BMC bets on open-systems business

While systems management software developer BMC Software Inc. has traditionally focused on the mainframe arena, revenue from products catering to open-system platforms such as Unix and Windows NT has been increasing substantially, according to company officials.

Last year, 40 percent of the company's revenues were derived from mainframe-based licenses and services. Revenue from distributed-platform software, on the other hand, accounted for over 50 percent of income, according to Daniel Chong, BMC's Greater China managing director.

"Revenue that comes from open-platform products has been increasing at 10 percent a year since 1999," Chong said. "A lot of our customers' systems are becoming more cross-platform and they have started using our other products for open systems."

Demand for BMC's open systems Patrol and InControl enterprise management software has tipped the revenue balance away from mainframe products, said Chong.

In Hong Kong and Taiwan, revenue split between mainframe and open-systems products largely follows the company's worldwide average, while income from mainframe-oriented products is as low as 20 percent in the Mainland, mainly due to a lower mainframe deployment rate in that market, according to Chong.

Currently, BMC derives only 20 percent of its revenue from services, which is relatively low compared to many other IT vendors in the space, he acknowledged. Chong said BMC emphasizes ease of implementation to minimize service requirements, adding that a normal implementation cycle ranges from three weeks to two months.

Services

"Besides, we're prudent in growing our professional services team. Services are a double-edged sword - it can drive revenue growth during good times, but it can also be risky as business slows," leaving idle project teams that cut into the bottom line, Chong said.

Among BMC's 88 employees in Greater China, close to 40 are engaged in technical presales and support services, Chong said.

The company has seen an overall revenue drop of 5 percent in the first quarter of 2001, Chong said. However, there has been 70 percent growth in the Greater China region, most prominently in the Mainland, where revenues increased over 200 percent during the same period, he added.

"One of the primary reasons for growth is that a lot of Mainland companies are gearing up their systems prior to WTO (World Trade Organization) accession," which is expected to bring stiff competition from multi-nationals entering the China market, Chong said. The banking and telecom indust-ries are the key business drivers there, he added.

Looking forward, BMC aims to expand its distribution channel from systems integrators to IT product resellers.

"Apart from traditional resellers, we also target to tell through the new generation of resellers like Internet data centers, as well as management service providers," Chong said.

In addition, with BMC's February 2001 acquisition of Perform, a French developer of Web-based network optimization software, the company has built a stronger foothold in the network man-agement area and expects that business to contribute at least 5 percent of the company's total revenue, Chong said. However, more importantly, BMC hopes that by entering into the network management arena, it could cross sell other software products to customers.

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