Management Vendors to Court E-Businesses
Network and systems management vendors have been facing an unenviable dilemma in recent months: Because they’ve been so successful in selling their products to enterprise accounts, the market for their solutions in many large organizations has become saturated.
As these vendors see it, the answer to this bind is to both trickle down and go wide. Trickle down entails selling their solutions into small and midsize companies. Going wide means targeting the mainstays of the new dot-com-driven economy: e-businesses and service providers.
"They have management products which in the past have been targeted to large enterprises because these were the places that had thousands and thousands of systems that they had to manage, but growth in this market is now rather flat," says Jasmine Noel, research analyst at D.H. Brown Associates Inc. (www.dhbrown.com).
The expansion in to midmarket accounts has been tried by others. When enterprise resource planning (ERP) vendors, for example, began feeling a revenue crunch in the late 1990s, they looked toward the untapped midmarket accounts for additional expansion opportunities.
There are different expectations in midmarket accounts, however, in terms of the service and support levels that are expected -- especially vis-à-vis notoriously prickly solutions like ERP applications and systems or network management frameworks, which can often require lots of time and money to successfully implement.
"It does parallel to some extent the experiences of those ERP vendors, and a lot of companies like HP (Hewlett-Packard Co.) and Tivoli [Systems Inc.] are finding that these smaller customers want extra assurances that they’ll be able to effectively implement these tools in a realistic amount of time," says Rob Enderle, senior analyst at Giga Information Group Inc. (www.gigaweb.com).
In the ramp-up to their celebrated midmarket push, ERP vendors, for example, discovered that midmarket companies generally prized rapid times to deployment and value-added consulting services. There isn’t a lot of overlap between ERP applications and most network or systems management frameworks, but Giga’s Enderle says it is reasonable to assume that the same rules may apply here.
"IT spends most of its time trying to get its arms around its network environment, and frameworks provide a comprehensive ability to do that, so a lot of these [midmarket] companies really do want to deploy them," Enderle says. "But the complexity of these frameworks has been that implementing them and actually using them has been prohibitively time-consuming. That’s where the vendors have to give them a hand."
But while midmarket accounts represent a solid growth opportunity for most network and systems management outfits, market spaces such as those populated by service provider and e-business ventures have the potential to be revenue gold mines.
"The service provider space is our area of greatest growth, although of course we still held our own in the enterprise space, and in the mid-market we had tremendous growth as well. But the service providers will likely be our most active space for some time to come," says Paula Dallabetta, director of the partner management program at HP’s (www.hp.com) service provider organization.
Service providers are vendors that supply some manner of application-, business-, or management-related effort to one or many clients on an outsourced basis. Because the single point of failure for any service provider can be reduced to its own internal IT infrastructure, these vendors represent a tremendous opportunity for the systems and network management kingpins.
Consequently, most network and systems management vendors are aggressively pursuing service providers. As is the case with their midmarket accounts, these vendors are discovering that they have to bundle value-added services in addition to their base management tools if they’re to attract service provider and e-business customers.
In 1999 and 2000, systems management vendor BMC Software Inc. (www.bmc.com) unveiled two initiatives targeted at both service providers and e-business ventures. BMC’s first initiative, Guaranteed Ontime Deployment, is a rapid-time-to-deployment-type program designed to help organizations get up and running on BMC management tools in a fixed amount of time. BMC's second initiative, BMC OnSite, is a certification program positioned for service providers and for e-businesses.
"It’s targeted to those customers who adopt a service assurance methodology and implement their services with our help," explains Wayne Morris, vice president of marketing at BMC. "[If they satisfy all of our criteria,] we’ll allow them to brand their site with the BMC Software OnSite symbol."
BMC is not alone in this effort. HP, Computer Associates International Inc. (www.cai.com) and IBM Corp.’s (www.ibm.com) Tivoli subsidiary, among others, are all maneuvering to capture share in the burgeoning service provider and e-business integration spaces.