The IT management software market looks quite grim these days. There are number of trends that has a negative impact on software companies.
The market is being consolidated. Even midsize companies with sizeable amount of cash and a customer base have been looking for refuge under industry behemots. In last couple of years, several mid-size (and even large) companies have been folded into much larger entities. Smarts (and nLayers) was acquired by EMC, Aprisma was acquired by Concord, which was then acquired by ComputerAssociates, Micromuse acquired Quallaby and then acquired by IBM who also acquired Candle among many others. Mercury Interactive made some acquisitions before it got acquired by HP.
There are still some mid-size companies(let's call them MidCo), and a new set of startups but it looks like suddenly, mostly multi-billion dollar companies left in the market. The usual suspects (aka The Big four): IBM, HP, CA, and BMC. The main driver for this consolidation seems to be the market/customer access. There are more and more companies are competing for the attention of the customers (not just the direct competitors).
In the enterprise software business, access to customers is becoming increasingly difficult. Very large companies like IBM (BigCo) already has access to the customers globally with local presence in every significant market, therefore has a leg up on MidCos.
For MidCo companies, short of being acquired by a BigCo, only other option seems to be to partner with their larger competitors to get access to customers in the global marketplace (or continue go alone and swim upstream). However, MidCos are at a big disadvantage in this relationships and often conceed so much that once the BigCos and their channel take their cuts there is practically no margin left for them in these deals. It is also often the case the BigCos have so many products in their product portfolio that getting your product in there is not enough. The MidCos still have to carry the sales/marketing burden. As a result, although these deals create some awareness and buzz for the MidCos, at the end I'm not aware of great successes, at least they are not the norm but the exception.
For startups, the terrain is even more challenging. BigCos typically consider working with startups too risky and not worth their time, so partnering option is not only unappealing but it is often unavailable. Given the lack of innovation coming from the BigCos (what is the last innovative product that came out of HP or BMC?) startups with their fresh approaches are desperately needed in the industry.
One positive development at the side of the startups has been the explosion of knowledge/experience sharing occurring these days. Using the latest marketing tools available (search engines, community sites, blogosphere, etc.) startups attempt to reach to customers directly. Whether this approach that has certainly worked for customer facing startups will work for enterprise software companies remains to be seen, but there are some hopeful developments. If the startups and customers were able to connect directly, it would certainly be good for both the customers and the startups. There are currently too many barriers to information sharing in the industry. It is still quite difficult to find in-depth, quality information about management solutions on the web. Startups can change this by being transparent, providing as much information as possible, and facilitating information exchange among the community.
At iFountain, we certainly are trying very hard to do this. All our documentation and software is available on our website, which is the bare minimum. We've also begun to use this blog to start the communications with anyone interested in the IT management field. As part of this effort, I've created a page on this blog where we will list startup companies in the IT management industry. On this page, I'll provide links to all the startups I can find. I will also post about what I found out about each one. If you know a startup, I've missed, please post a comment with the website. If you are a customer/user of any of these solutions, and would be willing to post a review please also let us know.
