CA Expands Cloud Services with $350M Nimsoft Purchase

IT software behemoth CA has acquired yet another company as it moves to provide its emerging enterprise customers and managed-service providers with cloud-computing support. CA acquired Redwood City, Calif.-based Nimsoft, its fourth acquisition in the cloud-computing space, in a cash purchase valued at $350 million, CA announced Wednesday.

Nimsoft, a provider of monitoring systems used in data centers, is the fourth company that CA, formerly Computer Associates, has acquired in the past nine months. CA plans to integrate Nimsoft's assets into its cloud products and solutions business.

The acquisition, expected to close by March 31, will enable CA to tap into Nimsoft's more than 300 managed-service customers such as Hitachi, Barclays Capital, and Amway and its emerging enterprise customers (with revenues between $300 million and $2 billion).

Perfect Marriage or Bad Move

Nimsoft's reporting and monitoring technology has been used in public cloud services such as Google Apps for Business, Amazon Web Services, and Salesforce.com. Its technology has also been used in internal applications and in both physical and virtual server environments.

CA's new acquisition is only one piece to its larger cloud-computing puzzle. CA acquired Cassatt, NetQoS and Oblicore, and last month announced plans to acquire 3Tera.

While Nimsoft attracted a solid customer base, it was having difficulties keeping up with the fast-moving market. Nimsoft hired both engineers and salespeople, but not fast enough, according to CEO Gary Read.

"We were already hiring additional salespeople and engineers as fast as we could, but there is a natural limit to how rapidly you can scale a business without breaking those things that are important to us, customer satisfaction being the top of the list," Read said.

When he was approached by CA, Read said, he was hesitant to begin any talks. That changed once CA told Nimsoft executives that the company was committed to Nimsoft's innovative efforts.

A Different Company

Since announcing the acquisition late Wednesday, Nimsoft has received negative feedback from people who worry that CA will run Nimsoft's products into the ground and that customers will suffer as a result of the acquisition.

"OK, I hear you," Read responded on his official blog. "And you know what, if this were many years ago I would agree with you. Back when I was a sales executive in late 90s, taking customers away from CA was easy because they were not well liked at all."

"But it's 2010 and CA is a different company," Read added. "Nimsoft is a great company and will continue to be great company inside CA."

Read and most of Nimsoft's 120 employees will make the transition to CA.

While CA has been aggressively acquiring cloud-computing companies, it still has its work cut out.

"Now, it isn't all unicorns and rainbows," said Drue Reeves, vice president and research director with the Burton Group. "CA has work to do to integrate these pieces into a product suite and convince customers that heterogeneous cloud management is the way to go and they are still missing a few ingredients because they are absolutely going to experience some competition in the cloud-management arena."