In-Depth

BMC Bets on a Big-Iron Future

BMC doesn’t think the reemergence of Big Iron is a fluke—and it’s putting its money where its mouth is

• By Stephen Swoyer
• 11/16/2004

You don’t have to look hard these days for proof that the mainframe is doing just fine. Consider the case of Big-Iron tools stalwart BMC Software Corp., which announced record mainframe software sales for the quarter just passed.

Like other players in the mainframe market, BMC doesn’t think the resurgence of Big Iron is a fluke. In fact, BMC officials say they’re placing a long-term bet on having the mainframe at the center of the data center. With over 150 percent year-over-year growth in its mainframe business—and more than 20 percent growth from quarter to quarter—that seems like a safe bet.

“We are actually ramping up our investments in the mainframe,” says Bill Miller, general manager of BMC’s mainframe business unit. “This year, we implemented a mainframe specialist focus for sales, globally, so from a field standpoint, that’s a first. We’ve also had more mainframe announcements this year than any year I know of. We announced the final leg of our SmartDBA message, where we announced the IMS connection into SmartDBA.”

What’s more, says Miller, BMC is investing in long-term mainframe brainpower by recruiting fresh college graduates and training them on IMS, CICS, DB2, and z/OS. “This year, we brought in ten college kids out of college and are training them on assembler and other technologies,” Miller confirms, noting that some schools—such as Northern Illinois University—actually produce graduates with mainframe expertise. “We’re going back to the future here and realizing that some of our key talent here is getting up in years, and investing in the future.”

Miller acknowledges that BMC hasn’t always been the best ISV with which to partner. For this reason, he says, the company has focused on improving its relationships with customers. “Four or five years ago at BMC we did a lot of large, large deals that wrapped a lot of mainframe products in them, and we didn’t always ensure that the customer took advantage of the mainframe products that were in those deals,” he says, conceding that some customers ended up purchasing software they didn’t want or need. “We had a lot of products in those offerings and we were giving customers incentives to sign deals of three, four, five years, in order to lock them up in our products.”

That’s ancient history, however, says Miller. “What we’ve tried to do is broaden our portfolio to give the customers more options, so we’ve got some very nice term offerings right now,” he explains. “We have things like our Mainframe Software Advantage Packs, where a customer can come in and sign a three-year deal so that every six months they can take a look at the products they’ve got and switch them out if they aren’t using them.”

BMC was one of the first vendors to sign on for sub-capacity licensing when IBM introduced the z900 several years ago. In sub-capacity licensing schemes, customers pay only for the capacity of the mainframe that they use to run their software. Given the historically high—some might say prohibitive—cost of mainframe software, sub-capacity licensing is sometimes seen as a panacea for Big-Iron pricing woes. What’s surprising, says Miller, is that sub-capacity licensing is only modestly popular among BMC’s customers—many still license software on a MIPS-only basis. To some extent, he concedes, this is because BMC and other vendors demand a much stricter accounting—through the use of IBM’s Sub Capacity Reporting Tool and other metrics—of the actual capacity that customers use. Some customers simply don’t have the time or expertise to satisfy these requirements.

“Sub-capacity certainly has a lot of benefits to it, and we have double-digits of customers that have gone down that route,” he says. “But the challenge for customers is if they want to go down the sub-capacity path, we and others want to make sure we have a better view of those customer environments so we can effectively measure and gauge the utilization of those products, and frankly, not as many customers were willing to step up to that level of accountability.”

Not surprisingly, he says, large customers with significant mainframe investments are more likely to invest in sub-capacity licensing than small and medium-sized shops. “The ones that we have signed up for that, I would say are the shops that are maybe larger, that really have very good processes in place,” he indicates, citing chargeback as an example of a prime driver. “These customers have embraced it because it gives them a way to help them justify internally the investments they’re making in mainframes. There’s other folks who don’t have the time, don’t have the folks, don’t want to go down that path.”

Similarly, Miller hasn’t been wowed by demand for Linux-related Big-Iron tools, either. “We are still seeing traditional growth in the mainframe being a good number for us. We’re still seeing business continuity growth in the mainframe, and still see growth in ERP, eBusiness, and stuff like that,” he comments. “As for Linux, I would say we’re still looking for the wave. We have a MainView for Linux product, and we have a VM cloning product that is coming out as we speak, but we just haven’t seen the customers at the point where they’re investing in Linux in the mainframe. At least, not for critical applications where they feel they need to have that enterprise assurance.”

One challenge for BMC going forward is maintaining its relationship with IBM, which—with the acquisition of the former Candle Corp.—has signaled a willingness to compete with long-time partner BMC in many of the latter company’s bread-and-butter accounts.

For his part, Miller says BMC has a very clear strategy for engaging with Big Blue. It plans to partner with IBM Global Services, with which it has an existing relationship, but competes with IBM in the IMS and DB2 tools space, as well as in the mainframe management space, where BMC’s MainView has a substantial degree of overlap with Candle’s own offerings.

Miller does not believe that IBM’s in-house mainframe expertise gives it an insurmountable leg up on BMC and other competitors, however. “Take DB2 and IMS [tools], where we’re agnostic to databases,” he says. “IBM doesn’t want to foster competitive databases in their environments, whereas we want customers to understand that we’re a partner with them, so if they want to invest in IMS or DB2 or Oracle, we are a partner that will work with them.”