Amid IT Gloom, a Ray of Sun

 
 
By Paula Musich  |  Posted 2001-04-30 Email Print this article Print
 
 
 
 
 
 
 

Management software a bright light in enterprise.

Amid the gloom and doom of layoffs, faltering revenue and stock price nose dives, the one bright spot in IT appears to be the management software sector. The earnings reporting season has turned up a string of good news for tools providers ranging from Micromuse Inc. and InfoVista SA to Aprisma Management Technologies, along with mixed news last week from BMC Software Inc.

With growth remaining healthy for a variety of vendors across several management disciplines, the obvious question is, why have capital spending cuts missed many of these management tools providers?

"Management software gives you greater efficiency with what youve got. We had the big bandwidth party last year; now companies are taking control of it this year," said Dennis Drogseth, vice president of Enterprise Management Associates Inc., in Portsmouth, N.H.

EMA estimates the average year-to-year growth rates for management software revenue will be 10 percent to 20 percent from the fourth quarter of last year to the fourth quarter of this year. Others focused on service creation or improving operational efficiency will fare even better.

A mandate to drive down costs is a key factor, according to Hewlett-Packard Co. OpenView management software user Mark Whatman at Avaya Inc., in Maitland, Fla. "Im being pressured to give [the company] more and more data on the actual utilization of the infrastructure—down to the minute basis—so they can do analysis trending to see if we are using every dollar effectively," said Whatman, senior manager for service management technologies. "Were able to show that the better our management software gets, the more information we can give them and the more money we can drive out of the business."

Service-level management is one of the faster-growing segments of the management software market. Although it has been more hype than reality for enterprise IT, it is becoming a key differentiation for service providers. The trend toward outsourcing infrastructure management functions to service providers is now helping to fuel increased acceptance of the practice in the enterprise.

"Within the enterprise, people are being held to a very different standard than in the past. Now there is an alternative. Service providers are saying, I can manage your infrastructure," said Brenda Peffer, director of marketing for HPs OpenView business unit in Cupertino, Calif. Peffer said that OpenView management tools have seen double-digit growth in all regions, although it has slowed somewhat in the United States in the most recent quarter.

More sophisticated tools from vendors such as British company RiverSoft plc. and System Management Arts Inc., of White Plains, N.Y., are demonstrating return on investment for their customers in the new efficiencies they bring to fault isolation. The 3-year-old RiverSoft saw a 1,300-fold jump in revenues for the fourth quarter last year compared with the same quarter a year earlier.

"The industry is trying to get away from managing elements to managing service levels," Avayas Whatman said. "Now we are being asked to predict, fix it before it breaks, and we need more sophisticated tools [to do that]. That is the cycle were seeing right now."

Not every vendor is a beneficiary of the renewed interest in management tools. Although BMC beat Wall Street expectations for earnings and revenue in its fourth fiscal quarter, officials warned that it is not likely to meet fiscal 2000 first-quarter expectations. At the same time, BMC announced a layoff of 6 percent of its work force. Officials said they believe the rest of the fiscal year will be on track and attributed lower sales to the end of last years mainframe software slump.

IBMs Tivoli Systems saw yet another quarter of declining revenue. Its hard-to-install tools, along with an aging client/server-based architecture, are not viewed as well-suited for e-business applications or infrastructure management.

"Some of the traditional players in the legacy side buffed up their products and wrapped e-labels around them, but when you look at their architectures, theyre not well-suited to e-business," said Rick Boswell, general partner at St. Paul Venture Capital LLC, in Andover, Mass. Boswells company invested in startup Altaworks Corp., which is developing systems management software for e-business.

Altaworks primary competitor, Dirig Software Inc., based its e-business application management tools on Web-based technologies. The privately held company, in Nashua, N.H., saw more revenue in the first quarter of this year than it did all last year, and it expects to double revenue this quarter. "Increasingly, people are looking for more Web-architected software—light weight; faster to deploy; highly scalable; and Web installed, operated and managed. Thats why were seeing quite a number of new smaller companies getting into management," said Tim Grieser, an analyst at International Data Corp., in Framingham, Mass.

 
 
 
 
 
 
 
 
 
 
 

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