A reasonable working definition of "Network Management" is: software used within the corporate/enterprise environment which allows the organization to monitor, manage, control, secure and configure complex company networks. Today, such corporate networks may include a complex variety of topologies, protocols and devices distributed across a global enterprise’s operations.

The Network Management market, including the sub-market of “Fault Management”, is projected by Bear Stearns to total $4.5 billion by 2005, growing 13% annually. The key drivers of growth in this space are the increasing complexity of corporate networks and corporate end-user needs, a desire by IT to reduce the total cost of ownership of existing systems, escalating concerns over network security, and general cost-consciousness of IT departments seeking ways of lowering network and downtime costs.

Historically, the Network Management space has been dominated by three large “Framework” or “Systems Management Platform” vendors. These include: IBM/Tivoli, HP/Openview, and CA/Unicenter. Their frameworks generally allow IT professionals to manage network availability through problem detection using statistics, alarms, and single-display mappings. These players are also branching out and acquiring new areas of the market with a broader vision of being the umbrella under which all IT management is done.

Many Fortune 500 companies have bought into the theory behind the framework providers, and have purchased one or more offerings from these vendors, but there is still a considerable amount of cobbling together of point solutions as they pertain to the pain of any given corporation. The simple reason for this is that the network is only as good as its weakest component – so IT professionals generally seek out “best of breed” targeted or deep solutions to fill the gaps that no one framework provider can fill. From a venture investment perspective, iMinds looks to these targeted solutions that take advantage of new technologies or processes, which IT professionals perceive to provide high ROI to existing frameworks. iMinds has focused on areas of growth not sufficiently covered by the large players, as well as disruptive technologies that can unseat the large players in the years to come.

In the mid-late 1990’s, several new arrivals in the market proved that there is still room for innovation in Network Management. These include companies such as Micromuse , Concord Communications, Visual Networks, and SMARTS. We’ll revisit some of these emerging leaders in the context of four key trends that are shaping the future of Network Management:

• the extension of the multi-layer approach to management
• the shift from re-active to pro-active monitoring and control (self-management)
• new technology choices and emerging standards
• the convergence of Network Management, Security, and Storage

Trend #1: Extending the multi-layer approach to management

One starting point is the 7-layer OSI model which depicts seven layers of management with the typical IT environment: Physical, Datalink, Network, Transport, Session, Presentation, and Application. Not surprisingly, early efforts of the “Framework” vendors focused on Layer 3 – the “network”, but the general trend is toward multi-layer management where information from several layers of the model are brought together as part of the solution.

Emerging leaders in the industry are migrating across the OSI model. For example, Concord Communications' eHealth suite provides fault and performance management focused on applications, systems and networks. The company began as a Layer 1 and 2 vendor, but has migrated up the OSI layers into management of network, transport and session.

There is also mental expansion of the OSI model and as Network Management becomes more sophisticated, a pressure for new companies to go beyond the standard OSI stack. While many companies in the Network management space struggle almost schizophrenically to both assimilate and differentiate themselves in the “middle ground of the OSI model, several have differentiated themselves by focusing on the extremes (top and bottom) of the model, thus expanding their focus beyond the traditional OSI thinking.

For example, NetBrowser (www.netbrowser.com), an iMinds Ventures portfolio company, focuses on Facilities (or Environmental) Management – an emerging sub-market of Network Management. Netbrowser’s eGuardian software aggregates data from “sub-physical” (Zero Layer) devices and systems such as environment, power, fire and security – thus pushing the edge south of the OSI model. According to several research studies, as much as 40% of enterprise network downtime can be attributable to outages and downtime at this Zero Layer – thus a solution for solving this problem within enterprises is gaining acceptance in the marketplace.

Conversely, several successful companies are pushing the limits of the Application Level on the “north” side of the OSI model, by looking at aggregated systems or business processes (collections of applications). Mercury Interactive, a leader in the automated software testing market, recently moved into the growing area of Application Performance Management. This growing field is akin to the Network Management space, and future vendors will more closely map these two areas together. Aprisma (a spin-off of NYSE-traded Enterasys) is another example of an emerging company tackling the issue of business processes. Aprisma aggregates data from multiple levels of infrastructure to create “service-level intelligence” – using Aprisma’s Spectrum product enterprises and service organizations to manage critical business processes and tie together the events on the network related to these processes. And, start-up System Management ARTS takes a “holistic” approach to Network management functions utilizing multi-layer architecture, but ties components of the system together to monitor and correct business process issues – such as service delivery (SLAs) and other business processes.

With the growth in application-level management, end-user interaction – driven by emerging visual interfaces, pre-configurable selections and intelligent systems -- will be incorporated into the next wave of Network Management. According to Network Management expert, Scott Clayton, as IT managers improve business processes execution within the enterprise, they seek to optimize the experience of corporate users on the network. Just as human interface designers seek to optimize the end-user Application experience on the desktop, the optimization of the network experience (availability, security, reliability, etc) has also become important to large organizations.

Trend #2: The shift from re-active to proactive management

A discussion on application and process management brings us to a second trend – a shift from reactive to proactive system management. Proactive management is on the minds of visionaries within the network management world, but has not yet fully reached mainstream applications and tools. Currently, several products on the market allow for systems to diagnose and proactively adjust based on findings. These products primarily fall within the “Event Management” and “Correlation” segment of the market.

A number of emerging companies plan to enable proactive business process activity. One company, for example, allows IT to set up rules in advance which will take action on specific combination of event notifications or correlations related to a specific business process. Such applications will allow anytime/anywhere business process execution. Some examples of this are: sales notification of customer credit being approved; shop floor data management, and supply chain execution/management.

The earliest leaders in proactive network management fall into the category of “Server Monitoring.” Examples of this segment of Network Management include NetIQ, BMC and Micromuse.

BMC has been an early leader in proactive network management. BMC’s Patrol product line is described as a “health” monitoring system. It monitors how the applications are behaving (Layer 7) and if a performance attribute threshold is triggered, notification goes to a monitoring platform. BMC's "knowlege module" describes how a specific application interacts with the particular system it resides on.

Micromuse has emerged in recent years as a leader in the area of "fault management", a sister market to network management. Micromuse "Netcool" products track and consolidate alarms and events from thousands of nodes on the network and provide insight into where service "assurance" may be compromised.

Systems that are self-healing (correct themselves without the intervention of a professional) will utilize artificial intelligence in the future. iMinds has assessed several early-stage companies that are focused on "correction management"--the future art of correcting or "healing" network problems automatically and with minor or no intervention of staff. Such "self-healing" capabilities appear to be several years away in the market, but represent state-of-the-art thinking among providers of network management tools. The self-healing trend is evident within Micromuse and variety of new start-ups such as Invoq and MobilLynx that aim to proactively diagnose and take action on network warnings.

The challenge currently facing IT is how fully reactive they want to be. If a network management system proactively attempts to fix a problem but has diagnosed the wrong problem, the entire network can be accidentally altered. So, initial systems are leaving checkpoints and fail-safes for network managers to use in judging the evaluation of the self-healing.

Trend #3: New technologies will shape the next generation of Network Management

There are several technology trends to be aware of in the Network Management space. The focus of the original “framework“ vendors was on Simple Network Management Protocol (SNMP), an application-layer protocol which is part of the TCP/IP protocol suite – and the facilitation and the exchange of management information between network devices. SNMP allows managers to manage network performance, find and resolve network problems and plan for network growth.

Emerging web service protocols promise to make an impact in the area of Network Management. XML (extensible mark-up language) is becoming a standard for data interchange enabling a shift to "multi-layer management”. Using XML, future network management tools will be able to extract data from multiple layers of the OSI model, thus bridging the gap between layers and providing a more complete and end-to-end management system.

Multi-protocol label switching (MPLS) will drive the trend toward improved quality of service (QoS) over the network. MPLS speeds the time to process packets of network instructions and increases performance of the network. This standard has become more prevalent on the minds of IT professionals today as it deals with blending business applications over common networks (e.g., order processing and Web browsing) and handling real-time traffic, such as voice and video, which are becoming more of a challenge to manage over complex networks.

Several start-up companies are looking at a new approach to managing information on the network, called Uniform Resource Management System (URMS). If adopted by the major hardware/equipment makers, URMS might someday become the standard by which IT professionals describe, manipulate and monitor networks. URMS adoption will depend upon all key vendors incorporating its protocol into their hardware and software.

Trend #4: The Convergence of Network Management with Security and Storage Management

Many IT professionals predict a convergence of Network, Security, and Storage management systems and a day when IT can manage these systems together as part of a whole.

There is already a movement among the framework vendors to add new features and modules to their Network Management Suite that tie in security, server, application and storage management. The debate, however, is whether these legacy vendors can “band-aid” new solutions to old. Newly architected systems, such as Micromuse, BMC, and Aprisma may have a better architecture for combing these areas. Ulitmately, the gorillas of the future will attempt to become a one-stop shop for all needs of the IT professional as they pertain to performance – and certainly security and storage play a role in this.

BMC is a great example of this – founded as a data management company, then launching into Enteprise Systems management, and Enterprise Application Management, BMC then went public in the 1990s and recently has created business units for Security Management and Storage Management.

Although there will never be one company that can solve all the needs of the IT/network professional, Systems Integrators (IBM, EDS, Andersen, Accenture) will flourish in years to come as they attempt to create global IT infrastructures that knit together the “best of breed” networking, security, storage and application infrastructure software into an all-encompassing set of modules for managing the major processes within the organization.

Convergence spells future opportunity for investment groups like iMinds. Targeted solutions for network, storage and security will be appealing to the larger “Framework Vendors” (as well as network players like Sun Microsystems, Novell, Microsoft, Cisco, etc.) and the emerging mid-sized players such as Micromuse, BMC, and Concord. These vendors will seek to both ease the burden of growing complexity and improve the experience of using networked services with the overall goal of systems transparency.

With far more trends and considerations on the horizon for Network Management, we at iMinds will be keeping abreast and seeking investment opportunities in this space. To keep abreast yourself, some sources we’ve found helpful are:

• Network Magazine - http://www.networkmagazine.com/
• CIO - http://www.cio.com/
• eWeek – http://www.eweek.com/
• Gartner Group – www.gartner.com
• Aberdeen Group - http://www.aberdeen.com/
• Inforworld CTO - http://www.infoworld.com/cto/t_index.html