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Acquisitions becoming more meaningful

Jul 26, 20043 mins
Data CenterMergers and Acquisitions

* Why acquisitions are taking a more structural tone

One of the most quietly observed signs of maturity in the network and infrastructure management marketplace is the shift in focus of acquisitions towards what I would call more structural investments.

It used to be that acquisitions were viewed primarily in a market context rather than an architectural context – and of course entering new markets is not necessarily a bad idea. The problem was more often than not, however, actually getting the products to work together well and effectively was not necessarily a first priority. The result was acquisitions that looked good on paper with little insight into the nuts of bolts of how good management software needs to be designed and evolved.

The examples are numerous enough, and certainly aren’t limited to management software. They turned out to be particularly egregious in management software, however, because more than many other industry markets, management products were (and are) evolving towards synergy and integration, and away from separate, roll-your-own consoles.

Examples of old-style acquisitions abound, and touch many of the more established brand names – but I’ll stay close to home and mention one I was personally involved with. I was working for a company with solid network management capabilities focused primarily on IP networks and weighted towards the enterprise. Our company bought a telecommunications management vendor with distinct strengths in supporting TL1 and other telecommunications protocols. The problem was that there was a chasm between what we had and what the acquired company had. As a result, an acquisition that looked good on paper to accelerate growth in the telecommunications market never received the investment – much more than the initial price of the company – to build the bridge to make the whole more than the sum of its parts. Investing in companies for “separate markets” often requires special attention to separate sales and channel relationships, and my acquiring company failed to take this requirement seriously, as well. The result was a sputtering relationship without forward motion – and in this case the sum of the two companies together was far less robust than they were individually. 

Today, however, acquisitions are more targeted to architectural and functional concerns than in the past. These range from Micromuse’s acquisitions of RiverSoft for root-cause analysis and Layer 2 discovery and Network Harmoni for strong systems agents and application management capabilities – to Computer Associates’ acquisition of Silent Runner as an enabling technology for security forensics, network diagnostics, and service management topologies.

The purchase of enabling technologies – products that not only offer immediate application value in themselves, but can also provide critical resources for other management applications – is especially interesting. HP’s investment in Consera for object-based modeling and provisioning, IBM’s purchase of ThinkDynamics for business-based provisioning and orchestration, and Mercury’s acquisition of Appilog for application-ecosystem topology are all good examples of this. BMC should also be a company to watch in terms of leveraging its topological investments from its Perform SA acquisition in conjunction with a broader direction centralized topology and configuration data.

I can also say that we are being asked much more creative questions about how to use, say, “analytic” or “topology,” or “configuration-related” capabilities than even two years ago. For you in IT – this overall trend is a good sign, as it suggests that your management software providers are thinking about what they’re building and how it will work together – not just how they can make more money by selling more stuff to more people.