "To compete in BSM, they'll have to acquire companies with inferior technology, or they'll have to develop their own, much stronger technologies."

During the conference call, Beauchamp said that current BladeLogic customers won't have difficulty migrating to BMC's Atrium CMDB because there's a history of integration in place. BladeLogic had previously worked with RealOps (for run book automation), a company BMC has since acquired; as a participant in BMC's alliance program, BladeLogic has integrated its tools with BMC's Remedy (for change and configuration management). "By integrating with run book automation and the change and configuration module, BladeLogic products can plug straight into the CMDB," Beauchamp said.

While Mann didn't address the specifics of integration, he nevertheless sees the acquisition as advantageous for BladeLogic customers. "BMC has a broader support network, a broader development team and more development resources," he said. "BladeLogic customers aren't going to see the products atrophy because they are core to BMC's strategy."

Let us know what you think about the story; email Megan Santosus, Features Writer .


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