BMC doesn't stand for Business Mismanagement Cure, but it could. BMC Software is a leading provider of business management software used for a variety of functions and processes, including recovery and storage management, business process integration, service management, application and database performance management. BMC, which primarily serves larger companies, provides tools designed to manage enterprise servers, speed up and monitor databases, eliminate unplanned outages, and recover system assets. It also provides professional services such as consulting and systems integration. BMC, which is going private, sells directly and through channel partners worldwide.
Change in Company Type
BMC came under pressure in 2012 from shareholder Elliott Management, which acquired a more than 5% ownership in the company that year, to put the company on the auction block. BMC issued statements in response, asserting its board doesn't consider seeking a buyer to be in the stockholders' best interests. Elliott planned to pursue the matter by submitting five nominees for election to BMC's board at the annual stockholder meeting that year.
Under continued pressure, in 2013 the company agreed to a $6.9 billion buyout offer from an investor group led by Bain Capital and Golden Gate Capital. The buyout comes as BMC has fallen behind competitors who are better suited to handle the migration to cloud-based products and services.
The company is made up of two primary units: enterprise service management (ESM) and mainframe service management (MSM). ESM provides software for service assurance (managing IT functions and processes) and automation (automating otherwise manually-intensive compliance and configuration changes to servers, networks, databases, and applications). ESM also encompasses BMC's professional services unit. MSM provides tools for mainframe database management and monitoring. It earns the bulk of its revenue from maintenance and support services and by licensing its software.
BMC maintains technology alliances with such companies as Dell, EMC, Red Hat, McAfee, and Cisco. Its systems integration partners include Accenture, EDS, and Wipro.
The company's product manufacturing and distribution takes place in Houston and, internationally, in Dublin. Its major R&D campuses are in the US, India, and Israel. Smaller R&D efforts happen in offices at many other locations.
Both software license and maintenance revenues increased for fiscal 2012 (ended March). They also increased across both segments, with the exception of a 1% drop in its largest contributor to license revenue, the ESM segment, which accounts for about 60% of all software license intake. Maintenance revenue rose for both ESM and MSM on the strength of increased customer bases and, in ESM's case, a nearly $10 million uptick in software-as-a-service (SaaS) subscriptions.
At home in the US, license revenue fell 2% for 2012, while maintenance sales were up nearly 5%, but professional services outpaced both, growing more than 20%. International business grew across the board, with license revenue up 5%, maintenance climbing 7%, and professional services improving 22%. Looking more closely, however, even international business couldn't escape some downturns. License sales for the ESM segment in Europe, the Middle East, and Africa (EMEA) decreased, and had to be propped up by gains in Latin America, Asia/Pacific, and Canada. In MSM license revenue, however, EMEA picked up along with Latin America and Asia/Pacific, while Canada faltered. In international maintenance business, both ESM and MSM sales improved in Asia/Pacific and EMEA, while Canada only saw gains in ESM, and Latin America only picked up in MSM. In BMC's professional services, the double-digit growth was fueled mainly by implementation, consulting, and education services, which also entailed growing demand for SaaS offerings.
Mergers and Acquisitions
BMC continues to expand past its core expertise in mainframe management and utility software, with an emphasis on its ESM products. In 2010 the company bolstered its Java-based offerings when it acquired Phurnace Software, a provider of automation software used to deploy and configure Java applications. That year it also purchased middleware provider MQSoftware, IT discovery software company Tideway Systems, storage capacity management software developer Neptuny, and Web database automation tool maker GridApp.
In 2011 BMC acquired Coradiant and created its End User Experience Management offering. Coradiant's technology allows customers to monitor how application performance affects the end-user experience. Its software is offered on enterprise and cloud-based software-as-a-service (SaaS) platforms and is sold to clients in a diverse group of industries including education, finance, e-commerce, insurance, and health care.
Also that year, BMC bought mainframe management software developer NEON Enterprise Software's IMS (information management system) database product line to complement its own IMS application selection. Additionally that year, it acquired Aeroprise, a developer of mobile software used to extend the functionality of BMC's Remedy IT Service Management product. The deal helped BMC target clients with an increasing need to equip their IT staff mobile access to BMC's enterprise applications.
The year also saw the acquisition of enterprise application delivery company StreamStep. The purchase filled out BMC's application development cycle capabilities and will be the basis for a product called Release Process Management for its Application Release Automation stable.
In 2012 BMC expanded its MainView monitoring and automation product suite with the acquisition of I/O Concepts, a developer of security, automation applications for mainframe computers. BMC billowed up its cloud capabilities that same year by acquiring mid-market IT management software provider Numara. The purchase not only expanded its reach into the SaaS model, but also into the small- and mid-sized business market.
Additionally that year BMC bought IT service and asset management software developer Numara Software to expand its software-as-a-Service capabilities, particularly for mid-sized businesses. The company also acquired Abydos, the maker of an add-on product for BMC's Remedy IT Service Management application called Process Designer. The tool enables the creation and deployment of IT requests and processes via a graphical interface. Then it acquired VaraLogix, which added application deployment automation technology.
The company supports both mainframe and distributed computer systems. BMC helps companies in such industries as financial services, telecommunications, and transportation -- many of which rely heavily on mainframe computing -- to integrate data stored on mainframes with business services.