BMC breaks into two: Mainframe and Helix businesses to operate independently

GIXnews

1 week ago

BMC today announced plans to divide its existing company into two standalone software companies, one focusing on its long-standing mainframe business and the other focusing on tools for managing IT and distributed operations.

Houston-based BMC has been owned by global investment firm KRR since 2018. BMC will remain the name of the company that includes the mainframe and software automation technologies, including BMC’s Intelligent Z Optimization and Transformation (IZOT) and Digital Business Automation (DBA) business units. BMC Helix will encompass the Digital Service and Operations Management (DSOM) lines of business.

“We have determined that the two companies will better serve their markets individually. Each of these businesses has its own profile and characteristics in growth opportunities, margins and profitability, and competitive landscape. We are confident that the underlying economics of both businesses sets each company up to continue driving innovation and growth for long-term success,” Ayman Sayed, president and CEO, said in a statement.

The strategic move could benefit the two entities as well as their customers, industry watchers say. To start, the division would make each company more nimble and better able to direct resources to their areas of expertise. And customers across the product portfolios would also benefit from the enhanced focus, analysts say.

“One company will have their mainframe business (about two-thirds of the total $2.3 billion in revenues are mainframe or about $1.5 billion). And the second company, BMC Helix, will house the distributed business (about $800 million in revenues). It’s generally a three-horse race with Broadcom, BMC, and IBM with other smaller players across various mainframe disciplines,” explains Stephen Elliot, group vice president at IDC.

“Customers should be able to benefit from the improved focus,” Elliot says, including a more targeted allocation of people, budgets and other resources. “As one company, BMC was spreading a limited R&D budget across too many product needs,” he says.

The divided companies should be able to better accelerate product development in their respective areas without any internal politics around feature prioritization, driving innovation in both the mainframe and distributed businesses at an accelerated pace, Elliot says.

This move could also help with strategic partnerships that perhaps didn’t make sense when the various product divisions were under one company, Elliot says. “It’s critical to note that with two businesses, each business now has the ability to partner with vendors that in the past might have been seen as competitors and off-limits. It opens up some interesting political scenarios,” he says.

BMC also emphasized that the division will benefit customers and partners by sharpening each company’s focus. “Our customers and partners look to us in their transformation journeys to enable business faster than humanly possible. As a strategic partner for ongoing innovation in their mainframe, distributed, cloud, and edge technology needs, the creation of two companies puts them at the core of each company’s mission with deeper specialization and vertical industry focus,” Sayed said in the statement.

“Also, let’s not forget that this now provides KRR with two potential financial exists—and the increased focus enables each business to potentially generate higher growth rates, which in turn drives a higher valuation,” Elliot explains.

Founded in September 1980, BMC Software started as a software developer for IBM mainframe systems and after 10 years expanded its product portfolio to include other systems, such as Windows. In May 2013, BMC announced it was being acquired by a group of major private equity investment groups, and in October 2018, BMC was acquired by KKR, a global investment firm. BMC was first listed as a public company in 1988, but it was then removed in 2013. In 2023, BMC filed confidentially for an IPO.

The transition to two independent software companies is expected to begin in early 2025, BMC said.

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