From M&A Impact, a sister publication.
By Kevin White
Event management tools are critical to the control of client- server systems management and the worldwide customer base of Max/Enterprise is a sure indication that this event management suite is no lightweight. Most of these corporates want to unify the management of their enterprise information technology infrastructure and consolidate mainframe, Unix and NT systems under a single management framework like that on offer from Maxm Systems. A winner of a product managed by a bunch of losers, was how one insider summed up business at Maxm Systems, supplier of the Max/Enterprise event management suite to some 200 organizations worldwide. Product development had always been hampered by ineffective management and poor marketing and the company had never looked able to generate sufficient revenue to justify any more than a dozen or so research engineers. In contrast, its new parent, Boole & Babbage Inc, (CI No 3,082) claims to spend 16% of its $160m+ revenues on product development. At this early stage it would be unwise to say that things can only get better, but users seeking reassurances following the sale of Maxm Systems can at least rest easy that product development and support is unlikely to stall completely, as Boole & Babbage will not want to cross them before it has the opportunity to cross-sell its own products into the blue chip installed base of Max/Enterprise. Despite chiefly being positioned in the US as a telco-oriented high-event network management product, Max/Enterprise actually sold best into large businesses with multiple sites leaning towards improved systems automation and performance management.
Competing with Boole
As such, Maxm Systems found itself increasingly competing head on with mainframe systems software vendors like Boole & Babbage and Computer Associates International Inc who have slowly been moving into the distributed systems market space first with event management tools and then selling robust performance management add-ons. Like Boole’s Command/Post, Max/Enterprise is a ‘manager of managers’ system designed to provide a central focus for control of multiple system management disciplines across distributed systems. In essence, its function is centralized event management encompassing particularly close integration with problem/availability and job scheduling. As such, it sits at the heart of any strategy for control of distributed systems. The notion, current around five years ago, of a single all-embracing architecture for distributed systems management – OSF’s DME is a fine example, particularly one also populated with products from a single supplier – take IBM’s SystemView, for instance, has proved over-ambitious and unworkable. The most practical solution appears currently to be to automate as many functions as possible locally, using best-of-breed tools for individual systems management applications/platforms. It can be a struggle to make them work together, admittedly, but what is needed then is for exception conditions, as well as an overall management view, to be provided by a tool that communicates with these disparate best-of-breed solutions. It is the latter role that Boole’s Command/Post flagship product for event management seeks to fulfil – as does its once principal rival: Max/Enterprise. Over the last couple of years, Maxm Systems’ Max/Enterprise has been Boole & Babbage’s principal competition. This was a newer product which made a number of important sales in a short space of time.
However, it came from a small company and there were always lingering doubts whether it could last the pace in development as well as sales. Management changes during 1996 at Maxm Systems and a simultaneous revenue of staff, several of whom went on to join Boole & Babbage, suggests Maxm had been experiencing difficulties for some time. So while the acquisition sees Boole & Babbage eliminate a key competitor in the growing market for event management software, there is very little synergy between the two product lines and there may be only a limited opportunity for cross-selling. Indeed, many of the sites to have installed Max/Enterprise will have at one time considered and rejected the Command/Post alternative. After exhaustive tests, many sites have found Max/Enterprise to have the edge, pointing to its better graphical user interface, its technical diversity, its ability for automated correction of faults, its NT workstation clients, and its use of the industry-standard REXX language. Not surprisingly there are concerns among the user base about how many Maxm Systems developers will stay on board and when they will see promised new support. Keenly aware that it can ill afford to upset its newly acquired installed base, Boole & Babbage is on record as saying that enhancement of Max/Enterprise will continue for ‘several more releases at a minimum’ but ultimately it will be subsumed into a superset version of the Command/Post product. Both Command/Post and Max/Enterprise rely on a core engine to perform event handling and other central processing functions and it says it expects to be able to support both product engines for a while to come. Its intention is, though, that future products will take in a combination of best of each breed, making the superset so good users would want to plan a migration path. This all sounds eminently sensible, but it is not the first time that such promises have been made – think back to the so-called ‘friendly merger’ of Legent Corp and rival mainframe systems management house of Goal Systems Inc, and the failure of the proposed superset of Legent’s Automate and Goal’s OpsMVS which finally both got swallowed up into Computer Associates anyway.
Attractive to shareholders
The deal will look attractive to Maxm’s shareholders since it gives them a valuable commodity in place of their unmarketable unlisted shares. Since 1992, Boole and Babbage’s shares have consistently out performed both the Dow Jones Market Index and more importantly, the Dow Jones Software Sector Index. Costs have been firmly controlled with operating margins climbing 2 points to 14%. Boole & Babbage has now turned in 21 quarters of continuous profit and the market is giving a premium for reliability. All this possibly makes Boole & Babbage, itself, something of an attractive property. While Computer Associates has made it clear that it is no longer interested in big players, it is still very much attracted to key niche players like Boole & Babbage. Off some reasonably good technology, Maxm System’s and Boole & Babbage have developed an impressive list of reference sites. And these are deeply entrenched systems and so difficult to de-commission and swap out. Accordingly, maintenance streams are rock solid and run to $40,000/ site a year upwards. If Boole can push its own product lines into its acquired customer base it can expect substantial returns. But the company faces the tricky task of juggling incompatible products. The Meta Group suggests that Boole will be forced to walk a fine line, providing support and making enhancements to Max/Enterprise that are ‘good enough’ to retain the maintenance stream.