IBM gets some culture from Tivoli

This is the story of how Big Blue gained newfound entrepreneurial spirit for $750 million.

It's been one year since $75 billion monolith IBM (IBM) gobbled up Austin, Texas-based enterprise management software upstart Tivoli Systems for a figure many at the time thought was high.

When the merger occurred, industry watchers feared the youthful drive at Tivoli might fall victim to the unwieldy corporate bureaucracy that some equate with IBM.

In due time, that may happen. But for now, Tivoli has seemingly energized the network and systems management software business at IBM, tying a distributed management architecture--the Tivoli Management Framework--and a bevy of applications to mainframe and network-centric management products from IBM. The result: IBM customers have a compelling option in TME 10 compared with products from enterprise management stalwarts such as Computer Associates and network management platform vendors such as Hewlett-Packard.

Tivoli makes management software that can provide a variety of functionality, such as software distribution or performance analysis, across local and wide area networks. The software usually rests on a server and a client management console, with agents residing on various network devices.

For Frank Moss, Tivoli's fiery CEO and head of IBM's systems and network management software business, the ride has been exciting. He said he relishes the opportunity to build "the biggest cross-platform network and systems management company."

As a measure of how IBM's sales channels and muscle within the industry have aided Tivoli's presence in the market, the company announced sales of more than $100 million for the month of December as part of its most recent earnings. For the entire 1995 calendar year, Tivoli earned $50 million in revenue.

"It wasn't about the money, it wasn't about the stock, it was about the technology potential," Moss said. "We became their entire management strategy. [IBM] has gained the opportunity to acquire the No. 1 position in the market."

Analysts note that Tivoli has been given free rein to operate as it sees fit. Soon after the merger, a detailed road map from Tivoli outlined how IBM's products would be integrated into the Tivoli software architecture, allaying the fears of confused customers at the time. Since then, Tivoli has jettisoned several management products it found in IBM's software warehouse and kept only the ones that made sense.

The result is a streamlined operation that has propelled IBM from the back of the systems and network management pack. A forthcoming report from Forrester Research will handicap the enterprise systems and network management picture as a two-horse race between CA and Tivoli.

Analysts said the transition from hungry start-up to billion-dollar software company has been smoother than expected. "They've been fast out of the gate and have settled into a steady pace," said Waverly Deutsch, an analyst with Forrester Research.

"They've had to become a bigger company," Deutsch added. "They are now differently positioned in the market. Now the concerns are delivery of new functionality. Without a doubt, Frank Moss turned his guns on CA in a way he would not have been able to do without the acquisition."

The transition has been difficult for some IBM executives in the NetView and SystemView management group who may not have been used to the culture of an entrepreneurial venture, admitted Leo Cole, a 17-year IBM veteran who is director of TME 10 network management development. "If you don't fit, it can be kind of a quick exit," he said.

But the benefits of cutting-edge technology and a jazzed working environment are clear to Cole. "It quickened the pace of the SystemView vision by three years or so," he explained.

Previous to the purchase of Tivoli, the SystemView division had rolled out a road map to deliver an object-oriented framework for the product. It just so happens that Tivoli Systems was delivering the same type of functionality, allowing third parties to build specific applications on top of a base they could take advantage of.

In the biggest splash since the merger, Tivoli Systems rolled out a new product, Global Enterprise Manager, last fall that ties the IBM mainframe management expertise to Tivoli's distributed management products. Next on the plate will be the fourth generation of the Tivoli management framework, due out later this year, and the first new version of IBM's NetView product since the merger, due out in the second quarter for various flavors of Unix and Microsoft's Windows NT, with an emphasis on policy management across an enterprise.

The jury is out on who will win the enterprise management wars. The latest release of CA's Unicenter TNG features new functionality and a flashy three-dimensional interface that offers a very different vision of managing networks than Tivoli.

But over the long haul, many in the industry are most interested in how a small Texas firm with chili peppers adorning its Web site will fare in its bid to change the culture of Big Blue.