Category — M&A

I received a comment from Richard Whitehead, Director of Datacenter Solutions at Novell in response to my thoughts on the Novell - MO acquisition announcement.

While I’m appreciative of Richard joining the conversation, I feel the answers are a bit in line with the typical “post M&A” honeymoon responses you see in the press and typical micro-portals that are built to reassure customers that “all will be OK”. We’ve all seen it before.

Here’s Richard’s comment in my original post and some of my commentary. Thanks again Richard - don’t be a stranger! Get Abbas and Frank out there spreading the gospel!

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Hi Doug,

Thanks for taking the time to put up a thoughtful post on the Managed Objects acquisition by Novell. I’d like to take a moment to address the great points in your blog.

What’s the bigger strategy and vision?

Novell’s vision and strategy is to Make IT Work As One. The acquisition will extend Novell’s portfolio of data center solutions by adding tools to provide a unified view of all information and workloads. As a result, both IT and business managers will have improved visibility into how their information systems deliver business services across physical and virtual environments, so managers can make better decisions, ensure availability and quality of service while lowering the total cost of data center management - thus allowing IT to work as one.

**DLM*** Ok, sounds nice. Now, how will you help clients really work as “one”? My opinion here is that this is everything that surrounds the typical vendor portfolio. It’s people, organizational structure, silos, change and transformation, consulting, services, mentoring and MOST importantly how to operationalize the portfolio so IT will THINK, OPERATE and RESPOND DIFFERENTLY than they would without the portfolio (or other vendor’s portfolio).

Is this really a CMDB play with BSM as a nice to have?

We don’t look at BSM as a “nice to have,” it’s a critical part of the strategy behind the acquisition. We feel Novell’s existing workload management and virtualization solutions will especially benefit by adding flexible service modeling, advanced analytics and a unique Web 2.0-based virtualization element. Customers can now extract IT configuration and workload information in near real time, put it into a powerful CMDB, model how the IT configuration provides business services and then generate visualizations and “dashboards” that show how IT directly aligns to business services.

**DLM** I think what many of us in the industry are scratching our heads on is that you’re missing core enabling portfolio products that would bring the full power of the MO solution and architecture to life. This is why I ask if this is really an acquisition for the CMDB solution near term.

Will MO become a Novell oriented solution?

Managed Objects will be integrated with Novell’s system and resource management business. Over time and after the MO acquisition closes the MO brand will be transitioned into the Novell brand.

**DLM** This was more about how the investment dollars will likely focus on supporting the Novell strategy and vision more than the integrations with other vendors.

Will the Novell name keep exclude MO from some clients and opportunities?

Not entirely sure if we understand this question, but I think you’re asking if we’ll support existing customers. Absolutely. We intend to support and grow existing MO customers and we’ve already visited most of them to bring them up to speed on the acquisition, and reassure them of our continued support. We will be opportunistic in pursuing new opportunities as they arise.

**DLM** My point here was that many don’t think of Novell initially as someone to invite to the table for an RFP in the IT management and monitoring, ITIL or BSM space. When I think of Novell, I immediately think of Netware, SUSE and ZENworks. I suppose this is all sales and marketing and spinning up the new Novell. Maybe a sexy new “2.0″ name change is in order like Compuware has done?

Will this help or hinder their green field competition against the big4??

Almost all of the major BSM players are Novell’s partners today, and that won’t change. We believe our solution is complementary and provides rich added value to customers in the data center. In fact, Managed Objects has always integrated with IT management products from the flagship BSM vendors including IBM, Tivoli, HP, CA and BMC. This open and agnostic approach is critical to us.

**DLM** This question ties into the previous one, will Novell be in the final two for a big CMDB or BSM opportunity in the future against the ones you’d expect to be there?

Will they be relegated to only compete with the tier 2 business service management providers (Quest Software, Compuware, ASG, etc)?

Managed Objects has a mature technology platform deployed at hundreds of Global 2000 customers, and now that platform is available to Novell’s customers and prospects. As mentioned in the earlier question, we believe this joint solution will complement and extend customer capabilities.

**DLM**This was my speculation that if the previous were true, Novell and MO would be forced to compete in the “tier 2″ BSM marketplace.

How will Novell fill out some of the key gaps in its portfolio to fully enable an end-to-end solution that can leverage MO’s architecture and data collection capabilities? (systems, network, application, service, transaction, user experience, etc.) I see a big need here, starting with basic systems, network and application management (open source opportunities?).

Around 2 years ago, Novell announced the “Blueprint for Better Management”. In March this year, we completed the acquisition of PlateSpin which added key capabilities. The acquisition of MO shows execution and commitment to this blueprint. More details can be found at http://www.novell.com/managedobjects

**DLM** Many in the industry think you’ve got a loooong way to go here. I look forward to watching the portfolio round out and new partnerships evolve. Check out OpenNMS, RiverMuse, ScienceLogic, Nimsoft, ZenOSS, Quest Software as potential partners or further M&A targets to shore up the fundamentals.

Will MO sales and engineering team experience be diluted by other product quotas and priorities? BSM takes a unique sales team and ideally a very consultative approach to sell the value proposition and overall lifecycle. With more products to sell, how will this impact the overall BSM message?

We will provide more details on a joint product roadmap when the acquisition closes. There are no plans to discontinue any MO products, and they’ll be integrated with and enhance Novell’s systems management solutions. There are no plans to open source any of the Managed Objects products, and current product release cycles will not be disrupted.

As for how the overall BSM message will change, we see an enhancement. The integration of virtualization into the BSM fabric by way of Novell*s virtualization management lifecycle products will provide a tie into workflow management, identity management and collaboration tools.

Anything I haven’t covered here can probably be found on our acquisition resource page located at http://www.managedobjects.com/novell.

**DLM** Well, the priorities, quotas, commissions, etc. will all eventually change. The guy that was selling SUSE or ZENworks will eventually need to sell the MO portfolio. This is often VERY disruptive to the business and the typical client knows when they no longer get the “A TEAM” on-site anymore. I hope you focus on what it takes to sell, deliver and operationalize Business Service Management!

The announcement of the definitive agreement for Novell to purchase Managed Objects has been on the street for almost a week now. I’ve held back partly because of a pressing work engagement, but also to try and really think about this some on my own. I’ll admit I do not know much about Novell, its recent acquisitions, vision or strategy. What crosses my mind about Novell is their legacy and recent entrance into the world of open source Linux with SUSE and virtualization with ZENworks stuff.

I’ve read through their website and see the very early beginnings of marketing and spin to play in the enterprise buzzword bingo game of datacenter automation, virtualization, Linux servers/desktops, compliance, security and basic systems management. From what I see they have a long ways to go to fill in the gaps if one was to compare them to the mega product suites of the incumbent “big4″ or “other6″.

Some questions that initially come to my mind are:

• What’s the bigger strategy and vision?
• Is this really a CMDB play with BSM as a nice to have?
• Will MO become a Novell oriented solution?
• Will the Novell name keep exclude MO from some clients and opportunities?
• Will this help or hinder their green field competition against the “big4″?
• Will they be relegated to only compete with the “tier 2″ business service management providers (Quest Software, Compuware, ASG, etc)?
• How will Novell fill out some of the key gaps in its portfolio to fully enable an end-to-end solution that can leverage MO’s architecture and data collection capabilities? (systems, network, application, service, transaction, user experience, etc.) I see a big need here, starting with basic systems, network and application management (open source opportunities?).
• How will the MO target markets or customers change?
• Will MO sales and engineering team experience be diluted by other product quotas and priorities? BSM takes a unique sales team and ideally a very consultative approach to sell the value proposition and overall lifecycle. With more products to sell, how will this impact the overall BSM message?

I hope to speak with some of my friends at MO in the near future as the dust settles to get a glimpse into the future vision and strategy. In any case, it’s all business and the MO products can and will continue to stand on their own and remain a viable option for many around the world. I look forward to developments here and within the field in competitive situations. There will no doubt be wins and losses for both of our companies!

Other notable press and discussion available here:

• Denise Dubie - NetworkWorld
• Chris Kanaracus - NetworkWorld
• John Dragoon
• Novell Website
• Novell PR on Managed Objects Acquisition
• All Google news on acquisition

Just noticed that Nimsoft and Indicative have decided to join forces and work towards a more competitive offering for the future.

From Gary’s Blog, I particularly like this:

“The second area is Business Service Management. We decided that the big guys had had this space to themselves for too long and they needed someone to shake it up a little by providing easily implemented and easily managed products with a low cost of ownership. We intend to make Business Service Management “within reach” just as we have done with the other disciplines.”

Gary, I encourage you to visit my blog and especially the presentation I gave at BarCampESM for ideas that you can start with in your BSM product development journey. I’d also encourage you to look at what the folks at Firescope and Integrien are doing. Blending all of this in with your newly acquired technology, a nice interface and fundamental BSM capabilities will help you create a differentiating product for wide spread adoption. Please share your BSM thoughts as you progress (ping me if you want to guest author on the BSM topic here).

I hope this is the start of the smaller players joining forces to create products and offerings that start to shake things up. There are so many good things from these companies that have been overlooked for too long now. This isn’t just something that the “proprietary” folks should be considering either as the OSS guys need to think along these lines as well. Would it be a cardinal sin for an OSS player to join forces with a smaller “proprietary” player?

Good luck to the new Nimsoft!

It’s been many many months now since Quest Software picked up Magnum Technologies. Where’s the beef? Where’s the new Business Service Management (BSM) story? How’s the Magnum Technologies solution integrating into the Foglight 5 architecture? Are there significant architectural challenges preventing this?

Like I mentioned last year, I can tell that you have added some of the things I taught your PM’s about way back in 2004-2005, but where’s the new story? Where’s Foglight 5.x/6? When will you bring a new BSM story to the market? This is a bit stale and doesn’t look like the Magnum Technologies stuff is incorporated.

I realize there may have been challenges with the NASDAQ distractions and M&A activity in other areas of your company. Maybe you might consider donating your Foglight and/or Big Brother suites to the Open Management Consortium (OMC) for oversight and development? They’re in search of a good Open Agent and I think you’ve got a great platform and framework for just that.

I must say though that the Big Brother site has a very nice look and feel! Unfortunately, the product as demo’d on your site is still not fit for executive consumption.

Quest Software announced their intentions to acquire Business Service Management vendor Magnum Technologies today.

I’m not sure of how much penetration Quest has ever gotten into the larger enterprise accounts with their full Foglight solution, but they have had broader success across the board with their various point tools for databases/applications, Java and Windows. Foglight (and it’s counterpart Big Brother) and the Spotlight products/plugins play firmly into the IT organization silos. They’ve got some great diagnostics capabilities and very “geek” oriented dashboards for managing, tweeking and tuning databases and applications. I’ve never seen too much of a top down, business oriented, non-IT focus other than messaging from Quest’s Foglight line in what I’d say was a true Business Service Mangement manner like other vendors have today. In my past, I helped break in Foglight 4 into an environment with upwards of 2000+ servers and hundreds of services/processes/transactions and it wasn’t a painless process. Foglight 5 is out now and at least looks like they’ve done some of the things they talked about in roadmap sessions I was familiar with in 2004-05. I am not sure how the backend architecture changed which was where all the problems existed for large deployments. A great product for environments with a few hundred servers!

It looks like the Magnum acquisition could be what Quest needs to get a real business and top down story in place and to broaden out from the pure play systems and application management space. If they play their cards right, having purpose built Business Service Management plays that are in line with Quest’s strengths that visibility into systems/application/databases, Java and Windows and SMART pricing/packaging could be very attractive for the SMB market. I know little about Magum’s Business Service Management solution and do not know anyone who uses it. I do know IBM Tivoli OEM’s some of their network discovery technology in the IBM Tivoli Netview family. More emphasis on network monitoring and management would also be a plus for Quest as well. They could easily take on share from the likes of the What’s Up Gold, Solarwinds and Open Source Software folks if they can find a way to “unify” the IT organization silos into a single vendor/solution strategy.

Should be interesting to follow the integration messaging!

“Sleeper” Compuware announced today that it intends to purchase Proxima Technology. The press release indicates that Proxima’s Centauri product will become part of the Vantage suite.

Compuware has some good products and technologies of which I’ve used quite a few in the Vantage suite. They’ve made some key acquisitions over the past couple of years but I haven’t seen or heard much on how well they’ve been integrated into the suite. I thought the Adlex acquisition was a good one but it’s positioning and marketing has been relatively quiet. I’m not sure how well Compuware can or will carry the Business Service Management message or if they’ll just use this as a much needed improvement for the “top layer” dashboard and visualization needed to mend, patch and fix poor architectural choices in the Vantage suite, especially with the main user interface and dashboard. It was in need of significant work when I used it in the past. I’d bet this is a key driver for this acquisition.

This should make for some interesting discussions around here and potentially more work! It’s always fun to watch the new year come in and speculate on what it may bring. I wonder if there will be more M&A in this space this year by the big players looking to fill gaps, the smaller combining forces or a BSM/SLM convergence. Managed Objects, Digital Fuel, Oblicore, Netuitive, Indicative, OpTier, Magnum, etc. are all potential M&A targets now probably in that order. Then there’s BMC, who may revisit their definition of Business Service Management and seek to fill their gap with a pure play BSM solution rather than their ITSM based BSM story in place today.

Another acquisition right down the road from the “Atlanta Security Industry”!

From AP:

BOSTON (AP)–International Business Machines Corp. (IBM) said Wednesday it will spend $1.3 billion in cash to acquire Internet Security Systems Inc. (ISSX), which performs network monitoring and analysis services for companies. The deal values ISS at $28 a share, an 8% premium to ISS’s close at $26 on Tuesday on the Nasdaq Stock Market. If the acquisition is approved by shareholders, the companies expect it to close in the fourth quarter. IBM, Armonk, N.Y., has agreed to buy three public companies this month alone. Two weeks ago, it reached a pact to buy document-management software provider FileNet Corp. (FILE) for $1.6 billion. On Aug. 3, Big Blue agreed to spend $740 million for MRO Software Inc. (MROI), which helps industrial companies track physical assets.

Buying ISS could bolster Big Blue’s ability to take on what it calls “managed security services” for its business customers. ISS helps guard against data theft and other problems with automated monitoring products and with technical consultants, who now will be part of IBM’s vast services arm. Based in Atlanta, ISS says its 11,000 customers include 17 of the world’s largest banks. The company earned $38.5 million on $330 million in revenue last year; this year’s revenue is expected to surpass $350 million. New York Stock Exchange-listed shares of IBM, a Dow Jones Industrial Average component, were quoted 1 cent higher in recent premarket activity from Tuesday’s close of $78.95. Internet Security rose to $27.66 from Tuesday’s $26 closing price.

Updates-

http://www.networkworld.com/news/2006/082306-ibm-to-buy-internet-security.html?netht=082306netflash

Wow! This looks really interesting and brings a wealth of potential for our ITSM portfolio. I see all kinds of gaps being addressed in our portfolio with this - Service Desk, Service Catalog, enhanced Discovery, enahnced Asset Management, enhanced SLA & SLA monitoring, etc.

Yes, re-read that - Service Desk & Service Catalogs! I look forward to seeing what develops here!

Some links to info - more to come I’m sure.

Acquisition PR

ITSM Solutions

Maximo Discovery

Maximo IT Asset Management (ITAM)

Maximo Service Desk