Q&A: BMC CEO Bob Beauchamp
BMC Software chairman and chief executive officer Bob Beauchamp has headed up the company since the beginning of the decade, transforming it into the business service management power it is today. ZDNet.com.au talked to him at the company's customer meeting in Beijing, China.
BMC CEO and chairman Bob Beauchamp (Credit: Suzanne Tindal/ZDNet.com.au)
It's obvious why China is important to IT vendors. What excites you about Australia?
Australia is one of our best offices in terms of customer adoption. We're very successful in the financial services sector in Australia. The Australian economy has arguably been the most resistant to the global economic turndown of all the geographies we do business with. We have some of our biggest most sophisticated customers — our most advanced customers — in Australia. Some of the biggest wins that we've been working on just recently are in Australia.
Are they also in the financial services market?
Yes.
BMC Australia and New Zealand country manager Gary Mitchell last week was talking to me about other sectors he was trying to get in, saying there wasn't much strength in the government market in Australia. Do you agree?
The last time I was there, we were discussing all of our customers and we're not very strong in capital. We really had our big offices in Sydney and Melbourne. I think we really just under-served, really didn't go after government business as much as we should have in Australia. Some of our partners in Australia like CSC are doing business with the government and BMC's technologies are engaged in that. But BMC directly is not as strong in government as we are in other sectors. We're going to change that.
How?
I'm going to send an email when I'm finished talking to you for one thing.
BMC's really doing very well at growing strong in many sectors. For instance, government in the US is one of our strongest sectors. We do remarkably well in the US Government. We know that we do very well wherever we focus. We just haven't focused as much on the government market in Australia through the years. Frankly, we've just focused on the financial services and other larger markets. As the company's become successful we shouldn't really leave other major sectors.
Which other major sectors?
I'm just saying that all the major sectors we should cover. Government healthcare and manufacturing say 10 years ago were not as advanced as financial services and telecom. For instance, Telstra is a remarkably successful customer for BMC and we're very much part of their transformation initiatives. That's been the markets we've been most successful in because they're the largest IT users.
What's happened in the last few years is e-government came online. Healthcare's been modernising. Manufacturing is investing more in IT. We've seen a real surge in those markets around the world for us. Our sales are becoming more equally distributed through the sectors, when previously it was more concentrated in financial sector and telco.
Some companies have used acquisitions to make their way to the capital. Would you consider that?
We probably wouldn't use acquisition to move into a market that our current products would fit well into. In New Zealand we acquired a services company that gave us professional services and that actually helped us in NZ and Australia and really the south Asia market in general — quite a few years ago. It was a benefit but it wasn't that they were able to help us with [moving into a new market]. That's not really a strategy for us. Rarely does an acquisition involve moving into a market sector or into a geography.
Are there any targets out of product or service interest that BMC software is looking at within Australia and NZ?
Australia typically has been an important market for acquisitions where we've looked for acquisitions. Patrol, one of our most important acquisitions in the company's history, was an Australian-based company. We keep our eyes and ears open in Australia. I don't think I can suggest a specific thing that's underway. But we do keep our eyes and ears open, because there's quite a bit of innovation that happens in Australia. It's worth watching.
Australia is a highly virtualised market. You said in your keynote that virtualisation creates complexity and that BMC can help with that. Are you jumping on that bandwagon?
Absolutely, not only do our partnerships with Cisco and with Dell and with VMware and others leverage into that, but our customers who really standardise on our products depend on us to give them a management environment that will help them to manage virtual environments and physical environments and cloud environments consistently. So in all of our sale efforts, we will discuss with the customer the value that our products bring to a virtual environment.
You mentioned datacentre automation in your keynote. The Federal Government in Australia and the Queensland Government are doing datacentre consolidation at the moment. Is that something BMC is getting into?
I hope my team there is engaged in it. I will be asking that question at the end of this meeting as well. Our team should be engaged in that. Some of our best stories involve datacentre consolidation. I'll give you an example.
Two years ago Merrill Lynch came to us. As part of a datacentre consolidation effort, they were going to move from many datacentres to two. As part of their project, they realised that they were going to move to new technologies, virtualisation state-of-the-art hardware and operating systems and databases, really going to modernise all the infrastructure.
They came to the conclusion that that only addressed the technology and that really the bigger issue were the IT processes themselves. They realised that as part of the datacentre consolidation and modernisation, that IT process re-engineering was critical to really get the value out of the datacentre move.
They contracted with us to help them redesign their IT processes. Ultimately, we were awarded a very large piece of business from Merrill Lynch where they standardised on us and published the results. Within a year they were able to save $60 million and were able to free up 450-man years, really full-time equivalents, from that one consolidation — so huge savings across the organisation.
Do you see private and public cloud taking off?
I think it's like most of the new trends in technology, it's probably over-hyped today. It'll probably be slower to adopt than the current hype would have people believe. But its long-term implications are even more powerful than people would believe.
It is a clear and powerful trend. The hype is a bit much right now in terms of the industry. But we're working with some customers who are very, very aggressively moving into private cloud. We see private cloud among mid-size and large enterprises as a bigger change than public clouds. We've been working with many of our customers as they've set up and deployed their own private clouds.
One of the large financial companies recently advised us they have six business units and they were going to create six specific private clouds and they're working on doing exactly that.
How soon will it really take hold?
I would say most of the large customers I speak with have a private cloud initiative currently underway. Here in China yesterday I visited with a customer who said that they've not really begun so I can't say every customer is doing it, but I would say it's a frequent topic in almost every sales campaign or existing customer we're working with. They're either in the planning stages or in the process of implementing private cloud. Now public cloud — it's not quite as common right now that we're hearing of people deploying public clouds.
But the idea is to be able to mesh between private and public, correct?
Absolutely, we recently brought together a team of our top experts and we brought in some external experts and we really looked at the industry. What we believe is that the business requirements for the applications themselves will really determine where they sit. In some cases it'll be totally appropriate for them to be in the public cloud. In other cases they're unlikely any time in the near future at all to be in the public domain, it'll be required to be in the private cloud environment. I think you're really looking at a hybrid where you have some of all of it.
That's why I think that business service management is in a very special place because we give them the opportunity to manage it all with one management system rather than make the mistake that is usually made through the years that every time a disruptive technology comes along, another island of management is created. And I think this time, due to experience, more customers see that they're not going to let that happen. They're going to integrate the management into their existing management systems.
In which case, it's a hot target to get your management system into a company. There will be companies trying to move into the same space. BMC is more of a minnow than some of its competitors who are very, very large.
No one is much larger than we are at what we do. We are among the largest in the world, and in fact in many markets we are the largest in the world. It's true we don't have a printer business. It's true we don't sell disk drives or servers and we don't outsource datacentres, but we don't have our customers come to us and say they're going to go with the competitors because they have printers. We actually find it's the opposite. We find customers who are very intrigued and attracted to the fact that we only do this one thing. That every employee is focused on management, and, this is the key thing, that we don't have an agenda to sell other products to the customer leveraging management.
For instance, if you were in the storage business and you'd want to sell a management environment and you only have a dollar to spend on research and development, you'll spend it to make the management of your storage system better, not the management of your competitors' system. BMC on the other hand can't do that. BMC must deliver heterogeneous management consistently. We don't care whether they buy something from Dell or HP or IBM or Cisco. Or, it's not that we don't care. We assume they're going to buy all of them. Whereas some of these competitors, 97 per cent of their revenue comes from these other areas. I think customers are attracted to the fact that we don't leverage the management to bring other products in.
You spoke today about HP being one of your major customers, which is amusing because they're one of your major competitors. How has the HP-EDS merger affected that dynamic?
It was really EDS I was referring to that was the major customer. Very soon before HP bought EDS at our user conference, the chief technology officer for EDS announced that they were moving to BMC technologies as fast as possible and moving off the HP software technologies. Obviously that strategic direction was changed. But they continue to be a good customer of ours and we support them very well and many of their projects embed lots of their software.
Is it likely to become a much smaller customer?
I assume so. I'd assume they'd do everything they could to use their own technologies. The same as IBM does. Again that points back to the previous question. If you're buying, you can actually depend on them not recommending the best product. You can depend on them recommending their own product. This is an advantage we think being a heterogeneous environment.
Did you lose any employees to the financial crisis?
We haven't had that I could recall any across the board lay-offs in quite some time.
When was the last across the board?
I don't remember. Those are painful events and I just don't carry the dates in my head.
Did you ever consider reducing wages?
No. The concept of asking everybody to take pay cuts is not something we thought was a good idea. In general, we have to make sure our wages are competitive. The people that work for you, particularly if you've had to tighten down on budgets so they have to work extra hard, I don't find it a good idea to ask them to work twice as hard and pay them less.
When was the last time you were in Australia?
I don't recall. It's probably about 18 months ago. I try to make it to each region once a year or twice a year. I try to go to Asia, I try to go to Europe three or four times. I travel well over 100 days a year.
When is the next trip?
I'm coming back to Hong Kong and a few other markets in April. I'll probably try to get a trip to Australia in there then.
Suzanne Tindal travelled to Beijing as a guest of BMC.