In a bid to grow its systems management division, Computer Associates International Inc. is buying an IT management and governance software company for approximately US$350 million in an all-cash transaction.

The deal for Niku Corp., which is expected to close in three months, builds on CA’s initial partnership with the Silicon Valley-based company in January in which CA agreed to resell and service Niku’s flagship product line, Clarity IT management and governance (IT-MG). Since then, 350 CA sales personnel have been trained on Niku’s Clarity solutions and the two companies have participated in joint marketing efforts and closed their first joint deal with the Commonwealth of Massachusetts.

The agreement extends the value of CA’s existing systems management offerings, said company chief operating officer Jeff Clarke, particularly for CA’s business services optimization (BSO) unit, which Niku will become part of once the acquisition closes. The unit will be headed by CA’s senior vice-president and general manager Jacob Lamm.

“We’re excited about the business opportunities associated with this transaction,” said Clarke in a teleconference Thursday. “This is a targeted acquisition in a high-growth area of software that strengthens and broadens our 1.5 billion dollar Unicenter business and our general competitive position in systems management.”

The BSO unit, which is comprised of lifecycle systems management technologies in the areas of business process outsourcing (BPO), IT governance, service management, IT asset management and enterprise change management, enables enterprises to align their IT investments with business objectives, control IT costs, deliver IT as a service and meet compliance requirements, according to CA.

Niku president and CEO Joshua Pickus, who will join CA as senior vice-president of BSO, said Niku sees a huge market opportunity for its Clarity product in IT management and governance and increasingly in new product development.

“We believe that the fastest and best way to take advantage of that new market opportunity is with the backing and support of top five software company,” said Pickus. “In order to achieve this we first struck a strategic partnership with CA. This partnership is off to a great start and has already shown fast returns both commercially and in the fit between those of us at Niku and those of us in the team at CA. We decided to take next logical step of becoming part of CA.”

CA’s agreement to resell Niku’s Clarity is a step towards integrated IT management (IIM), paralleling similar moves by IBM, which acquired Systemcorp and Compuware (which itself acquired ChangePoint), according to a February Forrester Research Inc. report. Forrester defines IIM as a “dashboard-level” view of IT management data based on project portfolio management (PPM), in which Niku is a prominent vendor, application portfolio management (APM) and enterprise infrastructure management (EIM).

Niku’s revenues grew 45 per cent in last fiscal year to more than US$66 million and the company has been profitable for the last 11 consecutive quarters, according to CA. The company brings 400 customers and nearly 400,000 users at companies such as HSBC and Unilever. Through the acquisition, CA will add 290 Niku employees and several patents.

“To ensure as much continuity as possible Niku will operate as much as it does today once the acquisition is completed,” said Clarke. “As we work to integrate the sales functions first and longer term the development functions.”

Clarke said CIOs currently lack solutions that link infrastructure and people.

“This link is critical to giving CIOs a complete picture of IT to help them track project staffing costs and schedules of every initiative and related IT infrastructure costs and dependencies,” he said. “Niku’s Clarity IT management and governance solution is an integrated suite that helps provide that link. It gives an IT executive comprehensive, real-time views into their organization portfolio of IT investment.”

Similarly, Pickus said Niku endorses and applauds the BSO unit and looks forward to take a complete product to market.

“This acquisition will allow us to further our mission of helping our customers maximize their return on critical investment, to accelerate the delivery of enhanced offerings to our customers and to more quickly meet the growing demand for our joint solutions,” he said.

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