Monday, June 26, 2017

BMC and CA: Impending Nuptials?

Have you heard the one about BMC Software acquiring CA, Inc.? 

At first glance, to those of us who have been in the business for awhile, that sentence may look odd? Those two have been slugging it out in the mainframe software world for decades now. And to be fair, not just the mainframe world, but also in the distributed world.

But the chatter is out there that this could happen. Read this Reuters article or this Bloomberg article or this one from the Register

The general idea is that BMC and its financial backers are working on a deal to take CA private and combine it with BMC. This would indeed be interesting.

The two companies have competing solutions across the board in many areas, which would make the combination challenging... at least in terms of customer satisfaction. First, the new combined entity (BMCA?) would have to identify all of the competing software products (both companies probably already know this, so no big deal). The next steps are the troubling ones. For each case where there are competing offerings they would have to choose to support both (costly in the long run and not sustainable), choose one to sunset (probably making existing customers not very happy), or combine the best of both products (technologically difficult and I know of no concrete examples where this happened successfully post-acquisition). So there is that to deal with.

Nevertheless, a combined BMC and CA would be a very powerful systems software vendor. But it would come into existence when a lot of software offerings are moving into the cloud. This will be on most analyst's lips if this "merger" moves forward. But it is not a big concern to me as there are still a lot of organizations that rely on systems software (from both BMC and CA) that are not going to move it all to the cloud any time soon.

From a DB2 perspective, the two companies have competing products (and solutions) across all the major categories (fast DB2 utilities, performance management, change management, backup/recovery, and catalog visibility). So if this acquisition happens, it is likely that a whole suite of DB2 for z/OS tooling (that has been "out there" for decades) gets completely eliminated. I'd bet on most of the BMC stuff surviving… not just because BMC would be the "acquirer" but because BMC has been paying more attention to their DB2 product line (lately) than CA. Nevertheless, it’d be sad to see some of the old Platinum stuff retired (e.g. Detector).

The DB2 tools are one component, but not the biggest. Think job scheduling and workload automation, for example. CA has the CA7 and AutoSys product lines for mainframe and distributed; BMC has Control-M. What happens to consolidate these products is anybody's guess?

Two areas without a lot of cross over in the two companies portfolios are help desk and release management. CA probably covets BMC’s help desk (Remedy) and BMC probably covets CA’s software release management (Endevor). But the whole DevOps revolution is impacting the ongoing viability of products like Endevor. Now that is not to say that the market for such tools will disappear overnight, but...

At any rate, I think the hassle would be tremendous for customers as the combined company tries to rationalize its product portfolio. If it goes the traditional BMC route it keeps both sets of products at least for some time; the CA route it lets all products sort of die by attrition over time. The best case scenario would that that a ruthless product-customer-focused view be deployed so that winners in each category are determined with a reasonable conversion plan for customers to switch to whatever wins. I’d be surprised if that happened because in my experience “reason” rarely prevails with an acquisition.

Also, and this is not a minor concern, I’m not sure that this would pass the regulatory anti-trust requirements, but who knows?

I would think that discounting would not be as great in a post-acquisition market because prospects will no longer be able to play one vendor against another. IBM could become more of a viable choice for competing system management software.

What do you think? Should BMC and CA combine together? How would it impact your company if they did? 

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