Vendors Roll Dice with Network Management Mergers

SAN MATEO (03/02/2000) - A GROWING NUMBER of network management vendors are sacrificing independence and identity to bolster their product suites with new technologies and stronger infrastructure management capabilities through mergers.

This week's announcement of a new company to be formed this summer from three separate entities -- Mission Critical Software, NetIQ, and Ganymede Software -- is the latest instance of small-to-midsize network management vendors arming themselves for a prime run at a market with plenty to offer but formidable competition to face.

The deal will result in a product suite aimed at providing e-businesses, ASPs (application service providers), and enterprise customers with a new end-to-end suite of products enhancing network infrastructure performance, directory, and application management on an integrated platform.

The new company will focus on serving Windows 2000 and Windows NT users, with products expected to hit the market in the June time frame.

By merging, competing companies are discovering quicker ways to build upon technology and customer bases. To be successful, these new collaborations must solve entire IT network infrastructure problems, rather than just specifics of a problem, said analyst Richard Ptak, vice president of systems and applications management at the Hurwitz Group, in Amherst, N.H.

"The IT manager now must contribute to the solving of [general] business problems," Ptak said. "'Not Invented Here' is being brutally stamped out. From a business perspective, the e-business pressures and the speed in which your competitor can arise is forcing companies to more realistically evaluate their ability to create solutions."

Another company that has joined the acquisition fray is Concord Communications.

In a span of less than four months, Concord has stocked its network management product arsenal through mergers by adding the real-time reporting and monitoring capabilities of FirstSense and the system and application management know-how of technology-heavy Empire.

Still, the high level of risk is always an issue with these types of acquisitions, Ptak said.

"So many companies out there are built on a wing and a prayer, if you don't do your homework, you could buy something that's not worth its promise," Ptak said.

The larger vendors are watching the field intently, gobbling up potential competitors not only to bolster their own resources, but also to keep competitors from banding with others to form stronger units, said Ray Paquet, an analyst at Gartner Group, in Lowell, Mass.

"You'll notice that the big guys are particularly carnivorous," Paquet said.

"That's the game they play. They're much more worried about each other."

Other companies that have used acquisitions and mergers to boost network management portfolios include Computer Associates, BMC Software, and IBM, with its high-profile Tivoli acquisition.

Mission Critical Software Inc., in Houston, Texas, is at NetIQ Corp., in Santa Clara, Calif., is at Ganymede Software Inc., in Raleigh, N.C., is at Concord Communications, in Marlboro, Mass., is at IBM Corp., in Armonk, N.Y., is at

Computer Associates International Inc., in Islandia, N.Y., is at BMC Software Inc., in Houston, is at

Brian Fonseca is an InfoWorld reporter.

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More about BMC Software AustraliaBMC Software AustraliaCA TechnologiesConcord CommunicationsGanymede SoftwareGartnerGartnerHurwitz GroupIBM AustraliaNetIQTivoli

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