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CA,Tivoli square off

Networking powerhouse CA and IBM subsidiary Tivoli are grabbing bigger pieces of the growing systems management pie.

Computer Associates (CA) and IBM (IBM) subsidiary Tivoli Systems take different approaches to systems management, but both vendors are grabbing up bigger slices of an ever-growing pie.

CA's third-quarter earnings per share were right on target with Wall Street's estimates yesterday, despite a scare earlier in the quarter due to lower-than-expected sales in European markets.

Tivoli, as part of IBM's positive earnings announcement, saw an explosion of growth, doing more than $100 million in business in December of 1996 alone, according to company officials.

IBM does not break out quarterly numbers by category. Tivoli, acquired by IBM in March in a $750 million deal, had revenues totaling $50 million for all of calendar year 1995.

But as both companies grow, the competition between then only heats up.

"I think the real exciting game will come down to CA vs. Tivoli in the systems-management space," said Waverly Deutsch, an analyst with Forrester Research. She noted that new management investment by IT is moving toward a systems management-centric view of the network.

Systems and network management software is used to locate devices on a network, monitor network useage, distribute software, and to chart maps of the entire network. Using these maps, an administrator can then perform a variety of troubleshooting tasks. Systems management software can also diagnose and send alarms when applications, network devices, or server system components are reaching capacity or have failed.

While CA promotes its new end-to-end Unicenter TNG product based on a three-dimensional video game-like interface as a complete solution for customers, Tivoli has taken a "best-of-breed approach," allowing users to keep existing management-point products while incorporating elements of Tivoli's TME 10 enterprise systems management environment as needed.

CA's revenue for its third quarter grew 5 percent, to just over $1 billion, but there are concerns that the company will need to find new revenue streams to continue to grow at an annual clip of 15 to 20 percent. The new Unicenter version should attract some business, but systems-management sales are usually characterized by an extended courtship with a customer.

"CA has done a real good job over the past year and a half expanding the mindshare for TNG and setting expectation levels for the product," said Hugh VanHook, a program director at the Meta Group consultancy.

VanHook said another major acquisition along the lines of CA's recent $1.2 billion takeover of Cheyenne Software may be in the offing. "To maintain their revenue growth they have to buy someone else," he said. "They have to do that to keep their people on Wall Street happy."

CA may start to feel more heat in the new year from Tivoli. Once viewed only as a pesky upstart, Tivoli gained a plethora of mainframe-based management tools to integrate into TME's architecture after its alignment with IBM.

Martin Neath, senior vice president for product development at Tivoli, said the company completed 60 sales in December alone and a backlog remains. He said Tivoli's traditional strength in distributed systems management saw triple-digit growth for the just-completed IBM fourth quarter.

Much of Tivoli's success can be attributed to the small Texas firm's access to IBM's sales channels. "We've got a lot of momentum," noted Neath. "As we look to 1997, we look to see very significant growth in the distributed business again."

While both companies get used to each other as competitors, some analysts view the enterprise systems management space as wide open for CA and Tivoli, since many networks have not adopted management policies that necessitate boundless management systems.

"I don't think they're feeling much heat in actually selling the product," said Paul Mason, an analyst with market researcher International Data Corporation. "It's like two sailboats on the ocean--there's a lot of ocean."