Software arch-rivals, BMC Software Inc and Platinum Technology Inc, fit the story of the hare and the tortoise almost perfectly. Both companies have their roots in the world of IBM mainframe database tools, but whereas Platinum responded to the mid-1990s boom in open systems by launching itself on a buying spree of smaller software firms […]
Software arch-rivals, BMC Software Inc and Platinum Technology Inc, fit the story of the hare and the tortoise almost perfectly. Both companies have their roots in the world of IBM mainframe database tools, but whereas Platinum responded to the mid-1990s boom in open systems by launching itself on a buying spree of smaller software firms – around 40 in the past four years alone – BMC’s approach was much less cavalier. That is, until this year, when chief executive Max Watson swooped first to purchase performance management software vendor BGS Systems for $285m, and then followed that up with the $915m acquisition of systems management console software vendor Boole & Babbage. The two acquisitions will propel Houston, Texas-based BMC into the top 10 list of software companies, with revenues of around $1.25bn for its financial year to March 31. Platinum, much to the chagrin of CEO ‘Flip’ Filipowski, will probably find itself slightly behind BMC with revenues of about $1bn. Watson’s more staged approach to acquisitions has certainly paid significant dividends. BMC’s purchase of Patrol Software, the Australian applications management software minnow, for just $34m in January 1994, has since provided the main engine behind the company’s accelerating rate of growth. Annual revenues for the 1998 financial year increased 30% to $730.6m. But, despite its relative youth, Patrol contributed $192.4m (or 26%) of revenues in 1998, while the other major contributor was the company’s original IBM (DB2 and IMS) database tools license business, which weighed in at $281m. In the current financial year, before taking into account the effect of the Boole & Babbage takeover, BMC is expecting products for open systems to grow by anywhere between 75% and 85%, compared with mainframe product growth that will be in the region of 15% and 20%. That puts the traditional BMC business on a run-rate of between 30% and 35%. Adding in Boole & Babbage is – in the short term at least – going to slow such momentum, given that B&B’s rate of expansion has been a more lackluster 11% annually. Watson thinks he can raise the heartbeat there by leveraging BMC’s sales force to cross-sell to customers of both companies. We are going to nail a huge installed based, says Watson, referring to the B&B’s 6,000 customers. He does concede, though, that it may take as long as 18 months before the Boole & Babbage product sales growth crosses the 30% line. That product base is led by Command/Post, an end-to-end network availability management system that Watson believes will fit well with both the mainframe tools and Patrol.