Can IBM Tivoli make the most of its software riches?

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The network management software market is competitive, analysts say

By Denise Dubie | Framingham | Monday, 13 November, 2006

IBM’s Tivoli software group has a big opportunity to address growing demand for management products by small and medium-sized businesses and by companies with converged networks, but first it needs to sort out all the new technologies IBM has obtained via acquisitions, and make its selection of offerings better known to customers.

That’s Forrester Research’s conclusion in a new report on IBM Tivoli.

Tivoli, which IBM bought ten years ago and which now boasts some 3,000 employees, is part of the IBM Software Group, which generated US$15.8 billion (NZ$26 billion) in revenue last year.

IBM Tivoli is considered to be among the top four management software vendors along with BMC, CA and HP. Forrester plans to issue reports on those other vendors as well, as it looks to help customers keep track of these companies amid a flurry of acquisitions.

“The IT management software market has gone through a wave of acquisitions over the past few years,” the report reads. “Once again, clients are particularly interested in the capabilities of the larger, more integrated vendors in this [market], as they prepare to make strategic decisions around topics such as business service management (BSM) and the configuration management database (CMDB).”

IBM acquired 11 companies for its software group alone in 2005, ending the year with its blockbuster Micromuse buy. Over a four-week period in August, Big Blue announced plans to purchase FileNet, MRO Software, Internet Security Systems and Webify Solutions for a combined outlay of more than US$3.6 billion. While the deals have provided Tivoli with lots of new tools, they’ve also confused customers and challenged Tivoli on the product integration front, the report says.

“IBM Tivoli has to make it much easier to fully grasp the depth and potential of the complete product portfolio,” the analysts write. “Many clients are unaware of the wealth of new capabilities today.”

IBM also needs to make it much easier for its customers to take advantage of the products it has in the Tivoli portfolio, Forrester says.

To address SMB customers, IBM should bundle its software as “plug-and-play” packages. This approach could prove to be to IBM’s advantage as well, the analysts explain, because “substantial short- and medium-term growth potential lies in the sub-US$1 billion market” and many smaller customer organisations are turning to open source management tools.

“What is currently a little flame could become a big fire, particularly as Tivoli’s Express solution has not yet managed to gain broad market acceptance,” the report reads.

Forrester analysts surmise that IBM and its competitors will be equally challenged to address an emerging area, dubbed converged service delivery. The report says Big Blue needs to market its management capabilities towards combining telco and IT assets, something with which its Micromuse purchase could help. Forrester says converged service delivery will require IT managers to have a “consolidated view of the service performance across the different layers of IT and telco functionality that support business processes.” While it’s a challenge for Big Blue, Forrester thinks IBM could be in a prime position.

“IBM Tivoli’s growth opportunities lie in using its enterprise products and the combined Micromuse [telco] assets to create a whole new market,” the report says.