What connects the recent mergers and acquisitions in the net mgmt. space?

* Mergers and acquisitions revisited

Last week I hosted a Webinar on EMA's report "Twenty Hot Markets for 2007," which I've written about in several columns in the past. The main message, ironically, wasn't about the markets themselves - they were early sketches for what I believe will be a new taxonomy to emerge in 2 to 5 years. The real point was that there is a tectonic shift occurring across the management marketplace driven by new architectural design points and cultural changes in IT.

(I used the word "tectonic" deliberately - harkening back to Permian times more than 200 million years ago, when the continents all became lumped together in Pangaea before breaking apart into Gondwanaland - Africa, and South America and Australia; and Laurasia - North America, Europe and Asia.)

One of the most conspicuous things about the changes going on are mergers, acquisitions and even heightened OEM activity. In the report, EMA developed a mergers and acquisitions list that spanned all of 2005 and most of Q1 2006. In this, I counted a total of 26 acquisitions of various sizes and across the four major platform vendors (or whatever they call themselves these days): three for BMC, nine for CA, four for HP and seven for IBM. Numbers don't necessarily count for dollars spent, as most of the acquisitions were small, compared to the more sizeable acquisitions, such as Peregrine (for HP) and Micromuse (for IBM).

And there is no indication that any of this activity will stop. In fact, public (just last week from Ann Livermore, executive vice president of HP's services organization) and private statements made to EMA indicate just the opposite. The drumbeat of mergers and acquisitions will continue. But why is this occurring? What does it all add up to? And what does it really mean?

A simple tally indicates that one of the first requirements is to invest in security services and in particular identity management as a core part of building a more effective management portfolio. Of the 26 companies listed, four were identity management and an additional four were involved other areas of security (from anti-spam to intrusion detection), while an additional three were directed at IT governance and/or project management. So if you combine these, of the 26, the total for security, compliance and security was 11.

Asset management was another key area with HP's acquisition of Peregrine and IBM's investments in CIMS Lab and Isogon. The acquisition of network management platforms was also conspicuous - with Concord/Aprisma going to CA and Micromuse going to IBM. The 10 remaining acquisitions spread across areas ranging from application management and service-oriented architecture management, to storage and systems management, to knowledge management and intelligent automation, to application dependency mapping.

While this may seem fairly random - with the exception of the need to invest in security and identity management as a core focus - I would argue that there are two fundamental things going on here. The first and most obvious is shoring up critical mass. These major solution vendors don't want to lose to each other because of holes in their portfolios.

But there is a second, less conspicuous trend going on here - the need to build an integrated system for providing management services that support multiple disciplines. This is done by advancing core requirements such as analytics and CMDB capabilities, and integrated security and identity management services. In other words, many of these acquisitions can support the move to deconstruct traditional, monolithic platform "one-size-fits-all" dinosaurs, into a new, more modular design that supports multiple brand choices, as well as a phased approach to investing in management software.

The focus on knowledge management, security and identity management, application dependency mapping and CMDB initiatives, as well as the willingness to deconstruct analytic investments to support multiple domains (e.g. harnessing network event correlation engines to support multiple domain requirements) are all more specific examples of this trend.

Of the two major forces at work here - not getting caught short on function and re-architecting towards a more modular, intelligent point of integration - I would say that this latter is what's really key. No EMA dialog or research or consulting suggests that most IT shops want to get all of their management solutions from a single vendor. What they are looking for is intelligent integration - a platform vendor that can offer effective choice, ease of integration, and advanced analytics - to support multiple brand choice. This is both a cultural and technological requirement of course. And the winning vendors in the next-generation platform wars will realize that this, far more subtle requirement, is the winning strategy - and those product managers clinging to old turf-war mindsets will have to reform or get out of the way.

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Copyright © 2006 IDG Communications, Inc.

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