IBM Snaps Up MRO in Latest Software Buyout

 
 
By Paula Musich  |  Posted 2006-08-03 Email Print this article Print
 
 
 
 
 
 
 

Big Blue agrees to acquire MRO Software in a $740 million deal.

IBM in its continuing march of software acquisitions on Aug. 3 announced its plans to acquire industrial and IT asset management provider MRO Software for $740 million. The move comes a day after IBM announced its acquisition of privately held Webify for an undisclosed sum.
Both companies bring to the table strong roots in SOA (service-oriented architecture) technology and a strong affinity with IBM Global Services.
The acquisition of MRO, once completed in the fourth quarter of 2006, will mark IBMs 37th software acquisition since July of 2001. In the last two years, IBM has acquired 19 software companies. The quick succession of acquisitions, which have weighed heavily among smaller, more nimble companies, has brought IBM into markets it intends to play in at the right time, according to Frank Dzubeck, president of Washington, D.C., consultancy Communication Network Architects.
"If organic development is too long, you go out and acquire," he said. At the same time, smaller companies that start to make inroads into significant IBM accounts that "have products that fit into IBMs matrix of products," become acquisition targets for IBM, added Dzubeck. Both the Webify acquisition, which brings to IBMs WebSphere brand SOA-based software and services for creating composite business applications, and the MRO Software acquisition bring key SOA technology to IBMs software portfolio, as well as SOA skill sets to IBM Global Services. "For IBM those three letters are next to godliness. SOA is no longer a figment of anyones imagination. [It is middleware] that will become the great battleground of the future. Applications are moving there, management software is moving there…" said Dzubeck. MRO, which will become a business unit within IBMs Tivoli software unit, brings to Tivoli a "proven track record in the enterprise asset management space," according to Al Zollar, general manager of the Tivoli unit. MRO provides software and services to manage such industrial assets as production equipment, facilities, transportation as well as IT hardware and software for utilities, manufacturing, energy, pharmaceutical and telecommunications companies. To read more about MRO Software, click here. As more and more intelligence is added to industrial equipment such as RFID tags, embedded chips and IP addresses, IBM believes that large enterprises are looking for a single, consolidated approach to managing production assets and IT assets, according to Zollar. "Were experts of asset management focused on nuclear power, oil and gas, with mission critical infrastructures where downtime and inefficiencies are measured in the tens of millions of dollars. "IT assets are becoming more integral to the operation of these plants and resources, and four years ago we started developing these capabilities in our products and built them on SOA. "Combined with IBM we are in a position to see this convergence happening," said Chip Drapeau, president and CEO of MRO in Bedford, Mass. MRO also "really complements the work we do between Tivoli software and IT Service Management [ITSM] and what weve been doing with IBM Global Services," added Zollar. In fact IBM with its Global Services unit has been an MRO partner for 10 years, during which Global Services implemented more than 100 enterprise asset management projects worldwide based on MROs Maximo offering, according to Allan Krans, industry analyst with Technology Business Research in Hampton, N.H. MRO brings another key capability notably missing from Tivolis product portfolio: a service desk function. "This allows our customers to complete all the steps they need to fully deliver IT Service Management. It will contribute to our ability to drive double digit revenue growth," added Zollar, noting that Tivoli last quarter grew revenue by 12 percent. The service desk capability, combined with a service catalog function aimed at self-service help, will quiet critics who have been skeptical over Tivolis assertion that the service desk market is mature and would not be a good investment for IBM. "IBM has been dinged for a long time over its lack of a Service Desk, especially in customers dedicated to an [IT Infrastructure Library] approach," said Richard Ptak, principal at Ptak, Noel & Associates in Amherst, N.H. "The addition of a service desk to the IBM portfolio means that customers that were sticklers for the specifics of the ITIL model will breathe a sigh of relief, and, IBM hopes, reach for their checkbooks," he added. The Webify acquisition, in contrast, fills a gap for IBM in what could promise to be a "lucrative commercial SOA component market," asserted Julie Craig, senior analyst for Enterprise Management Associates in Boulder, Colo. "At some point in the next couple of years, companies will be making SOA components that theyll lease to people or sell for their own SOA deployments. Webifys history of bringing up industry vertical SOAs positions IBM well for that," she added. And just as MRO offers good opportunities for IBM Global Services on the enterprise asset management front, Webify brings to the services behemoth important skill sets and intellectual property for vertical SOA application deployments. "This will be a nice thing for Global Services to have in their toolkit. They can say this is a way for you to shave a huge amount of time [for development and deployment]," she added. "The net here is that customers can move quickly to create SOA applications. Webify takes the reuse aspect of SOA and puts these components into industry specific context for businesses," explained Nancy Pearson, vice president of marketing for Tivoli in Somers, N.Y. Conversely, MRO with its SOA-based platform complements Tivolis ITSM strategy, also built on SOA. "They bring their enterprise asset management technology and their service desk technology with the most modern platform built on SOA," she added. Once the MRO acquisition is complete, IBM intends to integrate MRO technology into Tivoli software products, and at the same time continue to market existing MRO software through both vendors sales channels. IBM will also expand the scope of its IT asset management consulting practices and offer services for MROs offerings through IBM Global Services. MRO, which has 900 employees and $200 million in revenues for 2005, will continue to report to Drapeau. 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