Micromuse Acquires OEM Partner

Micromuse acquired partner Network Harmoni for $23 million in cash.

Micromuse Inc. this morning announced that it acquired its OEM partner Network Harmoni for $23 million in cash.

Micromuse for over a year has OEMed the San Diego companys intelligent agent technology for use in its NetCool/System Service Monitors (SSM) and Netcool/Application Service Monitors (ASM) to gather real-time data on the performance and status of systems, servers and applications.

"Theyve been so critical to our success, we decided an arms-length relationship was no longer sufficient," explained Lloyd Carney, who was earlier this summer named chairman and CEO of San Francisco-based Micromuse. "By folding their development engine into Micromuse, we can accelerate revenue growth and improve customer satisfaction," he added.

With the Network Harmoni acquisition under its belt, Micromuse can prioritize the development of new agents based on its own customers requirements and optimize the design of new agents to enhance the value of other tools in the Netcool portfolio, including the Netcool/Impact Manager and Netcool/SLA Manager.

In the near term, Micromuse will emphasize delivery of new Network Harmoni agents for SAP AG applications, IBMs WebSphere Web applications server, PeopleSoft enterprise applications and Blackberry handheld devices.

As part of the acquisition, Craig Farrell, president, CEO and Chief Technology Officer for Network Harmoni will become CTO for Micromuse.

"In my new role, my near term objectives are to broaden the capabilities of the NetCool suite at the systems and application layers for tighter integration across the NetCool suite and continue rolling out packaged solutions such as the recently released voice-over-IP application. My longer term goal is to reinforce and expand Micromuses reputation as a technology leader in real-time business and service assurance," said Farrell.

Farrell believes that thanks to the existing relationship with Micromuse, it will be able to easily leverage the Network Harmoni line with "little incremental effort" to be able to "gather rich security data, detect software licenses and asset data, discover the presence and status of applications, and conduct trace analysis on application layer perf problems," he said. "The Network Harmoni suite holds the potential to enhance the value of NetCool Impact, NetCool Reporter, NetCool SLA Manager, NetCool Precision and extend diagnosis and root cause capabilities across all layers," he added.

The acquisition also holds the promise to expand Micromuse products beyond their existing installed base among the Fortune 2000 and large service providers to address the mid-market. Network Harmoni also offers its Network Harmoni OpCenter, which Micromuse has not resold. It is a light-weight fault and performance management tool that provides "centralized monitoring and problem resolution for midsized IT infrastructures," described Farrell.

Micromuse will also acquire several pending patents that Network Harmoni had previously applied for. Most of the 40 Network Harmoni employees will transition to Micromuse.

Although at least two competitors are among the OEM customers that Network Harmoni brings to the table, Carney stressed that Micromuse intends to maintain those relationships. They include InfoVista S.A and Hewlett Packard Companys OpenView management software unit.

The acquisition brings Micromuse, known primarily as an event management provider for large enterprises and service providers, more squarely into competition with large enterprise management software providers such as IBMs Tivoli, BMC Software Inc., Computer Associates International Inc.s Unicenter, and HPs OpenView, believes Stephen Elliot, senior research analyst at International Data Corp., in Framingham, Mass. "Enterprises will have to be shown why Micromuse is better. It will be an interesting battle when you talk about domains outside event management," he said.

But by acquiring what Carney hailed as "the best agent technology in the market," Micromuse can take a broader approach to such competition that can be customized for specific applications. "Now they can articulate granular information about a specific application," he said.

The acquisition is effective immediately.