BMC Software

History

The company was founded in Houston, Texas, by former Shell Oil employees Scott Boulette, John J. Moores, and Dan Cloer, whose surname initials were adopted as the company name BMC Software. Moores served as the company's first CEO.

The firm primarily wrote software for IBM mainframe computers, the industry standard at the time. During those years, BMC wrangled with IBM about issues such as "software tie-in claims". IBM and BMC were involved in litigation."

In 1987, Moores was succeeded by Richard A. Hosley II as CEO and President. In July 1988, BMC was re-incorporated in Delaware and went public with an initial public offering for BMC stock. The first day of trading was August 12, 1988. From that time until its privatization, BMC filed quarterly and annual statements with the SEC. Annual stockholder meetings are typically held in Houston during July or August. The stock was originally traded on NASDAQ under the symbol BMCS, then on the New York Stock Exchange with symbol BMC.

BMC programmers received commissions for their designs since the beginning of the firm. As a cost-saving measure from the early days of the company, sales were handled via direct mail and telemarketing. In 1991, BMC placed one-quarter of pretax revenues into the budget for research and development. The employees at the headquarters in Sugar Land, Texas often wore Hawaiian shirts rather than business suits.

1990s

In 1989, BMC announced plans to lease additional property in Sugar Land and in 1990, Max Watson, Jr. succeeded Hosley as CEO and President. In 1991, BMC had 640 employees with $139 million in revenues. Revenues, net earnings, and earnings per share increased approximately 50% over 1990. By 1991, it had offices in several complexes in the Houston area including Stafford and Sugar Land. Later in 1991, BMC announced it was building a new headquarters complex for $65 million. The 20 story tower (120,000 square feet) opened in late 1993. In 1991, Greg Hassell of the Houston Chronicle noted that after 11 years of growth, BMC still utilized "classic strategies used by little companies", such as sales commissions for its programmers and sizeable spending in research and development.

A primary BMC product during the early-mid 1990s was Patrol, a "data base and systems management product (which) monitors the status of computers, resources, databases and applications on a network," according to a New York Times report. In 1994, BMC made an alliance with computer maker Digital Equipment Corporation in which BMC would convert its Patrol software to run on all Digital operating system environments. In 1997, BMC bought Datatools, a privately based maker of backup and recovery products based in Sunnyvale, California, for $60 million.

In 1998, BMC bought Boole & Babbage, an automation computer software company based in Silicon Valley. Estimates of the price paid varied from $877 million to $1 billion. Media reports praised the acquisition, noting that both BMC and Boole & Babbage produce software that helps workers in information systems and network administration monitor problems and optimize performance. The acquisition also helped BMC expand its international sales.

Also in 1998, BMC bought Massachusetts-based BGS Systems, whose software also supported systems monitoring and optimization, for an estimated $285 million. Local media reports noted that BMC focused on using its acquisitions to add new products, and therefore avoided the need for associated layoffs.

In 1999, BMC acquired the Israeli firm New Dimension Software, with its workload automation software CONTROL-M, for $673 million cash. New Dimension Software's products included security administration, document management and multi-platform job scheduling applications. In 2000, BMC bought Israeli software maker Optisystems for $70 million.

2000s

During the first years of the new century, BMC spent heavily on research and product development. "In fiscal 2000, 2001 and 2002, research and development spending, net of capitalized amounts, represented 23%, 29% and 37% of total revenues, respectively," according to a 10i.K report filed with the SEC in 2002.

BMC was making alliances and investing in new technologies. In 2000, BMC had reportedly invested with a firm called Interliant, a Purchase, New York provider. which "rented software to corporations over the Internet." The reporter explained: "By using an A.S.P. (application service provider), a business does not have to buy the programs itself, store them on servers and hard drives, or maintain and upgrade them. That allows companies to slash costs in their information technology departments... For monthly subscription fees, A.S.P.'s give businesses access to specific software programs on the Internet. Typically, the applications are used to manage a variety of important business functions, from customer service to supply chain management."

Also in 2000, BMC completed the acquisition of Sylvain Faust Inc.'s assets, products and technology to be integrated into BMC's Distributed Data Management business unit. The company was located in Canada (Hull/Gatineau, Quebec). The assets and management were moved to BMC offices in Houston and Austin, TX.."

In 2001, BMC cooperated with 20 other large companies in an IBM initiative called Project Eliza, described as an effort to "develop computer networks that can largely manage themselves, recognizing faults and repairing them without human handlers."

In 2002, BMC made a deal with Dell computer to manage Dell's systems; "Dell Computer had agreed to manage its systems with BMC's products and resell them", according to an article in the New York Times.

In November 2002, BMC acquired Mountain View, California based Remedy for $350 million. BMC president Bob Beauchamp said "the Remedy buy will take BMC software from managing disparate IT elements to managing business services across an enterprise." He elaborated: "This acquisition will change the landscape of enterprise management for BMC. Our company will move from managing IT components to managing the business itself." Remedy operated as an independent unit within the larger firm.

Before the Remedy Acquisition, BMC had had trouble integrating acquired technology into its tool set, Beauchamp said in a conference call, while Remedy software has been integrating with BMC for years. Remedy had been acquired by Peregrine Systems in 2001, but in 2002, Peregrine filed for bankruptcy, so BMC bought Remedy from the bankrupt Peregrine. In 2002, Remedy had sales of $250 million, with 800 employees, and 6,000 customers; it is a wholly owned subsidiary of BMC. The purchase had legal complications; at one point, BMC believed seven former employees of Peregrine might use their knowledge of trade secrets to develop competitive products; there were lawsuits and counterclaims involving this matter.

In 2003, BMC made a deal with a large maker of computer data storage systems, EMC Corporation, exchanging rights to BMC's discontinued storage software for access to fifty of BMC's software storage customers. In 2003, BMC bought IT Masters of Belgium "for $42 million to add software for managing computer-system services"; it added 75 employees to BMC as well as customers such as Toyota Motor, Lockheed Martin and Bank of America. Also in that year, BMC left the market for storage software because of a "lack of return on its investment amid intense competition from rivals like IBM and Veritas Software."

In April 2004, BMC bought Marimba, Inc., a maker of configuration storage management software, for $187 million. In August 2004, it bought the Magic Solutions unit of Network Associates for $47 million "to add customer-service programs for small and midsize companies" and which makes "software used to log and answer customer calls."

In 2005, BMC bought OpenNetwork, based in Clearwater, Florida, for $18 million to "expand its ability to let customers manage access to Web-based applications." In May 2006, BMC acquired Israel-based Identify Software. BMC paid approximately $151 million. "This acquisition provides solutions that optimize application development organizations through the automation of testing, support and maintenance processes and enables dramatic increases in development outputs," it said in the 10K report filed with the SEC.

In April 2007, BMC bought privately held start-up Service Management Partners which had a software product that "helps organizations to visualize and configure software tools."

In May 2007, BMC bought privately held ProactiveNet, a maker of business service management software which helps "IT collect systems data, which is then analyzed for potential problems" and can "automatically alert IT staffs to problems and suggest remedies."

In July 2007, BMC bought RealOps, a provider of run book automation solutions. The acquisition helped BMC create an "all-in-one service management solution" that "integrates diverse multi-vendor technologies" while enhancing "service availability" yet minimizing interruptions.

In October 2007, BMC bought Emprisa Networks (based in Fairfax, Virginia) "for its network compliance, change, configuration management and automation product". Analysts from Gartner Group commented: "BMC is correctly framing the Emprisa acquisition as a key step in its developing end-to-end IT service automation strategy, which leverages BMC's strength in configuration management databases (CMDBs) and change management." But analysts commented that BMC still needs: "integration with other network management disciplines where it has little or no presence" as well as a "field training plan and more field sales and technical expertise in network management" and "close cooperation with its reseller partner Entuity." It paid $22 million.

In April 2008, BMC bought BladeLogic, a data center automation software company, for $854 million. In the May 2009 SEC report, it said "The BladeLogic acquisition expands our offerings for server provisioning, application release management, as well as configuration automation and compliance."

In June 2008, BMC acquired privately held ITM Software, a Santa Clara, California firm founded in 2001 that makes "software products and services that advance the business management of Information Technology." The integrated approach helps managers see their corporate information networks "from the perspective of the business" and helps them get a "comprehensive view" permitting "greater visibility and control." An analyst explained: "Managing the business of IT has been a critical message in BMC Software's Business Service Management strategy since its inception. However, the company lacked critical applications to help senior IT leadership execute on that vision. With its recent acquisition of ITM Software, BMC fills in some critical gaps in its ITRP offering." Financial details were not disclosed.

In June 2009, BMC received a "CIO 100 Award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."

In August 2009, BMC acquired privately held MQSoftware, a "middleware management" software firm.

In October 2009, BMC acquired privately held Tideway Systems, a maker of IT discovery software.

In January 2010, BMC acquired Phurnace Software, a software company specializing in configuration, release and deployment of Java applications.

In December 2010, BMC acquired GridApp Systems, a software company specializing in automating database provisioning, patching and administration.

In April 2011, BMC acquired Coradiant, a software company specializing in end-user experience and Web application performance monitoring.

In October 2011, BMC acquired StreamStep, a software company specializing in lightweight planning and coordination tooling for DevOps-related activities.

In January 2012, BMC acquired Numara Software, a software company specializing in IT service and asset management software.

Acquisition & Privatization by Private Equity Firms

BMC Software management and Board of Directors decided to leave the NASDAQ and end its time as a public company, sell significant portions of stock and go private. In May 2013, the IT services and cloud computing company announced that it was in the process of being acquired by a group of major private equity investment groups for $6.9 Billion. Those firms included Bain Capital, Golden Gate Capital, Insight Venture Partners, GIC Private Limited's subsidiary GIC Special Investments Pte Ltd and Elliott Management Corporation. The process was completed in September. As a result of this privatization, BMC Software stock was no longer listed on the NASDAQ, effective at the close of business on September 10, 2013.

Location

BMC is a multinational firm operating in North America, Australia, Europe, and Asia and has multiple offices located around the world. The company's international headquarters is located at 2103 City West Boulevard, Houston, Texas, United States. In June 2006, Thomas Properties Group Inc., through its joint venture with the California State Teachers' Retirement System, agreed to buy BMC Software Inc.'s Houston campus for $295 million.

Products and services

BMC Software began as a mainframe software vendor, but since the middle 1990s has been developing software to monitor, manage and automate distributed and mainframe systems. BMC is divided into two main business units:

In August 2009, BMC had over 450 software applications to primarily manage mainframes and distributed systems, as well as virtual and cloud computing IT environments. Generally, the software is used to help information technology managers, typically in large enterprises or agencies, manage operations, make IT more efficient, remediate issues, increase compliance and lower IT costs.

For example, BMC's BSM platform improves efficiency for government agencies such as New York City's Department of Information Technology and Telecommunications. A June 2009 press release issued by the City of New York credits the implementation of BMC's IT Service Management (ITSM) software and integration of automated monitoring tools "has produced dramatic improvements in interagency communication and streamlined City services with considerable cost avoidance."

In October 2009, BMC announced an initiative called Dynamic Business Service Management to improve IT's proactive approach to data center management. All major product offerings, BMC BladeLogic Server Automation, BMC ProactiveNet Performance Management, BMC Atrium CMDB and BMC IT Service Management were updated as part of this initiative. BMC Atrium CMDB's integration came out as one of the key strengths to be top on Gartner's Magic Quadrant for IT Service Support Management Tools. This integration enables IT service visualization to show upstream and downstream impacts. This aids in faster issue recognition and resolution.

BMC uses its own software in a private cloud computing environment for developing applications. BMC also offers consulting, implementation, integration, and educational services related to its software products and sells directly through a sales force and indirectly through channel partners which include "resellers, distributors, and systems integrators."

Directors and staff

The company was founded by John Jay Moores in 1980; Moores was a "former Shell Oil computer specialist ... whose software made Shell's computers more efficient." As of December 2016, Peter Leav succeeds Bob Beauchamp president and chief executive officer; Beauchamp remains chairman of the board of directors.

Richard A. Hosley II was president and chief executive officer of BMC Software, Inc. from October 1987 until April 1990. Prior to being president, Hosley was BMC's first salesman. Later, as vice-president of sales and marketing, he was responsible for designing and implementing the highly innovative and cost effective telemarketing process and the commission scheme for salesmen and product authors for which BMC was known. Shortly after becoming president, Hosley took the company public in 1988. In Hosley's ten years as salesman, VP of sales and marketing and CEO at BMC, sales grew from under one million dollars to more than $100 million and employees from two (Hosley and Moores) to over 500 people. Hosley was succeeded by Max Watson, Jr. in April 1990.

Max Watson Jr. was chairman and chief executive officer of BMC Software from April 1990 to January 2001. At one point, he was listed as one of Houston's highest paid executives; in 2000, his salary and bonus was $1.2 million. In 2001, BMC had a policy of only awarding stock options once every three years. But one report described Watson as earning nearly "$37 million for running the Houston company during its period of turmoil." In 2001, BMC appointed the company director, Garland Cupp, to the post of chairman, succeeding Max Watson, who quit the post in January 2001. "Mr. Cupp has been a director since 1989 and was chief information officer at American Express Co.'s travel-related services unit." according to BMC.

Watson was succeeded by BMC's former senior vice president of product management and development, Robert Beauchamp (pron. "Bee-chum"). During his tenure as BMC's chairman and CEO, Beauchamp oversaw business changes including the move of BMC's stock to the New York Stock Exchange, the reorganization of BMC into two primary business units, and the introduction of Business Service Management. In October 2009, BMC returned to NASDAQ‘s electronic trading platform, remaining under the ticker symbol, BMC.

Today, Beauchamp continues to be chairman and CEO of BMC as well as president of its ESM business unit. His total compensation for 2009 is $10,902,868. Beauchamp has been at BMC since 1988; in August 2009, he was 49 years old.

In 2009, other executives include the president of the Mainframe Service Management unit—Bill Miller; and the chief financial officer—Stephen Solcher.

BMC had 6,100 employees in March 2010. BMC was a member of the S&P 500 and was listed as being a member of Fortune's "400 Best Big Companies" in 2009.

Partnerships

As the computer industry moves in the direction of cloud computing, BMC is working with firms like Cisco and VMware to build a so-called Unified Computing System described as a "private cloud in a box"; the Economist Magazine elaborated: "instead of having to wire up servers, storage devices and networking gear, companies can build and reconfigure virtual computer systems with a few mouse clicks," reported the Economist in March 2009. Business analyst Richard Sherman said the alliance "raises BMC's profile in the server automation industry" and would raise future revenues. According to the article, BMC's earlier acquisition of BladeLogic in 2008 was key to the formation of the alliance with Cisco. In June 2009, BMC received a "CIO 100 award" for "innovative use of an internal cloud computing environment to achieve maximum return on server and storage investments."

In July 2009, BMC and Amazon Web Services announced IT organizations will be able to extend their internal data centers to the Amazon Elastic Compute Cloud (Amazon ec2) through BMC's BSM platform.

In November 2009, BMC announced Service Desk Express (BMC Remedyforce) will be sold, marketed and available via Salesforce.com. "By delivering service desk technology via the cloud, you can abstract all the complexity of the infrastructure that rely on IT services delivery and follow best practices," said BMC chairman and CEO, Bob Beauchamp.

Assets

While BMC's most significant asset is perhaps a workforce of skilled software engineers, the firm owns considerable intellectual property in the form of software code. It elaborated how it protects this property in an SEC filing (2002): "We distribute our products in object code form and rely upon contract, trade secret, copyright and patent laws to protect our intellectual property. The license agreements under which customers use our products restrict the customer's use to its own operations and prohibit disclosure to third persons. We now distribute certain of our products on a shrink-wrap basis, and the enforceability of such restrictions in a shrink-wrap license is unproven in certain jurisdictions. Also, notwithstanding those restrictions, it is possible for other persons to obtain copies of our products in object code form. We believe that obtaining such copies would have limited value without access to the product's source code, which we keep highly confidential. In addition, we employ protective measures such as CPU dependent passwords, expiring passwords and time-based trials."

While software can be considered as intellectual property like screenplays and protected by copyrighting, some software processes can be considered as "inventions" and protected by patent. BMC owns software patents. For example, BMC owns a patent for "GUI interpretation technology for client/server environment" developed by software engineers David T. Sulcer, Lawrence M. Ackner, and Donna S. Lowe-Cleveland which involves complex signals processing; patent attorneys trying to describe this process wrote: "receiving a message from a remote device, the message comprising either a definition, a state change, a command or some combination thereof; processing the definition (if any) before the state change (if any); and processing the state change (if any) before processing the command (if any)."

BMC owns real estate property but it's mostly in four office buildings totaling 1,515,000 square feet (140,700 m²) in Houston, Texas; sales and development offices around the world are leased.