BMC Software - History - 1990s

1990s

The growing firm needed more space. In 1989, BMC leased property in Sugar Land, Texas and in 1990, Max Watson, Jr. succeeded Hosley as CEO and President. In 1991, BMC had 640 employees with $139 million in revenues. Revenues, net earnings, and earnings per share increased approximately 50% over 1990. By 1991, it had offices in several complexes in the Houston area including Stafford and Sugar Land. Later in 1991, BMC announced it was building a new headquarters complex for $65 million. The 20 story tower (120,000 square feet) opened in late 1993. Incidentally, in 1991, John Moores and his wife gave $51.4 million to their alma mater, the University of Houston. Greg Hassell of the Houston Chronicle stated in a 1991 article that after 11 years of growth in the company, BMC "has the soul of the little guy" and "still run like a start-up company" since it still used tactics used by smaller firms to expand.

Beginning in the mid-1990s, BMC began a pattern of consistently buying both small and large software firms. From 1994 to 2009, BMC bought approximately 32 firms. While many were acquisitions of small privately held firms with undisclosed terms of sale, there were sizeable purchases, too. Most firms were American, although there had been firms from Belgium and two from Israel. One of the first was Australia's Patrol Software, Inc. BMC was able to expand software product offerings, extend new capabilities, bring new talent into the firm, and integrate solutions into a comprehensive product line. As a result, few acquisitions were followed by substantial layoffs of redundant employees. In addition, BMC made cooperative arrangements with other computer and software firms. The firm invested in research and development. The firm's focus widened. In 1996, for example, it focused primarily on software for IBM mainframe computers. Over time, its focus widened to include tasks associated with monitoring information technology as well as its traditional focus on mainframe software.

A primary BMC product during the early-mid 1990s was Patrol, a "data base and systems management product (which) monitors the status of computers, resources, databases and applications on a network," according to a New York Times report. In 1994, BMC made an alliance with computer maker Digital Equipment Corporation in which BMC would convert its Patrol software to run on all Digital operating system environments. In 1997, BMC bought Datatools, a privately based maker of backup and recovery products based in Sunnyvale, California, for $60 million.

In 1998, BMC bought Boole & Babbage, the first software products firm in Silicon Valley, which "creates software to help corporations stitch together computer networks." Estimates of the price paid varied; some suggested the price paid in the stock swap deal was $1 billion while another estimate was more than $900 million while another estimate was $877 million. A New York Times business reporter praised the acquisition and described what software products from the two companies (BMC and Boole) do: "When they do their jobs right, products like Boole's Command Post or BMC's Patrol are invisible to end users. But they provide information systems management staff a virtual dashboard with which to monitor problems and optimize performance. In many cases, the programs can spot an error, alert network administrators to its existence and repair the problem without ever interrupting the system." The reporter elaborated: "Systems management software is a broad category of programs that function behind the scenes to make sure that big mainframes and far-flung networks of distributed computers keep working reliably and efficiently", and noted that "a major corporate computing system, whether based on a traditional mainframe or spread among Unix servers, is a vastly more complex environment than a personal computer, so the products that monitor and trouble-shoot these systems must be powerful and sophisticated as well." In another story, a reporter wrote: "Both companies sell software that makes computer networks run smoothly and that manages data bases on mainframe computers, but Boole & Babbage, of San Jose, California, gains 58 percent of its revenue from international sales, while the Houston-based BMC gets 35 percent of its revenue from such sales."

Also in 1998, BMC bought Massachusetts-based BGS which "makes software tools that help companies analyze and predict the performance of their systems" in a stock deal valued at $285 million. The Houston Chronicle wrote: "The move enabled BMC to strengthen its software offerings, which are used to monitor the health of a computer network."

Acquisitions didn't necessarily mean layoffs. While a common merger pattern is when "one big company buys another and the job cuts soon follow," a Houston Chronicle reporter wrote that BMC has acquired businesses with the goals of "adding new products and keeping the skilled people who create them." A BMC spokesperson commented "very good technologists are very hard to find ... The value of a software company all comes back to its intellectual capital."

In 1999, BMC acquired the Israeli firm New Dimension Software (flagship product CONTROL-M), which made application service as well as management software, for $673 million cash. New Dimension Software's products handled such tasks as security administration, document management and multi-platform job scheduling. In 2000, BMC bought "an Israeli maker of enterprise application management software for mainframe computer system", named Optisystems, for $70 million.

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