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The Fate of the Big Four

Empires under siege

Earlier this year, the 451 Group reported that the Big Four systems management vendors (BMC, CA, HP, and IBM) were ripe for a shakeup, and had been for some time. Poised at the top of a healthy, lucrative market, it hardly seems likely that these market leaders could be threatened by newcomers. Nevertheless, they are being challenged and the enterprise IT world is paying attention to the outcome. How real is the threat, and what changes will it eventually bring to the IT infrastructure management software?

Let's take a look at the lifecycle of an empire. Empires rise and fall with a fascinating yet predictable regularity. At the risk of vastly oversimplifying, we can say that empires come to power gradually, emerging from economic chaos or the ruins of war. They build power through their ability to establish order and achieve prosperity, often with deep investment in military might. Then, at some point, the empire becomes irrelevant. Choices are made not for the common good but with a view to preserving the status quo. Because of this, the empire loses its competitive edge and eventually fades into inconsequence.

It's hard to speak of empires without experiencing a secret glee at their eventual fall, and it's with this same indulgence in Schadenfreude that observers in the IT world watch the Big Four companies in systems management contend with challenges to their dominance. This is not to say that they are empires on the verge of toppling; in fact, Gartner reports that the market is $10 billion strong and growing, with the Big Four easily owning 55% of that.

But much has been said about emerging challenges to the Big Four as other large vendors, such as Microsoft, Oracle, EMC, SAP, and Symantec, aim for a piece of the market. And the threats to the Big Four aren't limited to those from proprietary vendors. A growing number of open source solutions have arisen to challenge the Big Four with the promise of lower cost, flexibility, and lack of vendor lock-in. In fact, a key finding of the 451 Group's report, "Managing in the Open: The New Wave of Systems Management" states plainly, "Open source is breathing new competitive life into systems management, ultimately forcing the established vendors to respond in their products, pricing, and strategies."

Nora Denzel, former senior VP and general manager of the software unit at Hewlett-Packard, agrees. Denzel retired from HP last year and now serves as a director or member of several software advisory or boards of directors, including GroundWork Open Source, a company that is counted among the new challengers to the Big Four. "Open source is encroaching in several arenas, but in particular with management software that helps companies manage their sprawling networks," Denzel says. "We haven't even begun to see the full impact of open source in this space."

According to Denzel, open source works because it's easy to deploy and is a small fraction of the cost of proprietary solutions. Further, she argues that open source is easier to use and faster to install owing to its modular rather than monolithic structure. As for the extensive feature packages that the Big Four vendors boast of, Denzel says, "In reality, studies show that over 50% of the features in the proprietary versions are never installed. Think of what features you use - in Microsoft Word, for instance - what percentage of the features do you estimate you use in that?"

Customers who've opted for open source over proprietary tell a similar story. Tom Lamb, CTO of the University of North Carolina at Charlotte, needed to upgrade the school's monitoring system to include every aspect of its complex IT environment. Lamb initially looked at HP's OpenView and Compuware Vantage but discovered the cost of purchasing, deploying, and scaling either system was beyond the reach of his IT budget.

"The initial licensing fees for both OpenView and Vantage were in the hundreds of thousands of dollars and simply far beyond what our budget would allow," Lamb says. "To get the customized dashboards we wanted, we would have incurred additional consulting fees - the enterprise license agreements did not allow our staff to customize these systems. And when we talked about scalability with these vendors, the overall price tags began to approach the million-dollar mark." Lamb eventually selected GroundWork Monitor Professional to do the job.

Another GroundWork customer made the acquisition decision based on the flexibility and control that open source offered. Richard Farley, director of IT at Ingenuity Systems, Inc., a developer of biology interaction modeling software, noted that proprietary systems with the functionality his organization required were too expensive while affordable proprietary packages didn't provide enough functionality. Additionally, proprietary systems came with modification restrictions and Farley wanted a package that could be modified to meet Ingenuity's requirements.

Farley was pleased with his open source solution: "We gained immediate results with the software right out of the box, yet we were also able to make unique configuration changes simply not possible with other enterprise-class tools." Such success stories are not uncommon; similar tales can be found among case studies from other open source system management vendors, such as Zenoss and Hyperic.

There's no doubt that open source presents attractive alternatives to proprietary software on many levels, but how valid is the argument that open source presents a threat to the Big Four? I'd argue that it's not open source itself, but the inherent maneuverability of the new players in the market segment and the necessity of remaining relevant to customers that is forcing the Big Four to react.

You can look at telecommunications companies for an example of an industry dominated by giants that was forced to adapt and change in response to challengers in the field. Few of us believe that Skype will topple AT&T any time soon, but AT&T is surely paying attention to Skype's growing user base, and well it should.

Likewise, the Big Four take a keen interest in the successes of their new competitors, whether proprietary or open source. Each customer they lose sends them a message with regard to feature packages, pricing, or the ability to customize. To stay relevant, they'll be forced to respond, and indeed are already responding with tiered pricing levels, customized feature menus, and open source components. In several instances, they've solved the problem simply by acquiring up-and-coming competitors, eliminating the threat and capturing the capabilities in one swoop.

The pressure to lower costs, innovate, and respond quickly to customer needs is quite real in the IT systems management market and this is good news for customers all around. The real shakeup may not be a question of open source versus proprietary software. Ultimately, innovation comes from listening to the customer's needs and meeting them, and whoever does this best will emerge the winner. But - just as an aside - open source has always excelled in this area!

Resources
•  The 451 Group Special Report: CAOS (Commercial Adoption of Open Source) - Report Four: Managing in the Open
www.the451group.com/caos/caos_detail.php?icid=419
•  Denise Dubie, Network World: A Look at the Big Four, Part One
www.networkworld.com/newsletters/nsm/2007/0604nsm1.html
•  Denise Dubie, Network World: Emerging management challengers: what do you think?
www.networkworld.com/newsletters/nsm/2007/0723nsm2.html

More Stories By Harper Mann

Harper Mann is a senior engineer at GroundWork, a San Francisco-based IT operations management startup. He has completed hundreds of IT monitoring and management software installations at customer sites during the last 20 years. Prior to GroundWork, Horace worked as a Linux and Solaris IT manager at E-Loan, and prior to that ran the virtual enterprise datacenter for Unicenter TNG at Computer Associates. Early in his career, he was part of the team at Cyber Cash that did the first credit card transaction completed on the Internet.

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