“Management is doing things right; leadership is doing the right things.” Peter Drucker
LAS VEGAS: IT is moving from the back office to the boardroom, from making businesses more efficient to making them more effective, and to paraphrase Peter Drucker, all aspects of information technology, including the current darlings — cloud, mobility, analytics, IoT and social — will have to enable businesses to do the right things, at the right places and at the right times, or the businesses will fail. That’s part of the challenge confronting Houston-based BMC Software, a management software vendor that started in the mainframe business back in 1980, broadened its portfolio to IT operations management (ITOM) solutions for on-premise and cloud environments, and went private in 2013.
This week the company, with more than 10,000 customers, including 82% of the Fortune 500, is hosting 2,300 attendees at BMC Engage 2016 Global User Conference. The theme — and the company’s focus of late, at least from a marketing perspective, is digitization and what it calls Digital Enterprise Management (DEM), unveiled at last year’s event.
“With Digital Enterprise Management, BMC is providing a clear path to successfully manage this digital transformation,” said BMC CEO Bob Beauchamp, last September. “From the mainframe to mobile to the cloud, our solutions allow companies to improve the speed and lower the cost of digital service development, deployment, operation and maintenance.”
Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets, stated IDC. PwC calls the digital enterprise ‘Industry 4.0’, and according to its recent survey of over 2,000 senior executives from nine major industrial sectors and 26 countries, the implications are incredible. Respondents expect to increase annual revenues by an average of 2.9% and reduce costs by an average of 3.6% p.a.
These results pale in comparison with the “first movers” who combine high investment levels with advanced digitisation: “they’re already gaining a nearly insurmountable advantage over competitors’. Representing just 4% of the respondents (71 companies), first movers ‘are far more likely to be forecasting both revenue gains of more than 30% and cost reduction of more than 30% at the same time.’
The numbers for the ITOM or IT operations and service management (ITOSM) market vary, but it is a significant and growing market populated by such vendors as Microsoft, BMC Software, Oracle, IBM, HPE, CA Technology and Dell. Last year it was worth $17.44 billion, with a compound annual growth rate of 6.5% between 2016 and 2024 ($30.96 billion), growing nearly twice as fast as the overall IT market worth nearly $2.4 trillion in 2016, and growing at a 3.3% CAGR to more than $2.7 trillion in 2020.
Another report puts the market at $22.1 billion, with IBM holding the biggest share ($3.4 billion), followed by Microsoft ($2.2 billion), CA ($2.0 billion), BMC ($1.9 billion) and HPE ($0.9 billion). This report expects that HPE will be replaced by ServiceNow, which is ‘on course to become a 1 billion-dollar unicorn in 2016.’
In a 2015 report, Gartner said ITOM was worth nearly $21 billon in 2014, with 7% growth, placing IBM in top spot, followed by CA, Microsoft, BMC and HPE. Released two weeks ago, Gartner’s Magic Quadrant for IT Service Support Management Tools (ITSSM or ITSM), an ITOM subset, recognized BMC (21.3% market share), along with ServiceNow (34.4%), as the two leaders in this segment, valued at $2.2 billion in 2015, almost double the market size of 2010. Only Cherwell Software made it into the Challenger category, while CA and HPE were among the six vendors in the Niche segment. Although there are over 450 ITSM/ITSSM vendors, none qualified for the Visionary category.
According to Gartner, BMC offers four ITSSM products (Remedy Service Management Suite targeted at high-I&O-maturity organizations, Remedyforce and FootPrints targeted at intermediate I&O maturity, and Track-It for basic I&O maturity), and its broad ITOM portfolio and the largest enterprise ITSSM customer base position it for growth. However it cautions that:
-BMC’s sales teams tend to be less responsive compared with the competition, and Remedy frequently drops off these shortlists of Gartner clients;
-Salesforce stopped selling Remedyforce, thereby removing a key sales partner for BMC’s midmarket SaaS product; and,
-customers that upgraded to FootPrints 12 have reported dissatisfaction with the usability and performance of the product.
Technavio offers a more bullish forecast for ITSM, with an 8% CAGR. The upside is much bigger for cloud-based ITSM, which is estimated to grow from $ 4.41 billion in 2016 to $8.78 billion by 2021, at a CAGR of 14.8%.
Cloud may be the (a?) future of IT, but it still has a long way to go when it comes to ITSM. According to a recent survey 85% of CIOs in the UK and US believe that cloud is reducing their organisations’ control over IT. “Quite simply, CIOs cannot blindly trust that public cloud services will work flawlessly and be delivered perfectly at all time,” said Paul Cash, Managing Partner, Fruition Partners UK.
The research also showed the issue of ‘Shadow IT’ is still a concern for organisations. 66% of CIOs said there was an increasing culture of ‘Shadow IT’ in their organisation, while 68% said that the business frequently does not seek their advice when it comes to the procurement of public cloud services.
Although privately held, in December BMC reported that for the first half of its fiscal year its ITSM business experienced:
-a more than 50%t year-over-year increase in new bookings of Remedy;
-nearly 80% year-over-year growth in new bookings for Atrium Discovery and Dependency Mapping solution;
-recurring revenue rate of 90%;
-added 100 new ITSM customers in the past quarter, among them many marquee enterprises such as BMW and 11 orders in excess of $1m each; and,
-exceeded nine million end user subscriptions for its self-service MyIT solution.
In addition to ITSM, BMC’s portfolio includes:
-Control-M, with more than 3,000 customers, recently received the highest cumulative score in the Radar for Workload Automation report from Enterprise Management Associates (EMA), where BMC was named a Value Leader and given a special award for having the most comprehensive Big Data support; and,
-Discovery, an IT discovery and dependency mapping toolset, formerly called Atrium Discovery and Dependence Mapping (ADDM), creates detailed maps of all the devices, virtual machines, containers and applications in a complex and geographically dispersed data center with a capacity to model more than 100,000 servers; an IDC study of nine BMC Discovery customers estimated average savings of $4.5 million per organization, a 470% return on investment over five years and an eight-month payback time.
While only a part of its portfolio (25% of annual revenues, with double-digit growth over the last two quarters in the other 75%, which would include ITSM, which represents another 25% of the company’s revenue stream), mainframe is still a substantial part of BMC’s past, present and future. The mainframe is still relevant today:
-71% of all Fortune 500 companies have their core business on the mainframe;
-23 of the world’s top 25 retailers use a mainframe;
-92% of the top 100 banks use a mainframe;
-10 out of 10 of the top insurers use a mainframe;
-more than 225 state and local governments worldwide rely on a mainframe; and,
-9 of the top 10 global life and health insurance providers process their high-volume transactions on mainframe.
While the mainframe market may be flat or even still shrinking, there remain good opportunities for BMC. For instance, the majority of Big Iron shops don’t understand what they’re paying IBM for their monthly license charge (MLC) software: 20% of those trying to manage MLC costs do not have a good understanding of how the charges are calculated; and another 60% think they do, but have it wrong.
A number of announcements will be made this week, including BMC’s Digital Enterprise Management Vision and updates to its Control-M and Remedy solutions.
DISCLAIMER: BMC looked after airfare and hotel.