Dissecting BMC and CA Technologies' cloud efforts
BMC Software and CA Technologies have a lot in common including efforts to target large enterprises with a promise to help CIOs better manage hybrid cloud data centers.
The similarities are everywhere:
- Both companies have mainframe management businesses;
- Both aim to ensure service levels are up to snuff;
- And both are repositioning for cloud computing and putting their wares on platforms such as Salesforce.com's Force.com and Amazon Web Services.
Salesforce.com CEO Marc Benioff called both companies out for developing on his Force.com platform. "Both Computer Associates and BMC have gone live with their native Force.com cloud applications built in 100% natively on the Force.com platform," he said.
So both players seem to get this cloud thing, but it's still early in their transformation. Here's a look at BMC and CA, their moving parts and a few thoughts on whether they pass the cloudwashing sniff test.
Related: May the cloud washing begin: Enterprise software giants graze on cloud startups
BMC: Building out enterprise clouds for 18 months or so
BMC Software has made a series of cloud computing moves and it claims that it has exceeded $100 million in "cloud foundation" deals. These deals are defined as ones where "virtualization and computing management capabilities were the key element in the customer’s final selection."The pitch around BMC revolves around unified IT management where physical, virtual, cloud and software as a service efforts are available in one service management dashboard. BMC is basically providing building blocks for private cloud infrastructure.
At a Morgan Stanley roundtable Tuesday, BMC vice president of strategy Herb VanHook set the scene. He said:
What's going on in enterprise IT organizations today, when they use the term private cloud or sometimes they use the term next generation data center, they have co-opted a lot of the thinking that's come out of the public cloud services space. So, the thinking that's sort of slanted everybody's bias towards things like Amazon and other public cloud service providers has shifted the way internal IT organizations think about both architecting, designing, building, implementing and running their infrastructure to deliver services and deliver applications to their business.
We've been helping customers build out their cloud environments both on the service provider side and on the private enterprise side for about 18 months now.
VanHook noted that enterprise IT shops are just messy. There's legacy gear; there's new on-demand offerings; there's cloud links. BMC is aiming to bring all of that stuff together to better manage it. "Customers still have a very mixed environment in the infrastructure, different storage vendors, different server vendors, different network vendors out there," said VanHook.
To that end, BMC rolled out its Cloud Lifecycle Management suite. The aim: Balance the demand for cloud services and IT's desire to control the environment. BMC's cloud management suite has a policy driven catalog, self-service Web portal, provisioning and management workflows for governance and compliance.
Financials: The company reported fiscal fourth quarter net income of $120.6 million, or 65 cents a share, on revenue of $491.3 million. BMC missed Wall Street revenue targets because a deal didn't close at the end of the quarter. For the fiscal year ended March 31, BMC reported net income of $496 million, or $2.66 a share, on revenue of $1.91 billion.
The cloud sniff test: BMC CEO Bob Beauchamp on an earnings conference call earlier this month referred a lot to targeting hybrid cloud environments and software as a service. Indeed, BMC's really about hybrid cloud deployments, which will be the norm in large companies. "BMC gives the customer the ability to manage all of those environments, physical, virtual, cloud, external cloud like Google, et cetera, and SaaS offerings from a single vendor and that's really integrated together so we see it's going to continue to raise the strategic importance of an integrated management environment in these large enterprises," said Beauchamp. Meanwhile, BMC is partnered in all the right places with Cisco's Unified Computing System business, Amazon and Salesforce.com.
Overall, analysts view BMC largely based on its existing products, notably mainframe management software and the Remedy IT service suite, which is available as a service and on Force.com. The transition to cloud deals is viewed as a longer-term adventure. In Oppenheimer analyst Shaul Eyal's recap of BMC's quarter he barely mentioned cloud computing. Eyal talked mainframe renewal cycles and Remedy sales, which are used to sell BMC's broader platform. BMC is "our favorite name in the mature infrastructure software space." More on BMC.
CA Technologies: Reinvention time
It was a busy time at CA World last week. The company changed its name from CA to CA Technologies and launched a cloud management strategy.The company's CA Cloud-Connected Management Suite builds on the acquisitions of 3Tera, Oblicore and Cassatt. In a nutshell, the four products that make up the suite break down like this:
- CA Cloud Insight assesses internal and external IT services and maps them across business goals.
- CA Cloud Compose maps and constructs cloud architecture based on commodity hardware and reusable software components.
- CA Cloud Optimize will aim to improve performance, service levels and capacity.
- CA Cloud Orchestrate is designed to automate workflow and policies.
Bill McCracken, CEO of CA Technologies, outlined the company's cloud and virtualization efforts while growing its mainframe and IT management businesses. "Running IT in a cloud-connected enterprise will be more like running a supply chain, where organizations can tap into the IT services as needed - specifying when, where and precisely how they are delivered," said McCracken.
In many respects, CA Technologies is formulating a plan similar to BMC's. Take existing IT management capabilities and products and make them more cloud friendly. In this world, it's not about mainframes, it's about mainframes 2.0. You get the idea.
Analysts generally say that CA Technologies is on the right path, but the cloud computing strategy is going to take time to play out. Eyal said that CA Technologies has a "coherent strategic plan," but the execution of the company will have to be evaluated in 2011.
Financials: CA Technologies' outlook for fiscal year 2011 generally disappointed analysts. The company reported fiscal fourth quarter net income of $175 million, or 19 cents a share, on revenue of $1.1 billion. Those results missed Wall Street estimates. For fiscal 2010, CA Technologies reported earnings of $869 million, or $1.47 a share, on revenue of $4.35 billion.
The cloud sniff test: CA didn't acquire a bunch of cloud computing companies and not talk about the cloud. CA also has some solid partnerships with the likes of Cisco. At CA World, the company broadened its Cisco alliance. However, Cisco won't be reselling CA software like it does with BMC.
Analysts seem to buy CA Technologies' cloud vision. The challenge for CA Technologies is going to be delivering on the vision. Deutsche Bank analyst Todd Raker said a research note:
We came back from CA world with a very positive view of the opportunities that lie ahead of CA in the virtualization and cloud space. The company, due to its differentiated product lineup is very well positioned to take advantage of these opportunities...The shift in the datacenter to a hybrid model encompassing physical, virtual and cloud environments creates a huge opportunity for CA. We believe that execution is key. More on CA.