Tivoli to mend fences with customers

When 1,500 Tivoli Systems users gather this week for their annual conference, they will learn the latest about the company's ongoing product-integration efforts with parent IBM. They also will hear Tivoli executives profess a renewed commitment to the needs of existing customers.

Among the topics expected to be addressed:

-- Tivoli's release of application software to manage IBM's WebSphere Application Server.

-- New privacy management software called Tivoli SecureWay Privacy Manager designed to help banks and other organizations comply with regulations in the Financial Services Modernization Act.

-- A three-part initiative to better serve customers through products, partnerships and channel offerings.

-- A roadmap for future product and services offerings.

"IBM and Tivoli working more closely together is definitely a good thing," says Diana Beecher, CIO at Travelers Insurance. Travelers purchased Tivoli management software about five years ago, right before IBM acquired Tivoli. "IBM understands what we need philosophically and [it] offers a lot of support, but Tivoli has the comprehensive products we need."

While the upcoming changes are being billed as natural evolutions, Tivoli's financial situation sped up the process. The company, which accounted for about US$2 billion of IBM's more than $21 billion 2001 first-quarter revenue, has seen revenue and earnings fall short for the past couple of years.

"Simply put, Tivoli hasn't been making its numbers," says Donna Scott, research director at Gartner.

The most recent IBM earnings report revealed declining revenue for Tivoli and IBM sibling Lotus, which reflects, according to IBM, ongoing transitions within both units. Although Tivoli earned its reputation for network management software, the company is now making a strong play in the security and storage markets. Meanwhile, Lotus is expanding into new growth areas such as knowledge management software.

'Lost its luster'

"Tivoli has lost its luster in the network management market. They have best-of-breed technology, but they have to make it easier to use," Scott says. "IBM can help Tivoli, but [Tivoli's] first priority has to be getting out there and satisfying existing customers."

All of this is not lost on Tivoli. President David Murphy acknowledges that the company focused its efforts too much on technologies that never saw the light of day, while possibly overlooking the more pressing concerns of customers.

IBM Software Chief Steve Mills refers to the Tivoli technologists as "maniacally focused" on solving abstract technology problems that users don't face in the real world.

With that in mind, Tivoli is targeting six areas for technology leadership: availability and performance management; storage management; security management; configuration and operations management; service delivery management; and "aggregated solutions." This involves Tivoli collecting technologies for customers to meet their specific needs. For example, a customer looking to implement an e-marketplace would need Tivoli's Web management and security products, and Tivoli would sell those as a package.

This week Tivoli will announce a link between its management software and IBM's WebSphere Application Server, but Murphy says the additional integration with IBM products in no way undermines his commitment to supporting multiple vendors.

"I want to be clear with all this talk of further integration that Tivoli will not become an IBM-only product company," he says. "The company made its way in the heterogeneous market and will continue to explore technologies not associated with IBM."

Hurwitz analyst Rich Ptak says the Tivoli/IBM plans should not concern customers.

"People always harp on 'you can't serve two masters,' but I really think that's a boogeyman, that they're trying to set up a threat that doesn't exist," Ptak says. "Tivoli has gone through some hard times, and it's certainly not the company it was, but I don't see any hardening of the arteries in Austin."

Ptak says Tivoli's SecureWay products are leading the security market, and Tivoli plans to announce this week a partnership with a Web security company that will strengthen its hold.

Details have yet to be disclosed, but Tivoli says its SecureWay Risk Manager will work with the partner's security appliance to manage risks. The company will also make public its deal with McData to sell a "LAN-free appliance" that is preconfigured and tested to quickly deploy storage systems for e-business networks.

But Gartner's Scott warns that until Tivoli can more fully satisfy existing customers, the company will not fully recover from its less-than-satisfactory performance in the past few years.

"Tivoli doesn't have laurels to rest on anymore. It's not a given Tivoli will be No. 1 in the market," she says. "They have to be fierce in their strategy; they can't relax."

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