BMC Software’s mainframe user survey

BMC Software, which recently lost a $13 million tax dispute with the US Internal Revenue Service, and which has recently ended its privatization process, has just published the results of its mainframe user survey.

On 25 September, BMC Software released the findings of its 8th Annual Worldwide Survey of Mainframe Users, which revealed that even though Cloud technology is on the march, a majority of companies are planted firmly on the ground with the mainframe.

The survey of nearly 1,300 mainframe users found that that mainframe technology will continue to play a critical role in delivering crucial computing power and take on an increasingly important role in today’s enterprise IT environments. So, that’s got to be good news and the kind of thing that mainframe users like to hear.

Other highlights were:

• 93 percent of respondents consider the mainframe to be a long-term business solution, although just half of all respondents thought it will attract new workloads.
• 85 percent said that keeping IT costs down is their top priority, which is an increase from 69 percent in 2012.
• 76 percent of large shops expect MIPS capacity to grow as they modernize and add applications to address business needs. BMC suggests that this highlights the need for software that exploits specialty engines. I wonder whether they had any products in mind!
• Perhaps not surprisingly, 75 percent of respondents are concerned about the shortage of skilled mainframe staff. Again, BMC concludes that this makes the need for automated, self-learning software greater than ever. If only there were products out there that could do that!
• 46 percent of mainframe budgets are spent on software.
• 66 percent of respondents said availability is a top priority, but 40 percent reported unplanned outage.
• 66 percent said that mainframe will be incorporated into their Big Data or Cloud strategies.

Jonathan Adams, general manager of data management at BMC Software said: “The unprecedented pace of technology evolution and the consumerization trend only solidify the need for a platform with superior availability, security, and performance capabilities.”
The full results of BMC Software’s Mainframe Survey can be found at: http://go.bmc.com/forms/MSM_Survey_MCO_MFSurveyResults_BMCcom_EN_Sep2012

Just for completeness, the private investor group is collectively known as the Investor Group, and is led by Bain Capital and Golden Gate Capital together with Insight Venture Partners, GIC Special Investments, and Elliott Management.

And that US Tax Court decision stems from 2004’s corporate income tax repatriation holiday. The Court said BMC owes taxes on a portion of its foreign profits brought into the United States under the 2004 tax break, which allowed multinational US companies to bring foreign profits into the US at a 5.25 percent tax rate, rather than the then current 35 percent rate.

Going back to surveys – if you want to have your say about what’s happening on your mainframe, I have some good news. The Arcati Mainframe Yearbook 2014 will be inviting mainframe users to complete its survey towards the end of October.

For vendors, as usual, there will be opportunities to advertise or sponsor the Yearbook. More information will be coming soon.

What’s really going on?

One of the problems with being a mainframer these days is finding out what’s going on at other sites and being able to compare your experiences with other people’s. There used to be rooms full of mainframe staff, and regular turnover meant that new ideas were easily examined. Apart from Google, nowadays you can keep in the loop by joining a user group (like the Virtual IMS and Virtual CICS user groups that don’t require you to be out of the office to attend meetings), going to conferences (you’ve just missed IOD, but Guide Share Europe takes place next week), or you can read survey results.

Or there’s survey results. And as we’re coming to the end of another year, surveys seem to be happening more frequently.

BMC Software recently published a survey from their AsiaPacific area. They found there was a growth in processor engines, which was driven by transaction processing requirements. And driving that is users wanting to have data available to them at any time and anywhere – particularly users with mobile devices. BMC also found that some of the growth could be attributed to legacy application development and some to newer applications where the mainframe provides the back-end delivery of that application.

Respondents liked mainframes for security and data integrity reasons, as well as its centralized manageability. One result that won’t surprise anyone who’s investigated the option was that the cost of moving away from the mainframe is very high!

CA Technologies has published a survey of 800 IT and business leaders. They found that IT and business leaders often have two different views on innovation, with IT respondents suggesting that they are more likely to position themselves as driving innovation, being an expert on innovation, and having the required skills to foster innovation. Business executives identified IT’s shortcomings in regard to its ability to support and drive innovation and gave themselves credit for innovation.

With results that could have been published any time up to the 1990s, the survey found large gaps can be found in rating IT’s knowledge of the business, IT’s business and communications skills, and overall speed and agility. I thought this division had healed over many years ago, but maybe the pendulum is swinging back the other way? Perhaps the paucity of IT staff makes it harder for them to get to meetings and interact with other execs? Or maybe the CIO (Chief Information Officer) is disappearing from organizations and IT is being relegated into a silo all over again?

Not surprisingly, the survey found common frustrations such as organizations’ lack of agility, and budget and staff resource shortages. Interestingly, new IT initiatives include mobile and business intelligence/analytics. Organizations reporting high levels of innovation are also planning investments in cloud, security management, business analytics, service management, and virtualization.

If you want to have your say about what’s happening at your site, the Arcati Mainframe Yearbook is conducting a user survey now. You can find the survey at www.arcati.com/usersurvey13.

If you’re interested in the Virtual IMS or CICS user groups, you can find them at www.fundi.com/virtualims/ and www.fundi.com/virtualcics/ respectively. More information about the GSE conference is at www.gse.org.uk/tyc/.

Operations management still growing

Gartner has produced figures showing that the Worldwide IT Operations Management (ITOM) software revenue increased by 8.7 percent last year and totalled $18.3 billion.

Why is this important? Let me suggest that we have been in or around recession since 2008, making most organizations try to cut their spending and try to save as much money as possible until the markets start moving again. Clearly, operations management is too important to be left – making it appear fairly central to the sucess (or perhaps survival) of many organizations.

Commenting on the figures, Laurie Wurster, Research Director with Gartner said: “The market showed growth for the second consecutive year, after a sharp decline in 2009, despite slow economic growth, tight IT budgets, and merger and acquisition activity. We saw consistent resilience in 2011, with the ITOM software market expanding both in terms of revenue and worldwide markets.”

So which software vendors are benefiting from this growth in the market? Well, it seems there are five that mananged 53.5 percent of the revenue between them. And yet again, in that number one spot is IBM. Second is CA Technologies, at least $1 billion behind the leader. Then comes BMC, Microsoft, and HP.

IBM was in pole position in the combined mainframe management segments, which accounted for 28 percent of its total ITOM software revenue of $3.3 billion.

CA Technologies was in second place for the third year running, with revenue growth ahead of the overall market.

BMC Software enjoyed 8.2 percent growth, with 31 percent of its growth coming from the mainframe. You may wonder whether that makes it a more tastey takeover target!

Microsoft saw impressive growth of 11.2 percent. Most of its sales are associated with its Windows product, of course.

It’ll be interesting to see where HP is next year. The company may be forced to take its eye off the ball as they go to court against Oracle. And then there’s the 25000 jobs that are being cut.

I think the important point to take away from this story is that organizations – whether they’re large mainframe-based sites or Windows sites – are looking to manage their operations in new and developing ways. This must be an indication of their desire to get the world economy moving again, and, more importantly for them, be well placed to take advantage when it is.

Who'll buy BMC?

With the Facebook share launch turning into a bit of a fiasco, high tech company shares may not look like such a good deal at the moment. But taking the long view, is BMC Software ripe for picking?

As you know, BMC sells software that runs on mainframes. And, like everyone else, its moving into the cloud space. And it would be a pretty big organization for anyone to acquire. Bloomberg (the business and financial experts) reckon that it would be the eighth-largest US software acquisition on record. Bloomberg also suggest that the last similar-sized acquisition occurred before the 2008 crash.

If you were going to spend your money, perhaps a better choice would be to snap up a suffering Hewlett Packard, who this week layed off 27,000 people, and who’s profits slid 31 percent.

But for many investors, getting a foothold in the cloud space provides more opportunities going forward than buying into current technologies where sales are perhaps more stagnant.

So, who might be discussing a takeover of BMC? We can discount HP. But whatabout Dell? This year, Dell has acquired Make Technologies (a provider of application modernization software and services), Clerity Solutions (a provider of application modernization and legacy system re-hosting solutions and software), Wyse Technology (a leader in thin client computing devices and software), SonicWALL (a provider of network security, content security, Web and e-mail security, secure remote access, and business continuity solutions), and AppAssure (who do back-up software). Dell definitely appears to be moving into the enterprise software space – while still retaining its hardware base.

Cisco has also been acquisitive this year, getting its hands on Truviso (who supply scalable, real-time network data analysis and reporting software), ClearAccess (suppliers of TR-069-based software to service providers for the provisioning and management of residential and mobile devices), NDS Group (a provider of video software and content security solutions that enable service providers and media companies to securely deliver and monetize new video entertainment experiences), and Lightwire (who develop advanced optical interconnect technology for high-speed networking applications).

And then there’s always Oracle, who, this year, have acquired ClearTrial (a cloud-based clinical trial operations and analytics product) and Taleo (talent management software). They might feel that acquiring BMC protects them from rivals.

Or maybe someone will buy BMC and sell off the mainframe software that we’re familiar with and retain and develop the cloud stuff as a way of making money in the future.

SAP has only recently spent $4.3 billion on cloud computing firm Ariba. Perhaps they would like to get their hands on that part of BMC.

It will be interesting to see whether organizations are willing to risk such large sums of money that an acquisition of BMC Technologies would require in these straightened times. Or maybe asset stripping is the only way forward?

We’ll be keeping an eye on the news.

How’s business?

Since 2008, the world seems to have lurched its way from one financial crisis to the next. In the UK they’re talking about double dip recession. In Spain, things look difficult. And in Greece, things look impossible! So how are the big mainframe companies weathering the storm? Are we looking at an extinction-level event? Are the big players (the metaphorically dominant dinosaurs) going to be replaced by smaller companies (the metaphorical mammals)?

For people who like this kind of thing, there are meant to have been five mass extinctions in the Earth’s history. There’s the Cretaceous–Paleogene extinction event (about 65.5 million years ago) when about 75% of species became extinct, seeing the end of the dinosaurs, and mammals and birds becoming the dominant land vertebrates.

There’s also the Triassic–Jurassic extinction event (205 million years ago). The Permian–Triassic extinction event (251 million years ago), which is referred to as the ‘Great Dying’. The Late Devonian extinction was about 375–360 million years ago. And the Ordovician–Silurian extinction event was 450–440 million years ago.

BMC Software’s fiscal fourth-quarter earnings fell 42%. On the dowside there was an increase in operating expenses, while on the up side they saw slightly improved revenue. It seems that cloud services bookings totalled $100 million for the year – 10% ahead of analysts’ projections. The company closed its acquisition of Numara Software, which added to revenue in the fourth quarter, and gave BMC additional IT management tools and distribution to mid-sized companies. BMC also has 25% more sales people than it had a year ago. Looking at the bottom line: for the quarter ended 31 March, BMC Software reported a profit of $70.7 million, or 43 cents a share, down from $122.5 million, or 67 cents a share, a year earlier.

CA Technologies’ fourth-quarter earnings increased from last year, helped mainly by lower income tax payments. Revenues for the quarter rose 5 percent from last year, but were mostly offset by increased product development and general expenses. Its fourth-quarter net income was $211 million or $0.45 per share, compared to $188 million or $0.37 per share last year. Its net income jumped by 12%.

IBM recently reported flat revenues as its hardware business struggled in the first quarter of 2012. Revenues increased by just 0.3 percent to $24.7billion from the same period last year, although profits increased by 7.1 per cent to $3bn. IBM’s figures for each of its major divisions were generally positive, especially its cloud services, which saw revenue double, however its hardware business suffered a 6.7 percent decline in revenue to $3.7billion. IBM has raised its 2012 full-year earnings per share forecast to at least $15.00.

I couldn’t find any figures for Progress|DataDirect.

So, it seems financially to be a bit mixed rather than anywhere near an extinction for the big beasts of the mainframe software world. There may be a number of small mammals running around their feet, but these metaphorical dinosaurs are far from fighting for their very existence. It’s always worth remembering that dinosaurs were the dominant terrestrial vertebrate for around 135 million years. Mainframes have only been with us since the 1960s They’ve still got quite a long way to go!