BDM Takes Commercial Stride with Novell

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BDM International Inc. has taken yet another step in its revenue diversification strategy in announcing last week that it will team up with Novell Inc. to support the just released GroupWise 5 client/ server e-mail system as an Enterprise Consulting Partner. BDM officials say that while they continue to grow the federal business -- the company has already rung up $1 billion in new orders this year, up from approximately $500 million last year -- efforts to build the commercial practice are b

Under the terms of the agreement, BDM will support Novell clients in their migrations to and adoption of GroupWise 5. And even though Novell hopes BDM's strong position in the federal market will translate into new sales, the biggest near-term opportunity lies in upgrading the existing 5 million GroupWise users to the new version, and in the process pushing Novell ahead of its arch competitors -- Microsoft and Lotus -- in the groupware market.

BDM International Inc. has taken yet another step in its revenue diversification strategy in announcing last week that it will team up with Novell Inc. to support the just released GroupWise 5 client/ server e-mail system as an Enterprise Consulting Partner. BDM officials say that while they continue to grow the federal business -- the company has already rung up $1 billion in new orders this year, up from approximately $500 million last year -- efforts to build the commercial practice are being intensified.


"We expect the professional services market associated with GroupWise 5 alone to be worth between $500 million and $1 billion, and we feel that the new features of GroupWise 5 will take us way beyond the 5 million users that are currently installed today," says Bob Wise, vice president of Novell Consulting.

Right now GroupWise is No. 3 behind Microsoft (No. 2 when Exchange and MS-Mail seats are added), and Lotus (No. 1 when Lotus-Notes and cc:Mail seats are added). BDM is looking at the ECP agreement as an opportunity to work with Novell's customers and further develop a presence in the commercial market.

"They are trying to commercialize their revenue base," says Moshe Katri, vice president for New York investment bank Oppenheimer &amp Co. "This is not an exclusive relationship, but it does open the door to doing more business in the commercial sector by allowing them to install, maintain and upgrade Novell's GroupWise customer base," he says.

The deal with Novell is the third in a series of new partnership agreements established to diversify the company further into the commercial market.

This summer the systems integrator announced agreements with BAAN, a Dutch company active in the Enterprise Resource Planning software environment, and SAP, a German software company that specializes in financial management tools. Deals like this, says BDM spokesman Todd Stottlemyer, have contributed to the company's progress in moving away from dependence on government contracts.

"Five years ago we only did $10 million in business with the commercial sector. In 1995 we did $135 million, and we expect 1996 to bring in between $160 million to $180 million in revenues from the commercial sector," he says.

Investment analysts appear to agree. According to Bill Loomis, vice president of Ferris, Baker Watts Inc., a Baltimore-based investment bank, BDM now only brings in 49 percent of its revenues from the federal government. Some 20 percent of its business now comes in through commercial contracts, and the remaining 30 percent comes from business with state, local and international contracts.

According to Loomis, the $1 billion BDM has taken a similar approach to that of $4.2 billion CSC. By pursuing aggressive acquisition and alliance strategies in the commercial environment, CSC has managed to bring the share of U.S. federal government revenues down to 37 percent.


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