BMC Hopes to Turn Agency Heads With On-Time Guarantee

By Lisa Terry, Contributing WriterBMC Software Inc. is hoping its new money-back guarantee pledging on-time deployment of its software will win the attention and business of government agencies and commercial customers.The Houston-based developer is promising its customers a 20 percent rebate on its professional services fees if the company fails to complete the rollout of its systems management software within a mutually agreed-upon time. BMC is offering the guarantee as part of its rapid deployment program, called SureStart. The year-old SureStart provides customers with training and implementation services, as well as the software, on a fixed-cost basis. So far, the guarantee covers only Patrol, an enterprise management and control product line. The company decided to offer the guarantee after noting that a high percentage of its projects were deployed within their time estimates, said Chip Nemesi, vice president of professional services at BMC.While guarantees themselves are not new in network and system management, "BMC is the first to guarantee with teeth, with a penalty if they don't comply," said Ray Paquet, vice president at GartnerGroup, Stamford, Conn. Because software projects of this type have a high failure rate, BMC's guarantee is very significant and could help bring in customers, he said. But the company also must be prepared for the resulting increase in business the guarantee could bring."They may not have the bodies to do all the SureStarts," he said. "That's a nice problem, but it's still a problem."BMC's offer comes at a time when the company is working to recover its stock value. The stock in January fell more than 50 percent from a 52-week high of $86.63 after Max Watson, company chief executive officer, president and chairman, had to rescind a month-earlier assurance that the company would make its third-quarter projections, said Paquet.For the nine months ended Dec. 31, 1999, net revenue rose 35 percent to $1.24 billion, but net earnings fell 45 percent to $144.3 million. Fiscal 2000 results were being announced at press time.The guarantee extends to contracts handled by BMC and its subcontractors, but not to contracts sold by resellers. Nevertheless, the guarantee also benefits BMC's resellers, said company officials."It raises the profile of BMC's confidence in its products," said Keith Million, manager of federal professional services for BMC.Nemesi said another reason the company decided to offer this guarantee, which he called its "biggest advantage over our competitors," is that the software is designed to get into productive use faster. The software is deployed in modules, starting with the most critical applications first, rather than installed over a customer's entire suite of applications in one shot."It's definitely an unusual commitment from a vendor," said Robert Rude, branch chief of the systems management and analysis branch for the Census Bureau."With most vendors you have to take what you get, and if it doesn't install right, especially if it's because of something in your environment, you don't get any consideration," he said.The Census Bureau de-ployed Patrol Console and Agents, Unix and OpenVMX Knowledge Modules and Alarm Manager for its most critical applications under the SureStart program, which enabled it to deploy much faster than if it had to learn and install the application at the same time.While the guarantee would not be a critical factor for the Census Bureau in deciding whether to purchase BMC software, "it's definitely a consideration," Rude said.Other government customers using BMC products include the departments of Defense and Treasury, NASA, the Patent and Trademark Office and the Postal Service.BMC officials contend that the guarantee will be attractive to the department heads and agency directors ? the ones responsible for running the business of government ? who usually initiate the search for the type of systems management applications sold by BMC.The risk of the guarantee to BMC is not as high as it would be for other companies because of BMC's comparatively low price for professional services, said Nemesi. He said BMC's professional services cost only 20 cents to 30 cents for the software dollar, while other developers charge a dollar-plus for these services.