IBM to shell out $740 million for MRO Software | CNET News.com
IBM Gets a Service Desk
IBM is to acquire asset management company MRO Software, in the process filling at least one major hole in its portfolio.
The lack of a service desk has been a gaping wound in IBM’s IT Service Management (ITSM) strategy. The ITSM market is getting hotter and hotter (just like the planet), and CA, BMC and HP have all been making FUD at IBM’s expense. “IBM doesn’t have a service desk strategy” is a pretty damning condemnation if an organisation is considering an ITIL approach for service management. Many organisations start ITIL with service management and helpdesk, before moving onto other ITIL functions.
HP Gets IBM’s Attention
So, HP evidently got IBM’s attention when it announced it is going to acquire Mercury.
Time to get serious, Big Blue, was the message from HP CEO Mark Hurd. HP is going after IBM. Peregrine was the start of something, not the end. Now Mercury too. Don’t forget Novadigm, the undisputed software deployment heavyweight champion, HP acquired in 2004. HP’s software portfolio is going through a dramatic M&A led transformation and HP has enough money to keep buying.
Obviously an acquisition doesn’t happen overnight and the IBM MRO deal must have been in the pipeline for some time already, but HP’s aggressive move for Mercury may have pushed IBM to pull the trigger on MRO sooner rather than later.
Where BMC has Remedy, and HP has Peregrine, IBM had, until today, a lack in its portfolio.
Talking of Peregrine, the IBM announcement did feel like déjà vu.
Haven’t I heard this somewhere before?
It doesn’t feel like so long ago (it was actually 2001) IBM Global Services was on a call, telling us how it was setting up a major alliance with Peregrine around service and asset management, bringing together IT and physical asset management. IGS kept telling customers to use Peregrine until… well, last week probably. That is some five years of drift from a Tivoli service desk perspective.
Peregrine was failing to make the asset/IT management lifecycle stick well enough to drive managed growth- but IGS kept recommending it to customers. In my opinion it was good for everyone when HP decided to remove any lingering fear, uncertainty and doubt about Peregrine’s future by bringing it into the fold.
Tivoli General Manager Al Zollar said on a conference call for industry analysts today:
“This is about the IBM model – software and services driving growth. The model is about innovation for growth. Tivoli was 12% last quarter and we expect that to continue.
Its interesting: the more its competitors claim that IBM only sells software to drive services revenues, the more IBM talks up the tight sales relationship and unique proposition of its combined software and services assets. IBM is playing some narrative judo, evidently. IBM likes the frame as much as its competitors do.
Rise of the Service Catalog
Zollar also said customers were increasingly asking for service catalog capabilities, which is interesting because it means CA’s sales and marketing is working. CA’s Clarity suite is evidently beginning to drive industry narratives since the Niku acquisition last year, and IBM is responding. CA is doing well in this space, partially because of the ability to automatically provision services to end users. IBM is now going to push into the same space, and Zollar made great play of MRO’s self-service capabilities.
We think our customers are ready for this, said Al. Like I said, I have déjà vu about Peregrine – the messages were very similar 5 years ago. What is more, MRO has 10k asset management customers, so what is Tivoli bringing to the party?
To be fair, Chip Drapeau, MRO’s CEO, put up a spirited defence of why things are different today, in comparison with a few years ago. I will buy the story, resting as it does on the fact enterprises are getting far more serious about risk management in the post SOX post Katrina age.
“Almost every large customer we talk to is focusing on the operational risks facing their business. Downtime, environmental risks and so on. They want to manage that risk in a holistic way. More and more corporate assets are becoming digital”
Chip is right that IT assets and corporate assets are increasingly one and the same thing. See CA’s video game customer base…
Another Way To Address SAP
MRO also brings IBM another nice entrée into SAP shops. BP, for example, apparently uses SAP for asset management, with MRO for the IT side. This suits IBM’s embrace, extend, and federate ambitions for SAP.
Another analyst (I won’t post her name without permission) asked a very good question about coordination of IT project management and IT asset management. Again – CA is already pushing forcefully into this space. Zollar said we’ll see some integration with Rational IT project management tools in the near future.
Finally, its worth noting IBM and MRO’s claims that other competitors’ architectures are old fashioned, whereas MRO is just rolling out its “SOA” platform [that really needs to be looked into, but let’s assume its on the money for now] – certainly noone would argue that Peregrine’s architecture is completely buzzword compliant. Actually HP probably would – feel free to comment folks.
One final concern I have, in terms of a note of caution. One of MRO’s references is the military industrial contractor BAE. It has an incredibly poor record of managing its assets effectively, and never manages to complete a large scale project on time. Seemingly every contract it writes with the UK government, its largest customer, has to be rewritten because of non-compliance with deadlines. Now that is not effective risk management. I don’t want to generalise too much from one example, but then I didn’t put the company name on the slidedeck.
All in all the MRO bid has to be considered a very sensible deal on IBM’s part. And in fact, its good for the industry as a whole. We’re beginning to see exactly what the next generation service management leviathans are going to be selling – optimisations applications built on standards-based system management Frameworks. And yes I know the implications of the word. More on that later.
disclaimers: IBM and BMC are clients.
HP; BMC, mro, IBM, ITIL, CA, Clarity, SAP, BAe, Rational
Doug McClure says:
August 3, 2006 at 10:26 pm
Good summary James. I look forward to seeing what develops “in the gaps”. 🙂
BSM/ITSM Blog: http://dougmcclure.net
Markos Symeonides says:
August 5, 2006 at 1:15 pm
Interesting aquisition. MRO don’t have any customers in the ITSM space ( their product is brand new ) so it will take some time to build any consumer confidence in their ITSM offerings if they are any good at all.
It’s all very well using all the buzzwords but it’s whats under the surface that counts.
Hedge Fund says:
January 25, 2008 at 1:44 am
Did IBM end up purchasing MRO??
January 28, 2008 at 11:35 am
hedge fund- yes they did. IBM now has a strong asset management application play. one intriguing area is the integration with GIS in the shape of deep MRO/ESRI integration for location based asset mapping discovery and so on.