Q&A: Bob Beauchamp, BMC CEO

Despite the recession, service management maven BMC announced sales up 4% and a record quarter. Jason Stamper caught up with CEO Bob Beauchamp.

Q. I guess you must have been rather pleased with the third quarter results considering the macro-economic climate?

A. We were, and they were above our own original estimates. We had record revenue [$508m] and record profits, while total bookings were up 18% and license revenue from non-mainframe products was up 15%. I guess you could say it was a solid quarter. Everything went well – Europe, Middle East and Africa all delivered above expectations.

Q. To what do you ascribe your strong recent financials?

A. I think it goes back to the fact that in 2003 we took a point of view on what the future of management was going to look like. It was pretty rocky and we needed to spend money on products and product design, but essentially we guessed right. We now have a single platform for heterogeneous management. All our rivals are looking at how they architect the data centre management of the future, but it’s not easy to change your architecture. That has put us in a very strong position.

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Q. Looking at your fiscal third quarter results, there are not many items that are a cause for concern. But I notice that professional services dropped over 20%…

A. It will rebound. It wasn’t as strong as we’d like. Every item did well apart from services. When BMC redesigned in the 2002 time-frame the result is that you’re seeing great performance now. But we designed the architecture first for Business Service Management. In the last two years we have been redesigning the sales force to sell to CIOs, strategic committees and the like. We’ve got the architectural management environment completed and now we need to turn our attention to the services environment.

Many of our services are done by partners of course – in the case of our largest non-mainframe transaction, a global top five company, all of the implementation was done by Accenture. But I’m still not satisfied by the financial performance of our [services] group.

Q. Should CBR readers be surprised if BMC made a large acquisition in this calendar year?

A. Over the years we have done small acquisitions as you know, so I wouldn’t rule those out, but in general we think we can grow organically not through a dramatic acquisition.

Q. Data centre optimisation firm BladeLogic was a fairly heft buy back in 2008 — $800m. How has the integration gone?

A. Integration of BladeLogic has gone as well as any in our industry. The sales leadership, R&D, in fact every aspect of the key people stayed on. Both BladeLogic and Remedy [$350m] founding developers still work with BMC.

Q. You made a much smaller acquisition this January – Phurnace, which does Java infrastructure management. What does that buy bring to the table and is integration done there too?

A. I would say that in general the Phurnace integration is done though there are some new ideas that we are still working on. In fact I had their CEO in my office just the other day. The revenue opportunity for that technology is exciting, I think it raises all boats in our harbour. Management of the application layer becomes a plug-in to BladeLogic, so you can manage all the way from the operating system through to the Java applications.

Q. As you know there has been something of a rush among many enterprises to virtualise their servers. I’ve heard some analysts suggest there is something of a gap in the management of those virtualised IT assets…

A. Put it this way, I think management has not slowed them down. The customers that we deal with understand that they have to rethink the management environment, and to do that they need to be able to manage the physical and virtual with the same tools. Virtual is distinctly different from physical, but companies may end up with this kind of ‘death by tools’ scenario. We took the view that cloud, SaaS and virtualisation need the same workflows and so on. In a nutshell that explains why we are doing so well. You want there to be an invisible distinction [between physical and virtual]. You want systems to make those decisions for you.

Q. You say BMC was re-engineered around 2002. Is it coming up for another big shift?

A. We have developed a clear architecture for our technology and vision and sure, it will evolve. There is a piece of paper today in front of the board that maps the next few years of our technology. But I have to be careful how much I give away: for example on our recent earnings call there were six executive vice presidents from a major competitor on the call.

Q. Will you be buying an iPad?

A. I’m sitting in front of three Macs right now at home. I like technology and I like being an early adopter. Does that answer your question?

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