BMC to split into two independent organizations

A decision by BMC to split into two independent companies was surprising from a timing perspective, but may have taken place so one unit, or potentially both, could be eventually sold off, Gartner VP Analyst Gregg Siegfried said on Wednesday.

Siegfried was responding to an announcement from the company that it will become two, with BMC remaining the name of one operating unit, while BMC Helix will be the other.

In a Wednesday posting on the BMC web site, company CEO and president Ayman Sayed said the decision to split was made because  “it was determined 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.”

Under the new arrangement, he said, BMC, which is owned by private equity (PE) firm KKR & Co., will include the mainframe software and automation/orchestration business units, while the company created from the digital services and operations management (DSOM) business unit will be called BMC Helix.

Siegfried described the two entities as “very different businesses with different customers, and maybe now the Helix company can be positioned in a way to compete with ServiceNow more directly than when they had the other [mainframe] products weighing them down.”

He said that if the plan for the mainframe unit now known as BMC is to attempt to sell it to a private equity firm, “that’s a piece of business that probably would be easy to sell as self-contained, but for that matter, so could Helix.”

Still to be determined is the product mix of each, as there are offerings such as Control-M, a task automation tool, that he said could fit in either of the new business units.

Siegfried said that, aside from it being funny that there will soon be a product called BMC Helix Helix, which from a marketing perspective is certainly going to be unusual, BMC is “trying to grow that product and trying to compete more seriously with ServiceNow.”

Asked what the customer base might think of the split, he said that when it comes to the new BMC company, “that will survive because their products will be around as long as there is demand for them.”

On the other hand, he said, products such as Helix and TrueSIght, a tool that monitors the health and performance of an IT infrastructure, are “clearly not the cash cows, so to speak” and will no longer have revenue from the mainframe business to prop them up moving forward, so may be at risk.

The possibility could exist, said Siegfried, that BMC already has other PE buyers interested in each unit, but those buyers did not want to acquire both. He added that this theory is “totally a crapshoot on my part and I have no knowledge that will happen.”

Creation of the two organizations, BMC’s Sayed wrote, will “be done in phases, and our goal is to officially start the transition to operate as two organizations in early 2025. Our guiding principle through the process is to ensure business continuity and proceed with the best interests of our customers, partners, and employees.”

Asked if he was surprised by the move, Naveen Chhabra, principal analyst with Forrester, said “not really, but yes. Private equity firms would typically bring multiple products and companies under one umbrella to reduce the business functions’ costs. Splitting the companies into two also indicates a propensity to take on more radical approaches like future investment into the latest tech or something very different.”