BMC Mainframe Push Helps Fuel Solid Growth

BMC Software recently wrapped up its fiscal year 2009 with record revenues and bookings, which officials say indicates that the company's approach for helping businesses manage their infrastructure is working. Much of BMC's BSM strategy is around the ability to use the same technologies to manage both distributed and mainframe environments. Mainframes will continue to play a strong role for BMC, officials said, echoing what other mainframe players-including IBM, CA and Unisys-are saying.

At a time when the global recession is hammering most of the IT sector, BMC Software just wrapped a fiscal year of record earnings and bookings, and on June 23, the company reaffirmed its outlook for the current fiscal year of further growth.

BMC officials say that much of the reason for this success stems from the BSM (Business Service Management) strategy the company embarked on several years ago, shifting from a strategy of managing technology products to focusing more on automating the computing operations and processes.

At a time when IT budgets are contracting and CIOs are under pressure to provide more services, software that helps drive down operating expenses by making those operations and processes easier to manage becomes more attractive. Add in such new technologies as cloud computing and virtualization, and the demand for the software that does what BMC's does will grow.

"Virtualization is a huge opportunity for BMC," Jim Grant, senior vice president of strategy and corporate development at BMC, said in an interview. "There are a lot of images, too many for the [small number of IT people] to manage."

Grant was talking from New York City June 23, where he and other BMC officials spoke with investors and analysts about the company's recent performance and current fiscal year.

For BMC's fiscal 2009, which ended in March, the company pulled in record bookings of $1.88 billion and record revenue of $1.87 billion. Company officials said during BMC's Investor Day that they were sticking with their expectations for FY 2010, which means a rise in earnings per share and cash flow from operations of $600 million to $650 million.

The recession is changing the way IT departments do business, and BMC is in a good position not only to help companies during the economic troubles, but also later, when the financial picture improves, said Grant and Derrick Vializ, vice president of investor relations.

Much of that will ride on the back of BMC's BSM approach, they said. The strategy drives down costs while improving efficiency, and spans the vendor's work in both distributed environments and in the mainframe world.

Mainframes, a platform that many believed was dying, have seen a resurgence over the past decade, driven in part by the demand for greater IT security, manageability and reliability, according to Bill Miller, president of mainframe service management at BMC.

BMC isn't the only company looking to take advantage of the new demand for mainframes. IBM and Unisys both have upgraded their mainframe hardware offerings in recent months, and CA in recent weeks has aggressively expanded its mainframe management software offerings as part of a larger Mainframe 2.0 initiative.

IBM also is trying to entice Unix customers of Hewlett-Packard and Sun Microsystems over to Linux on IBM's System z mainframes. HP officials argue that the mainframes are pricier than their own x86 ProLiant systems or high-end Integrity servers, based on Intel's Itanium chip.

BMC put a strong focus on mainframes more than three years ago, creating a business unit around the platform as well as an advisory council, Miller said in an interview. He pointed to two areas in particular as keys in BMC's mainframe push. The first is with the vendor's scheduling software, which he said is about 30 percent of BMC's mainframe software business.

Another is around the work BMC is doing with specialty engines, which are processors designed to run specific tasks-such as Java or Linux workloads. The specialty engines take those workloads off the general-purpose processor, which increases the performance of the processor. BMC is enabling mainframe users to run some BMC software on the specialty engines, freeing up the general-purpose processor to run other workloads.

Miller said BMC will continue to enable more of its software to run on the specialty engines. In addition, BMC officials are seeing an increased interest in Linux on the mainframe, he said. A recent survey of 1,100 customers indicated that they expected a 20 percent growth in Linux workloads on mainframes, and 30 percent said they expected to be in production with Linux workloads on mainframes in the next year.

The survey results echo what both IBM and CA are seeing from their customers.

The interest in Linux on the mainframe also is a bridge that helps link BMC's mainframe and distributed computing businesses, said Dev Ittycheria, president of enterprise service management at BMC. Through the company's BSM platform, BMC offers businesses a unified management console through which they can manage both mainframe and distributed environments, giving the company a strong position in both areas, Ittycheria said.