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Tivoli taps telecom niche with new unit

The IBM subsidiary plans to announce a new business unit that will provide network management software for telecommunications carriers, sources say.

Tivoli Systems is making new connections.

The IBM subsidiary on Monday plans to announce a new business unit that will provide network management software for telecommunications carriers, sources said.

Tivoli, which historically has sold its software to manage internal corporate networks, is also expected to announce new products and partners, sources said.

While Tivoli will continue to sell its software to corporate information systems users, the company is driving its stake in the booming telecommunications market, providing telecom carriers with the software that monitors the health of networks. The software will help ensure that their customers' services--such as email, Internet, and phone access--don't go down.

Sources said Tivoli plans to spend more than $100 million to enhance its existing management software and tailor it to the needs of service providers. The new business unit will have several hundred staff members, sources said.

A Tivoli spokeswoman declined to comment.

With the move, analysts say Tivoli jumps head-first into a hot market, where it will compete with Sun Microsystems, Bull, Cabletron's Spectrum unit, and smaller companies, such as Micromuse and Objective Systems Integrators. Tivoli has traditionally competed with Hewlett-Packard and Computer Associates selling software in the lucrative business market.

Analysts said Tivoli's plan to enter the service provider market is a smart move. "They're looking into the opportunity and saying, 'hey, maybe we can capitalize on it,'" said Dataquest analyst Stephen Elliot. "They've reaped the benefits of the enterprise. But now the importance of networks has elevated to the service provider space--and service providers themselves know they need network management if they don't want to lose business."

Hurwitz Group analyst Richard Ptak agreed. "We're talking about telephony, which is mega-billions of dollars worldwide," he said. "There's been a perception that [Tivoli's parent company] IBM has been less than aggressive in extending Tivoli's management suite. This investment and interest in the telecommunications space shows they intend to be an aggressive competitor in the market."