BMC Software, Inc.is an American company specializing in Business Service Management (BSM) software. Headquartered in Houston,Texas, BMC develops, markets and sells software used for multiple functions, including IT service management, data center automation,performance management,virtualization lifecycle management and cloud computing management. The name "BMC" is taken from the surnames of its three founders—Scott Boulette, John Moores,and Dan Cloer.

Employing over 6,000, BMC is often credited with pioneering the BSM concept as a way to help better align IT operations with business needs. For 2011, the company recorded an annual revenue of $2.1 billion, making it the #20 largest software company in terms of revenue for that year.
 
History
1980s
During the late 1970s, BMC Software founders Scott Boulette, John Moores, and Dan Cloer began a contract programming partnership. All three had worked at Shell Oil doing computer programming. By 1980, the company was incorporated in the state of Texas and officially became BMC Software. Moores was the company's first CEO. The firm primarily wrote software for IBM mainframe computers, the industry standard at the time. Sometimes BMC wrangled with IBM about issues such as "software tie-in claims."

In 1987, Moores was succeeded by Richard A. Hosley II as CEO and President. In July 1988, BMC was re-incorporated in Delaware and went public with an initial public offering for BMC stock. The first day of trading was August 12, 1988. Since then, the firm has filed quarterly and annual statements with the SEC. Annual stockholder meetings are typically held in Houston during July or August. The stock was originally traded on NASDAQ under the symbol BMCS, then on the New York Stock Exchange with symbol BMC.

BMC programmers received commissions for their designs since the beginning of the firm. As a cost-saving measure from the early days of the company, sales were handled via direct mail and telemarketing. In 1991, BMC placed one-quarter of pretax revenues into the budget for research and development. The employees at the headquarters in Sugar Land, Texas often wore Hawaiian shirts rather than business suits.

1990s
The growing firm needed more space. In 1989, BMC leased property in Sugar Land 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 billionwhile 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.

2000s
During these first years of the new century, BMC spent heavily on research and product development. "In fiscal 2000, 2001 and 2002, research and development spending, net of capitalized amounts, represented 23%, 29% and 37% of total revenues, respectively," according to a 10i.K report filed with the SEC in 2002.
BMC was making alliances and investing in new technologies. In 2000, BMC had reportedly invested with a firm called Interliant, a Purchase, New York provider. which "rented software to corporations over the Internet." The reporter explained: "By using an A.S.P. (application service provider), a business does not have to buy the programs itself, store them on servers and hard drives, or maintain and upgrade them. That allows companies to slash costs in their information technology departments... For monthly subscription fees, A.S.P.'s give businesses access to specific software programs on the Internet. Typically, the applications are used to manage a variety of important business functions, from customer service to supply chain management."

Also in 2000, BMC completed the acquisition of Sylvain Faust Inc.'s assets, products and technology to be integrated into BMC's Distributed Data Management business unit. The company was located in Canada (Hull/Gatineau, Quebec). The assets and management were moved to BMC offices in Houston and Austin, TX.."
In 2001, BMC cooperated with 20 other large companies in an IBM initiative called Project Eliza, described as an effort to "develop computer networks that can largely manage themselves, recognizing faults and repairing them without human handlers."

In 2002, BMC made a deal with Dell computer to manage Dell's systems; "Dell Computer had agreed to manage its systems with BMC's products and resell them", according to an article in the New York Times.

In November 2002, BMC acquired Mountain View, California based Remedy for $350 million. BMC president Bob Beauchamp said "the Remedy buy will take BMC software from managing disparate IT elements to managing business services across an enterprise." He elaborated: "This acquisition will change the landscape of enterprise management for BMC. Our company will move from managing IT components to managing the business itself." Remedy operated as an independent unit within the larger firm.

Before the Remedy Acquisition, BMC had had trouble integrating acquired technology into its tool set, Beauchamp said in a conference call, while Remedy software has been integrating with BMC for years. Remedy had been acquired by Peregrine Systems in 2001, but in 2002, Peregrine filed for bankruptcy, so BMC bought Remedy from the bankrupt Peregrine. In 2002, Remedy had sales of $250 million, with 800 employees, and 6000 customers; it is a wholly owned subsidiary of BMC. The purchase had legal complications; at one point, BMC believed seven former employees of Peregrine might use their knowledge of trade secrets to develop competitive products; there were lawsuits and counterclaims involving this matter.