BMC Software
Encyclopedia
BMC Software, Inc. is a multinational corporation
specializing in Business Service Management
(BSM) software, with record annual revenue in fiscal 2009 of $1.87 billion. BMC is one of the largest software companies in the world and has grown total revenue each fiscal year since 2002.
Headquartered in Houston
, Texas
, BMC develops, markets and sells software used for multiple functions, including IT service management, data center automation, performance management, virtualization
lifecycle management and cloud computing
management. The name "BMC" is taken from the surnames of its three founders—Scott Boulette, John Moores, and Dan Cloer.
Employing nearly 6,000, BMC is often credited with pioneering the BSM
concept as a way to help better align IT operations with business needs.
BMC is a multinational firm operating in North America, Australia, Europe, and Asia and has multiple offices located around the world. The company's international headquarters is located at 2101 CityWest Boulevard, Houston, Texas, United States. In June 2006, Thomas Properties Group Inc., through its joint venture with the California State Teachers' Retirement System, agreed to buy BMC Software Inc.'s Houston campus for $295 million.
In August 2009, BMC had over 450 software applications to primarily manage mainframes and distributed systems, as well as virtual and cloud computing IT environments. Generally, the software is used to help information technology managers, typically in large enterprises or agencies, manage operations, make IT more efficient, remediate issues, increase compliance and lower IT costs.
For example, BMC’s BSM platform improves efficiency for government agencies such as New York City's Department of Information Technology and Telecommunications. A June 2009 press release issued by the City of New York credits the implementation of BMC’s IT Service Management (ITSM) software and integration of automated monitoring tools “has produced dramatic improvements in interagency communication and streamlined City services with considerable cost avoidance.”
In October 2009, BMC announced an initiative called Dynamic Business Service Management to improve IT’s proactive approach to data center management. All major product offerings, BMC BladeLogic Server Automation, BMC ProactiveNet Performance Management, BMC Atrium CMDB
and BMC IT Service Management were updated as part of this initiative.
BMC uses its own software in a private cloud computing
environment for developing applications. BMC also offers consulting, implementation, integration, and educational services related to its software products and sells directly through a sales force and indirectly through channel partners which include "resellers, distributors, and systems integrators."
Partial List of Software Products
Richard A. Hosley II was president and chief executive officer of BMC Software, Inc. from October 1987 until April 1990. Prior to being president, Hosley was BMC’s first salesman. Later, as vice-president of sales and marketing, he was responsible for designing and implementing the highly innovative and cost effective telemarketing process and the commission scheme for salesmen and product authors for which BMC was known. Shortly after becoming president, Hosley took the company public in 1988. In Hosley’s ten years with BMC, sales grew from under one million to more than $100 million and employees from two (Hosley and Moores) to over 500 people. Hosley was succeeded by Max Watson, Jr. in April 1990.
Max Watson Jr. was chairman and chief executive officer of BMC Software from April 1990 to January 2001. At one point, he was listed as one of Houston's highest paid executives; in 2000, his salary and bonus was $1.2 million. In 2001, BMC had a policy of only awarding stock options once every three years. But one report described Watson as earning nearly "$37 million for running the Houston company during its period of turmoil." In 2001, BMC appointed the company director, Garland Cupp, to the post of chairman, succeeding Max Watson, who quit the post in January 2001. "Mr. Cupp has been a director since 1989 and was chief information officer at American Express Co.'s travel-related services unit." according to BMC.
Watson was succeeded by BMC's former senior vice president of product management and development, Robert Beauchamp (pron. "Bee-chum"). During his tenure as BMC's chairman and CEO, Beauchamp oversaw business changes including the move of BMC's stock to the New York Stock Exchange
, the reorganization of BMC into two primary business units, and the introduction of Business Service Management
. In October 2009, BMC returned to NASDAQ‘s electronic trading platform, remaining under the ticker symbol, BMC.
Today, Beauchamp continues to be chairman and CEO of BMC as well as president of its ESM business unit. His total compensation for 2009 is $10,902,868. Beauchamp has been at BMC since 1988; in August 2009, he was 49 years old.
In 2009, other executives include the president of the Mainframe Service Management unit—Bill Miller; and the chief financial officer—Stephen Solcher.
BMC had 6,100 employees in March 2010. BMC is a member of the S&P 500 and was listed as being a member of Fortune's "400 Best Big Companies" in 2009.
, and Dan Cloer began a contract programming partnership. All three had worked at Shell Oil
doing computer programming. By 1980, the company was incorporated in the state of Texas and officially became BMC Software. Moores was the company's first CEO. The firm primarily wrote software for IBM mainframe computers, the industry standard at the time. Sometimes BMC wrangled with IBM about issues such as "software tie-in claims."
In 1987, Moores was succeeded by Richard A. Hosley II as CEO and President. In July 1988, BMC was re-incorporated in Delaware and went public with an initial public offering for BMC stock. The first day of trading on the New York Stock Exchange with its symbol BMC was August 12, 1988. Since then, the firm has filed quarterly and annual statements with the SEC. Annual stockholder meetings are typically held in Houston during July or August.
BMC programmers received commissions for their designs since the beginning of the firm. As a cost saving measure from the early days of the company sales were handled via direct mail and telemarketing. In 1991, BMC placed one quarter of pretax revenues into the budget for research and development. The employees at the headquarters in Sugar Land often wore Hawaiian shirts rather than business suits.
. Greg Hassell of the Houston Chronicle stated in a 1991 article that after 11 years of growth in the company, BMC "has the soul of the little guy" and "still run like a start-up company" since it still used tactics used by smaller firms to expand.
Beginning about 1994, BMC began a pattern of consistently buying both small and large software firms. From 1994 to 2009, BMC has bought approximately 32 firms. While many were acquisitions of small privately held firms with undisclosed terms of sale, there were sizeable purchases too. Most firms are American, although there have been firms from Belgium and two from Israel. BMC was able to expand software product offerings, extend new capabilities, bring new talent into the firm, and integrate solutions into a comprehensive product line. As a result, few acquisitions were followed by substantial layoffs of redundant employees. In addition, BMC made cooperative arrangements with other computer and software firms. The firm invested in research and development. The firm's focus widened. In 1996, for example, it focused primarily on software for IBM mainframe computers. Over time, its focus widened to include tasks associated with monitoring information technology as well as its traditional focus on mainframe software.
A primary BMC product during the early 1990s was its Patrol Software, a "data base and systems management product (which) monitors the status of computers, resources, databases and applications on a network," according to a New York Times report. In 1994, BMC made an alliance with computer maker Digital Equipment Corporation
in which BMC would convert its Patrol software to run on all Digital operating system environments. In 1997, BMC bought Datatools, a privately based maker of backup and recovery products based in Sunnyvale, California, for $60 million.
In 1998, BMC bought Boole & Babbage, the first software products firm in Silicon Valley, which "creates software to help corporations stitch together computer networks." Estimates of the price paid varied; some suggested the price paid in the stock swap deal was $1 billion while another estimate was more than $900 million while another estimate was $877 million. A New York Times business reporter praised the acquisition and described what software products from the two companies (BMC and Boole) do: "When they do their jobs right, products like Boole's Command Post or BMC's Patrol are invisible to end users. But they provide information systems management staff a virtual dashboard with which to monitor problems and optimize performance. In many cases, the programs can spot an error, alert network administrators to its existence and repair the problem without ever interrupting the system." The reporter elaborated: "Systems management software is a broad category of programs that function behind the scenes to make sure that big mainframes and far-flung networks of distributed computers keep working reliably and efficiently", and noted that "a major corporate computing system, whether based on a traditional mainframe or spread among Unix servers, is a vastly more complex environment than a personal computer, so the products that monitor and trouble-shoot these systems must be powerful and sophisticated as well." In another story, a reporter wrote: "Both companies sell software that makes computer networks run smoothly and that manages data bases on mainframe computers, but Boole & Babbage, of San Jose, California, gains 58 percent of its revenue from international sales, while the Houston-based BMC gets 35 percent of its revenue from such sales."
Also in 1998, BMC bought Massachusetts-based BGS which "makes software tools that help companies analyze and predict the performance of their systems" in a stock deal valued at $285 million. The Houston Chronicle wrote: "The move enabled BMC to strengthen its software offerings, which are used to monitor the health of a computer network."
Acquisitions didn't necessarily mean layoffs. While a common merger pattern is when "one big company buys another and the job cuts soon follow," a Houston Chronicle reporter wrote that BMC has acquired businesses with the goals of "adding new products and keeping the skilled people who create them." A BMC spokesperson commented "very good technologists are very hard to find ... The value of a software company all comes back to its intellectual capital."
In 1999, BMC acquired the Israeli firm New Dimension Software which made application service as well as management software for $673 million cash. New Dimension software code handled such tasks as security, document management and job scheduling. In 2000, BMC bought "an Israeli maker of enterprise application management software for mainframe computer system", named Optisystems, for $70 million.
BMC was making alliances and investing in new technologies. In 2000, BMC had reportedly invested with a firm called Interliant, a Purchase, New York provider. which "rented software to corporations over the Internet." The reporter explained: "By using an A.S.P. (application service provider), a business does not have to buy the programs itself, store them on servers and hard drives, or maintain and upgrade them. That allows companies to slash costs in their information technology departments... For monthly subscription fees, A.S.P.'s give businesses access to specific software programs on the Internet. Typically, the applications are used to manage a variety of important business functions, from customer service to supply chain management."
In 2001, BMC cooperated with 20 other large companies in an IBM initiative called Project Eliza, described as an effort to "develop computer networks that can largely manage themselves, recognizing faults and repairing them without human handlers."
In 2002, BMC made a deal with Dell computer
to manage Dell's systems; "Dell Computer had agreed to manage its systems with BMC's products and resell them", according to an article in the New York Times.
In November 2002, BMC acquired Mountain View, California based Remedy for $350 million. BMC president Bob Beauchamp said "the Remedy buy will take BMC software from managing disparate IT elements to managing business services across an enterprise." He elaborated: "This acquisition will change the landscape of enterprise management for BMC. Our company will move from managing IT components to managing the business itself." Remedy operated as an independent unit within the larger firm.
Before the Remedy Acquisition, BMC had had trouble integrating acquired technology into its tool set, Beauchamp said in a conference call, while Remedy software has been integrating with BMC for years. Remedy had been acquired by Peregrine Systems in 2001, but in 2002, Peregrine filed for bankruptcy, so BMC bought Remedy from the bankrupt Peregrine. In 2002, Remedy had sales of $250 million, with 800 employees, and 6000 customers; it is a wholly owned subsidiary of BMC. The purchase had legal complications; at one point, BMC believed seven former employees of Peregrine might use their knowledge of trade secrets to develop competitive products; there were lawsuits and counterclaims involving this matter.
In 2003, BMC made a deal with a large maker of computer data storage systems, EMC Corporation, exchanging rights to BMC's discontinued storage software for access to fifty of BMC's software storage customers. In 2003, BMC bought IT Masters of Belgium "for $42 million to add software for managing computer-system services"; it added 75 employees to BMC as well as customers such as Toyota Motor, Lockheed Martin and Bank of America. Also in that year, BMC left the market for storage software because of a "lack of return on its investment amid intense competition from rivals like I.B.M. and Veritas Software."
In April 2004, BMC bought Marimba, Inc., a maker of configuration storage management software, for $187 million. In August 2004, it bought the Magic Solutions unit of Network Associates for $47 million "to add customer-service programs for small and midsize companies" and which makes "software used to log and answer customer calls."
In 2005, BMC bought OpenNetwork, based in Clearwater, Florida, for $18 million to "expand its ability to let customers manage access to Web-based applications." In May 2006, BMC acquired Israel-based Identify Software. BMC paid approximately $151 million. "This acquisition provides solutions that optimize application development organizations through the automation of testing, support and maintenance processes and enables dramatic increases in development outputs," it said in the 10K report filed with the SEC.
In April 2007, BMC bought privately held start-up Service Management Partners which had a software product that "helps organizations to visualize and configure software tools."
In May 2007, BMC bought privately-held ProactiveNet, a maker of business service management software which helps "IT collect systems data, which is then analyzed for potential problems" and can "automatically alert IT staffs to problems and suggest remedies."
In July 2007, BMC bought RealOps, a provider of run book automation solutions. The acquisition helped BMC create an "all-in-one service management solution" that "integrates diverse multi-vendor technologies" while enhancing "service availability" yet minimizing interruptions.
In October 2007, BMC bought Emprisa Networks (based in Fairfax, Virginia) "for its network compliance, change, configuration management and automation product". Analysts from Gartner Group commented: "BMC is correctly framing the Emprisa acquisition as a key step in its developing end-to-end IT service automation strategy, which leverages BMC’s strength in configuration management databases (CMDBs) and change management." But analysts commented that BMC still needs: "integration with other network management disciplines where it has little or no presence" as well as a "field training plan and more field sales and technical expertise in network management" and "close cooperation with its reseller partner Entuity." It paid $22 million.
In April 2008, BMC bought BladeLogic, a data center automation software company, for $854 million. In the May SEC report, it said "The BladeLogic acquisition expands our offerings for server provisioning, application release management, as well as configuration automation and compliance."
In June 2008, BMC acquired privately-held ITM Software, a Santa Clara, California firm founded in 2001 that makes "software products and services that advance the business management of Information Technology." The integrated approach helps managers see their corporate information networks "from the perspective of the business" and helps them get a "comprehensive view" permitting "greater visibility and control." An analyst explained: "Managing the business of IT has been a critical message in BMC Software’s Business Service Management strategy since its inception. However, the company lacked critical applications to help senior IT leadership execute on that vision. With its recent acquisition of ITM Software, BMC fills in some critical gaps in its ITRP offering." Financial details were not disclosed.
In June 2009, BMC received a "CIO 100 award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."
In August 2009, BMC acquired privately held MQSoftware, a "middleware
management" software firm.
In October 2009, BMC acquired privately held Tideway Systems
, a maker of IT discovery software, to support BMC’s vision of Dynamic BSM.
In December 2010, BMC acquired GridApp Systems
, a software company specializing in automating database provisioning, patching and administration.
, BMC is working with firms like Cisco
and VMware
to build a so-called Unified Computing System described as a "private cloud in a box"; the Economist Magazine elaborated: "instead of having to wire up servers, storage devices and networking gear, companies can build and reconfigure virtual computer systems with a few mouse clicks," reported the Economist in March 2009. Business analyst Richard Sherman said the alliance "raises BMC’s profile in the server automation industry" and would raise future revenues. According to the article, BMC's earlier acquisition of BladeLogic in 2008 was key to the formation of the alliance with Cisco. In June 2009, BMC received a "CIO 100 award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."
In July 2009, BMC and Amazon Web Services announced IT organizations will be able to extend their internal data centers to the Amazon Elastic Compute Cloud (Amazon ec2) through BMC’s BSM platform.
In November 2009, BMC announced Service Desk Express will be sold, marketed and available via Salesforce.com. "By delivering service desk technology via the cloud, you can abstract all the complexity of the infrastructure that rely on IT services delivery and follow best practices," said BMC chairman and CEO, Bob Beauchamp.
BMC also counts Dell
, VMware
and NetApp among its strategic alliance partners.
, Computer Associates, Hewlett-Packard
, Sun, and Microsoft
. In addition, other firms have been mentioned as being competitors, such as Candle, Platinum Technology, Network Associates, BeatBox Technologies, Quest Software, Oracle, Novell, Symantec, Red Hat, Sybase, Pervasive Software, and Compuware
But the industry is complex and ever-changing. Sometimes BMC competes with these firms in some areas, and cooperates in others.
Note: Numbers rounded to eliminate decimals
Source: Yahoo Finance. Retrieved Aug 2009.
In 2002, in a 10K statement submitted to the SEC, BMC identified its principal competitors as large software firms such as IBM, Computer Associates, and Microsoft, as well as computer makers such as Sun and HP. BMC officially described its business as competitive: "There are several companies, including IBM, Computer Associates and Microsoft, as well as large computer manufacturers such as Sun and HP, which have substantially greater resources than we have, as well as the ability to develop and market enterprise management solutions similar to and competitive with the solutions offered by us. In addition, there are numerous independent software companies that compete with one or more of our software solutions. Although no company competes with us across our entire software solution line, we consider at least 60 firms to be directly competitive with one or more of our enterprise software solutions. In systems management, database management, application management, security and storage management, there are hundreds of companies whose primary business focus is on at least one but not all of these solutions. Certain of these companies have substantially larger operations than ours in these specific niches."
While software can be considered as intellectual property like screenplays and protected by copyrighting, some software processes can be considered as "inventions" and protected by patent. BMC owns software patents. For example, BMC owns a patent for "GUI interpretation technology for client/server environment" developed by software engineers David T. Sulcer, Lawrence M. Ackner, and Donna S. Lowe-Cleveland which involves complex signals processing; patent attorneys trying to describe this process wrote: "receiving a message from a remote device, the message comprising either a definition, a state change, a command or some combination thereof; processing the definition (if any) before the state change (if any); and processing the state change (if any) before processing the command (if any)."
BMC owns real estate property but it's mostly in four office buildings totaling 1515000 square feet (140,748.1 m²) in Houston, Texas; sales and development offices around the world are leased.
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
specializing in Business Service Management
Business Service Management
Business service management is an approach used to manage business-aligned IT services. A BSM philosophy promotes a customer-centric and business-focused approach to Service Management, aligning business objectives and priorities with IT or ICT from strategy through to operations and continual...
(BSM) software, with record annual revenue in fiscal 2009 of $1.87 billion. BMC is one of the largest software companies in the world and has grown total revenue each fiscal year since 2002.
Headquartered in Houston
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, BMC develops, markets and sells software used for multiple functions, including IT service management, data center automation, performance management, virtualization
Hardware virtualization
Computer hardware virtualization is the virtualization of computers or operating systems. It hides the physical characteristics of a computing platform from users, instead showing another abstract computing platform...
lifecycle management and cloud computing
Cloud computing
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....
management. The name "BMC" is taken from the surnames of its three founders—Scott Boulette, John Moores, and Dan Cloer.
Employing nearly 6,000, BMC is often credited with pioneering the BSM
Business Service Management
Business service management is an approach used to manage business-aligned IT services. A BSM philosophy promotes a customer-centric and business-focused approach to Service Management, aligning business objectives and priorities with IT or ICT from strategy through to operations and continual...
concept as a way to help better align IT operations with business needs.
Location
Products and services
BMC Software began as a mainframe software vendor, but since the middle 1990s has been developing software to monitor, manage and automate distributed and mainframe systems. BMC is divided into two main business units:- A MainframeMainframe computerMainframes are powerful computers used primarily by corporate and governmental organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.The term originally referred to the...
Management segment focusing on reliability of "business critical data" and includes the BSM subgroup, “Service Optimization.”
- An Enterprise Service Management segment which focuses on servers and networks, and includes the BSM subgroups, "Service Support," "Service Automation," and "Service Resource Planning.”
In August 2009, BMC had over 450 software applications to primarily manage mainframes and distributed systems, as well as virtual and cloud computing IT environments. Generally, the software is used to help information technology managers, typically in large enterprises or agencies, manage operations, make IT more efficient, remediate issues, increase compliance and lower IT costs.
For example, BMC’s BSM platform improves efficiency for government agencies such as New York City's Department of Information Technology and Telecommunications. A June 2009 press release issued by the City of New York credits the implementation of BMC’s IT Service Management (ITSM) software and integration of automated monitoring tools “has produced dramatic improvements in interagency communication and streamlined City services with considerable cost avoidance.”
In October 2009, BMC announced an initiative called Dynamic Business Service Management to improve IT’s proactive approach to data center management. All major product offerings, BMC BladeLogic Server Automation, BMC ProactiveNet Performance Management, BMC Atrium CMDB
CMDB
A configuration management database is a repository of information related to all the components of an information system. It contains the details of the configuration items in the IT infrastructure. Although repositories similar to CMDBs have been used by IT departments for many years, the term...
and BMC IT Service Management were updated as part of this initiative.
BMC uses its own software in a private cloud computing
Cloud computing
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....
environment for developing applications. BMC also offers consulting, implementation, integration, and educational services related to its software products and sells directly through a sales force and indirectly through channel partners which include "resellers, distributors, and systems integrators."
Partial List of Software Products
Directors and staff
The company was founded by John Jay Moores in 1980; Moores was a "former Shell Oil computer specialist ... whose software made Shell's computers more efficient."Richard A. Hosley II was president and chief executive officer of BMC Software, Inc. from October 1987 until April 1990. Prior to being president, Hosley was BMC’s first salesman. Later, as vice-president of sales and marketing, he was responsible for designing and implementing the highly innovative and cost effective telemarketing process and the commission scheme for salesmen and product authors for which BMC was known. Shortly after becoming president, Hosley took the company public in 1988. In Hosley’s ten years with BMC, sales grew from under one million to more than $100 million and employees from two (Hosley and Moores) to over 500 people. Hosley was succeeded by Max Watson, Jr. in April 1990.
Max Watson Jr. was chairman and chief executive officer of BMC Software from April 1990 to January 2001. At one point, he was listed as one of Houston's highest paid executives; in 2000, his salary and bonus was $1.2 million. In 2001, BMC had a policy of only awarding stock options once every three years. But one report described Watson as earning nearly "$37 million for running the Houston company during its period of turmoil." In 2001, BMC appointed the company director, Garland Cupp, to the post of chairman, succeeding Max Watson, who quit the post in January 2001. "Mr. Cupp has been a director since 1989 and was chief information officer at American Express Co.'s travel-related services unit." according to BMC.
Watson was succeeded by BMC's former senior vice president of product management and development, Robert Beauchamp (pron. "Bee-chum"). During his tenure as BMC's chairman and CEO, Beauchamp oversaw business changes including the move of BMC's stock to the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
, the reorganization of BMC into two primary business units, and the introduction of Business Service Management
Business Service Management
Business service management is an approach used to manage business-aligned IT services. A BSM philosophy promotes a customer-centric and business-focused approach to Service Management, aligning business objectives and priorities with IT or ICT from strategy through to operations and continual...
. In October 2009, BMC returned to NASDAQ‘s electronic trading platform, remaining under the ticker symbol, BMC.
Today, Beauchamp continues to be chairman and CEO of BMC as well as president of its ESM business unit. His total compensation for 2009 is $10,902,868. Beauchamp has been at BMC since 1988; in August 2009, he was 49 years old.
In 2009, other executives include the president of the Mainframe Service Management unit—Bill Miller; and the chief financial officer—Stephen Solcher.
BMC had 6,100 employees in March 2010. BMC is a member of the S&P 500 and was listed as being a member of Fortune's "400 Best Big Companies" in 2009.
1980s
During the late 1970s, BMC Software founders Scott Boulette, John MooresJohn Moores (baseball)
John Jay Moores is an American entrepreneur and philanthropist, and the owner of the San Diego Padres.-Early years:...
, and Dan Cloer began a contract programming partnership. All three had worked at Shell Oil
Shell Oil Company
Shell Oil Company is the United States-based subsidiary of Royal Dutch Shell, a multinational oil company of Anglo Dutch origins, which is amongst the largest oil companies in the world. Approximately 22,000 Shell employees are based in the U.S. The head office in the U.S. is in Houston, Texas...
doing computer programming. By 1980, the company was incorporated in the state of Texas and officially became BMC Software. Moores was the company's first CEO. The firm primarily wrote software for IBM mainframe computers, the industry standard at the time. Sometimes BMC wrangled with IBM about issues such as "software tie-in claims."
In 1987, Moores was succeeded by Richard A. Hosley II as CEO and President. In July 1988, BMC was re-incorporated in Delaware and went public with an initial public offering for BMC stock. The first day of trading on the New York Stock Exchange with its symbol BMC was August 12, 1988. Since then, the firm has filed quarterly and annual statements with the SEC. Annual stockholder meetings are typically held in Houston during July or August.
BMC programmers received commissions for their designs since the beginning of the firm. As a cost saving measure from the early days of the company sales were handled via direct mail and telemarketing. In 1991, BMC placed one quarter of pretax revenues into the budget for research and development. The employees at the headquarters in Sugar Land often wore Hawaiian shirts rather than business suits.
1990s
The growing firm needed more space. In 1989, BMC leased property in Sugar Land, Texas and in 1990, Max Watson, Jr. succeeded Hosley as CEO and President. In 1991 BMC had 640 employees with $139 million in revenues. Revenues, net earnings, and earnings per share increased approximately 50% over 1990. By 1991, it had offices in several complexes in the Houston area including Stafford and Sugar Land. Later in 1991, BMC announced it was building a new headquarters complex for $65 million. The 20 story tower (120,000 square feet) opened in late 1993. Incidentally, in 1991, John Moores and his wife gave $51.4 million to their alma mater, the University of HoustonUniversity of Houston
The University of Houston is a state research university, and is the flagship institution of the University of Houston System. Founded in 1927, it is Texas's third-largest university with nearly 40,000 students. Its campus spans 667 acres in southeast Houston, and was known as University of...
. Greg Hassell of the Houston Chronicle stated in a 1991 article that after 11 years of growth in the company, BMC "has the soul of the little guy" and "still run like a start-up company" since it still used tactics used by smaller firms to expand.
Beginning about 1994, BMC began a pattern of consistently buying both small and large software firms. From 1994 to 2009, BMC has bought approximately 32 firms. While many were acquisitions of small privately held firms with undisclosed terms of sale, there were sizeable purchases too. Most firms are American, although there have been firms from Belgium and two from Israel. BMC was able to expand software product offerings, extend new capabilities, bring new talent into the firm, and integrate solutions into a comprehensive product line. As a result, few acquisitions were followed by substantial layoffs of redundant employees. In addition, BMC made cooperative arrangements with other computer and software firms. The firm invested in research and development. The firm's focus widened. In 1996, for example, it focused primarily on software for IBM mainframe computers. Over time, its focus widened to include tasks associated with monitoring information technology as well as its traditional focus on mainframe software.
A primary BMC product during the early 1990s was its Patrol Software, a "data base and systems management product (which) monitors the status of computers, resources, databases and applications on a network," according to a New York Times report. In 1994, BMC made an alliance with computer maker Digital Equipment Corporation
Digital Equipment Corporation
Digital Equipment Corporation was a major American company in the computer industry and a leading vendor of computer systems, software and peripherals from the 1960s to the 1990s...
in which BMC would convert its Patrol software to run on all Digital operating system environments. In 1997, BMC bought Datatools, a privately based maker of backup and recovery products based in Sunnyvale, California, for $60 million.
In 1998, BMC bought Boole & Babbage, the first software products firm in Silicon Valley, which "creates software to help corporations stitch together computer networks." Estimates of the price paid varied; some suggested the price paid in the stock swap deal was $1 billion while another estimate was more than $900 million while another estimate was $877 million. A New York Times business reporter praised the acquisition and described what software products from the two companies (BMC and Boole) do: "When they do their jobs right, products like Boole's Command Post or BMC's Patrol are invisible to end users. But they provide information systems management staff a virtual dashboard with which to monitor problems and optimize performance. In many cases, the programs can spot an error, alert network administrators to its existence and repair the problem without ever interrupting the system." The reporter elaborated: "Systems management software is a broad category of programs that function behind the scenes to make sure that big mainframes and far-flung networks of distributed computers keep working reliably and efficiently", and noted that "a major corporate computing system, whether based on a traditional mainframe or spread among Unix servers, is a vastly more complex environment than a personal computer, so the products that monitor and trouble-shoot these systems must be powerful and sophisticated as well." In another story, a reporter wrote: "Both companies sell software that makes computer networks run smoothly and that manages data bases on mainframe computers, but Boole & Babbage, of San Jose, California, gains 58 percent of its revenue from international sales, while the Houston-based BMC gets 35 percent of its revenue from such sales."
Also in 1998, BMC bought Massachusetts-based BGS which "makes software tools that help companies analyze and predict the performance of their systems" in a stock deal valued at $285 million. The Houston Chronicle wrote: "The move enabled BMC to strengthen its software offerings, which are used to monitor the health of a computer network."
Acquisitions didn't necessarily mean layoffs. While a common merger pattern is when "one big company buys another and the job cuts soon follow," a Houston Chronicle reporter wrote that BMC has acquired businesses with the goals of "adding new products and keeping the skilled people who create them." A BMC spokesperson commented "very good technologists are very hard to find ... The value of a software company all comes back to its intellectual capital."
In 1999, BMC acquired the Israeli firm New Dimension Software which made application service as well as management software for $673 million cash. New Dimension software code handled such tasks as security, document management and job scheduling. In 2000, BMC bought "an Israeli maker of enterprise application management software for mainframe computer system", named Optisystems, for $70 million.
2000s
During these first years of the new century, BMC spent heavily on research and product development. "In fiscal 2000, 2001 and 2002, research and development spending, net of capitalized amounts, represented 23%, 29% and 37% of total revenues, respectively," according to a 10K report filed with the SEC in 2002.BMC was making alliances and investing in new technologies. In 2000, BMC had reportedly invested with a firm called Interliant, a Purchase, New York provider. which "rented software to corporations over the Internet." The reporter explained: "By using an A.S.P. (application service provider), a business does not have to buy the programs itself, store them on servers and hard drives, or maintain and upgrade them. That allows companies to slash costs in their information technology departments... For monthly subscription fees, A.S.P.'s give businesses access to specific software programs on the Internet. Typically, the applications are used to manage a variety of important business functions, from customer service to supply chain management."
In 2001, BMC cooperated with 20 other large companies in an IBM initiative called Project Eliza, described as an effort to "develop computer networks that can largely manage themselves, recognizing faults and repairing them without human handlers."
In 2002, BMC made a deal with Dell computer
Dell
Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest...
to manage Dell's systems; "Dell Computer had agreed to manage its systems with BMC's products and resell them", according to an article in the New York Times.
In November 2002, BMC acquired Mountain View, California based Remedy for $350 million. BMC president Bob Beauchamp said "the Remedy buy will take BMC software from managing disparate IT elements to managing business services across an enterprise." He elaborated: "This acquisition will change the landscape of enterprise management for BMC. Our company will move from managing IT components to managing the business itself." Remedy operated as an independent unit within the larger firm.
Before the Remedy Acquisition, BMC had had trouble integrating acquired technology into its tool set, Beauchamp said in a conference call, while Remedy software has been integrating with BMC for years. Remedy had been acquired by Peregrine Systems in 2001, but in 2002, Peregrine filed for bankruptcy, so BMC bought Remedy from the bankrupt Peregrine. In 2002, Remedy had sales of $250 million, with 800 employees, and 6000 customers; it is a wholly owned subsidiary of BMC. The purchase had legal complications; at one point, BMC believed seven former employees of Peregrine might use their knowledge of trade secrets to develop competitive products; there were lawsuits and counterclaims involving this matter.
In 2003, BMC made a deal with a large maker of computer data storage systems, EMC Corporation, exchanging rights to BMC's discontinued storage software for access to fifty of BMC's software storage customers. In 2003, BMC bought IT Masters of Belgium "for $42 million to add software for managing computer-system services"; it added 75 employees to BMC as well as customers such as Toyota Motor, Lockheed Martin and Bank of America. Also in that year, BMC left the market for storage software because of a "lack of return on its investment amid intense competition from rivals like I.B.M. and Veritas Software."
In April 2004, BMC bought Marimba, Inc., a maker of configuration storage management software, for $187 million. In August 2004, it bought the Magic Solutions unit of Network Associates for $47 million "to add customer-service programs for small and midsize companies" and which makes "software used to log and answer customer calls."
In 2005, BMC bought OpenNetwork, based in Clearwater, Florida, for $18 million to "expand its ability to let customers manage access to Web-based applications." In May 2006, BMC acquired Israel-based Identify Software. BMC paid approximately $151 million. "This acquisition provides solutions that optimize application development organizations through the automation of testing, support and maintenance processes and enables dramatic increases in development outputs," it said in the 10K report filed with the SEC.
In April 2007, BMC bought privately held start-up Service Management Partners which had a software product that "helps organizations to visualize and configure software tools."
In May 2007, BMC bought privately-held ProactiveNet, a maker of business service management software which helps "IT collect systems data, which is then analyzed for potential problems" and can "automatically alert IT staffs to problems and suggest remedies."
In July 2007, BMC bought RealOps, a provider of run book automation solutions. The acquisition helped BMC create an "all-in-one service management solution" that "integrates diverse multi-vendor technologies" while enhancing "service availability" yet minimizing interruptions.
In October 2007, BMC bought Emprisa Networks (based in Fairfax, Virginia) "for its network compliance, change, configuration management and automation product". Analysts from Gartner Group commented: "BMC is correctly framing the Emprisa acquisition as a key step in its developing end-to-end IT service automation strategy, which leverages BMC’s strength in configuration management databases (CMDBs) and change management." But analysts commented that BMC still needs: "integration with other network management disciplines where it has little or no presence" as well as a "field training plan and more field sales and technical expertise in network management" and "close cooperation with its reseller partner Entuity." It paid $22 million.
In April 2008, BMC bought BladeLogic, a data center automation software company, for $854 million. In the May SEC report, it said "The BladeLogic acquisition expands our offerings for server provisioning, application release management, as well as configuration automation and compliance."
In June 2008, BMC acquired privately-held ITM Software, a Santa Clara, California firm founded in 2001 that makes "software products and services that advance the business management of Information Technology." The integrated approach helps managers see their corporate information networks "from the perspective of the business" and helps them get a "comprehensive view" permitting "greater visibility and control." An analyst explained: "Managing the business of IT has been a critical message in BMC Software’s Business Service Management strategy since its inception. However, the company lacked critical applications to help senior IT leadership execute on that vision. With its recent acquisition of ITM Software, BMC fills in some critical gaps in its ITRP offering." Financial details were not disclosed.
In June 2009, BMC received a "CIO 100 award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."
In August 2009, BMC acquired privately held MQSoftware, a "middleware
Middleware
Middleware is computer software that connects software components or people and their applications. The software consists of a set of services that allows multiple processes running on one or more machines to interact...
management" software firm.
In October 2009, BMC acquired privately held Tideway Systems
Tideway Systems
Tideway Systems was a software company, founded in November 2002 by Richard Muirhead, that offered products for data center optimization, virtualization management, application availability and standards compliance, targeted toward enterprise customers....
, a maker of IT discovery software, to support BMC’s vision of Dynamic BSM.
In December 2010, BMC acquired GridApp Systems
GridApp Systems
GridApp Systems, Inc. was a database automation software company. It was purchased by BMC Software in December, 2010.Founded in 2002 and headquartered in New York City, GridApp Systems was the brainchild of five former employees of Register.com, Rob Gardos, Shamoun Murtza, Matthew Zito, Dan Cohen,...
, a software company specializing in automating database provisioning, patching and administration.
Partnerships
As the computer industry moves in the direction of cloud computingCloud computing
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....
, BMC is working with firms like Cisco
Cisco
Cisco may refer to:Companies:*Cisco Systems, a computer networking company* Certis CISCO, corporatised entity of the former Commercial and Industrial Security Corporation in Singapore...
and VMware
VMware
VMware, Inc. is a company providing virtualization software founded in 1998 and based in Palo Alto, California, USA. The company was acquired by EMC Corporation in 2004, and operates as a separate software subsidiary ....
to build a so-called Unified Computing System described as a "private cloud in a box"; the Economist Magazine elaborated: "instead of having to wire up servers, storage devices and networking gear, companies can build and reconfigure virtual computer systems with a few mouse clicks," reported the Economist in March 2009. Business analyst Richard Sherman said the alliance "raises BMC’s profile in the server automation industry" and would raise future revenues. According to the article, BMC's earlier acquisition of BladeLogic in 2008 was key to the formation of the alliance with Cisco. In June 2009, BMC received a "CIO 100 award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."
In July 2009, BMC and Amazon Web Services announced IT organizations will be able to extend their internal data centers to the Amazon Elastic Compute Cloud (Amazon ec2) through BMC’s BSM platform.
In November 2009, BMC announced Service Desk Express will be sold, marketed and available via Salesforce.com. "By delivering service desk technology via the cloud, you can abstract all the complexity of the infrastructure that rely on IT services delivery and follow best practices," said BMC chairman and CEO, Bob Beauchamp.
BMC also counts Dell
Dell
Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest...
, VMware
VMware
VMware, Inc. is a company providing virtualization software founded in 1998 and based in Palo Alto, California, USA. The company was acquired by EMC Corporation in 2004, and operates as a separate software subsidiary ....
and NetApp among its strategic alliance partners.
Competitors
BMC competes against firms with large market capitalizations and resources, particularly IBMIBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
, Computer Associates, Hewlett-Packard
Hewlett-Packard
Hewlett-Packard Company or HP is an American multinational information technology corporation headquartered in Palo Alto, California, USA that provides products, technologies, softwares, solutions and services to consumers, small- and medium-sized businesses and large enterprises, including...
, Sun, and Microsoft
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
. In addition, other firms have been mentioned as being competitors, such as Candle, Platinum Technology, Network Associates, BeatBox Technologies, Quest Software, Oracle, Novell, Symantec, Red Hat, Sybase, Pervasive Software, and Compuware
Compuware
Compuware Corporation is a software company with products aimed at the information technology departments of large businesses. The company's services also include testing, development, professional services automation, project and portfolio management, cloud-based collaboration and performance...
But the industry is complex and ever-changing. Sometimes BMC competes with these firms in some areas, and cooperates in others.
| Firm | Market capitalization (billions) | Employees | Revenue Growth % | Revenue (billions) | Gross Margin % | EBITDA (millions) | Operating Margin % | Net Income (millions) | Price to Earnings (P/E) |
|---|---|---|---|---|---|---|---|---|---|
| BMC Software | $6 | 5,800 | % | $2 | 78% | $609 | 26% | $319 | 21 |
| Computer Associates (CA) | $12 | 13,200 | % | $4 | 86% | $1,390 | 29% | $693 | 17 |
| Hewlett Packard | $105 | 321,000 | % | $118 | 23% | $14,960 | 9% | $7,710 | 14 |
| IBM | $156 | 410,097 | % | $97 | 45% | $23,250 | 19% | $12,650 | 13 |
Note: Numbers rounded to eliminate decimals
Source: Yahoo Finance. Retrieved Aug 2009.
In 2002, in a 10K statement submitted to the SEC, BMC identified its principal competitors as large software firms such as IBM, Computer Associates, and Microsoft, as well as computer makers such as Sun and HP. BMC officially described its business as competitive: "There are several companies, including IBM, Computer Associates and Microsoft, as well as large computer manufacturers such as Sun and HP, which have substantially greater resources than we have, as well as the ability to develop and market enterprise management solutions similar to and competitive with the solutions offered by us. In addition, there are numerous independent software companies that compete with one or more of our software solutions. Although no company competes with us across our entire software solution line, we consider at least 60 firms to be directly competitive with one or more of our enterprise software solutions. In systems management, database management, application management, security and storage management, there are hundreds of companies whose primary business focus is on at least one but not all of these solutions. Certain of these companies have substantially larger operations than ours in these specific niches."
Assets
While BMC's most significant asset is perhaps a workforce of skilled software engineers, the firm owns considerable intellectual property in the form of software code. It elaborated how it protects this property in an SEC filing (2002): "We distribute our products in object code form and rely upon contract, trade secret, copyright and patent laws to protect our intellectual property. The license agreements under which customers use our products restrict the customer's use to its own operations and prohibit disclosure to third persons. We now distribute certain of our products on a shrink-wrap basis, and the enforceability of such restrictions in a shrink-wrap license is unproven in certain jurisdictions. Also, notwithstanding those restrictions, it is possible for other persons to obtain copies of our products in object code form. We believe that obtaining such copies would have limited value without access to the product's source code, which we keep highly confidential. In addition, we employ protective measures such as CPU dependent passwords, expiring passwords and time-based trials."While software can be considered as intellectual property like screenplays and protected by copyrighting, some software processes can be considered as "inventions" and protected by patent. BMC owns software patents. For example, BMC owns a patent for "GUI interpretation technology for client/server environment" developed by software engineers David T. Sulcer, Lawrence M. Ackner, and Donna S. Lowe-Cleveland which involves complex signals processing; patent attorneys trying to describe this process wrote: "receiving a message from a remote device, the message comprising either a definition, a state change, a command or some combination thereof; processing the definition (if any) before the state change (if any); and processing the state change (if any) before processing the command (if any)."
BMC owns real estate property but it's mostly in four office buildings totaling 1515000 square feet (140,748.1 m²) in Houston, Texas; sales and development offices around the world are leased.