Which is More Difficult: A Marriage or a Corporate Acquisition?

My nephew recently attended a wedding and later commented that the bride and groom were totally incompatible and that he expected that the marriage would soon dissolve. His comments don’t seem entirely unwarranted. Given that half of the marriages in the US end in divorce, if you attend two weddings you can expect that one of them will not last.

Corporate acquisitions are about as likely as a marriage to be successful. With that in mind, it is interesting to look at the two acquisitions that were announced earlier this week and speculate as to whether or not they will be successful. One of those acquisitions, Avaya’s acquisition of Nortel’s Enterprise Solutions Business unit, was long expected. Avaya spent nine hundred million dollars for Nortel and set aside another fifteen million dollars for employee retention. Avaya is owned by private equity firm Silver Lake. Silver Lake executive Charlie Giancarlo, ex-of Cisco, is responsible for Avaya. While it is difficult to know what Giancarlo and Kevin Kennedy, CEO of Avaya have in mind, it is possible to make some intelligent guesses. Giancarlo knows the LAN switching business intimately. He could be interested in resurrecting Nortel’s LAN switching product line and trying to take market share away from Cisco. However, I doubt that is what he has in mind. This acquisition looks to me like Avaya is buying the Nortel customer base and if that is the case, Avaya will not face the tough challenge of product integration. Avaya will try to find a way to get at least some value out of the Nortel product set that it acquired while they focus primarily on the task of migrating the Nortel customer base over to Avaya. Given that Avaya has a seasoned management team, it is likely that Avaya will transition most of the Nortel customers and end up getting a good return on their investment. As such, this marriage (make that this acquisition) should be successful.

The CA acquisition of NetQoS came together relatively quickly. CA paid two hundred million dollars for NetQoS – roughly four to five times earnings. In 2009 that is a big multiple and indicates that CA clearly values NetQoS. There is reason to hope that this marriage can work. CA is a very different company than it was just a few years ago when it was known as Computer Associates. The CA infrastructure management group has brought in some very skilled executives (i.e., Roger Pilc, Bill Ahlstrom) and CA has made some key acquisitions; i.e., Wiley. When the new CA acquires a company, it tends to give it a fair degree of autonomy – at least for a while. That being said, Pilc will definitely want to integrate NetQoS products into the rest of his portfolio. That process always tends to take some of the momentum away from the acquired company. Perhaps the strongest threat to this marriage is that CA looses too many key NetQoS personnel if it makes the mistake of forcing a big company culture down the throats of a fast-moving small company.  Still, this marriage should work out.

First Impressions of Interop

I landed in Vegas Monday afternoon (5/18) around 4:00. When I stepped out of the hotel I saw something that I have never seen before in Vegas – there was absolutely no line for a taxi. Every other time I have come to Vegas there has been a long line, often lasting a half hour or more. My fear was that the Interop show would be as empty as the taxi line. It is not. It appears to be down some from last year, but there still is a lot of energy here.

The first session I moderated on Tuesday morning was on Application Performance Management (APM). The panelists were from NetQoS, CA and Fluke. I find this to be a very important topic because I strongly believe that all that a company’s business managers really care about is the performance of a handful of applications that they use to run their business unit. All of the infrastructure components (e.g., LAN, WAN, SAN, servers, OSs, firewalls, WOCs – you get the idea) are just a means towards an end.

The attendance at the session was ok, but less than I expected for this topic. The three panelists did a good job of describing APM and their company’s approach. Paul Ellis of CA drove home the fact that CA believes that IT organizations need to focus on the transaction and the quality of the user’s experience with that transaction. Matt Sherrod of NetQoS and Doug Roberts of Fluke Networks both did an admirable job of creating a framework for how IT organizations should approach APM.

The bottom line is that I was quite pleased with all three presentations. Then we got to the Q&A and the gap between what is being promoted by vendors and analysts and what is being practiced by IT organizations became painfully clear. For example, vendors and analysts have been talking for years about what IT organizations need to do to meet their internal SLAs. When asked, hardly any of the participants stated that they offer internal SLAs. That did not surprise me. Even more interesting is that vendors and analysts have also been talking for years about the need for visibility into applications. When asked, relatively few of the participants stated that they had that kind of view even though most of them had some kind of APM tool. That did surprise me. The feedback from the participants was that the main reason they didn’t have that kind of visibility was the overall complexity of the IT environment. Given that I believe that things are only going to get more complex, the gap between theory and practice may well get larger over the next few years.

Jim Metzler

A Comparison of Application Performance Management (APM) Vendors

Management used to be focused primarily on the availability of network devices such as switches and routers. However, in the last few years the focus of management has evolved to where it now typically includes the performance of both networks and applications. While the shift has been relatively recent, the industry is flooded with vendors who claim to offer application performance management (APM) products. Viewed from a hundred thousand foot level, the majority of APM tool vendors all make very similar promises. Most if not all APM tool vendors promise that their products can help to identify when the performance of an application is degrading and can help to identify the component of IT that is causing the degradation; i.e., is it the WAN or the servers that is causing the degradation. Some APM tool vendors claim that their tools also enable an IT organization to identify the particular sub-element (e.g., the particular WAN link or server) that is causing the degradation.

The first panel that I will be moderating at Interop is entitled “Application Performance Management”. The primary goal of this panel is to help IT organizations get better at APM. A secondary goal is to help IT organizations understand some of the primary similarities and differences amongst APM vendors. To achieve those goals I have invited three APM vendors to the panel. Those vendors are Fluke Networks, NetQoS and CA. I have asked each of the panelists to spend about 15 minutes discussing what it takes for IT organizations to be successful with APM. At the conclusion of the formal presentations we will have a Q&A. I will start the Q&A by asking each of the panelists to discuss how their company is differentiated in the marketplace. After that, I will turn it over to the audience for further questions.

The panel will be held Tuesday, May the 19th from 10:15 to 11:15 in Breakers E. If you are going to be at Interop, I invite you to attend.

Jim Metzler