Tivoli, which is introducing products to attract small and midsize companies in off-the-shelf and outsourced environments, last month shipped Tivoli IT Director 2.1. The update, which is still aimed at companies with fewer than 1,000 seats and one or two IT staff members, adds support for IBM's AS/400 as a management server and managed system. (Version 2.0 manages Windows, NetWare, and OS/2 clients from an NT server). Tivoli says the application takes up 20% less storage space, and its user interface runs twice as fast as the previous version's. Pricing through year's end will start at a discounted $11,995 for the management server and 120 seats.

Guardian Capital Group Ltd., a Toronto financial-services company with $42.5 million in revenue and two IT managers on staff, installed Tivoli IT Director this year to help ensure customers could reliably view quotes on their mutual funds online. The company also issues fund prices to newspapers via the Web or dial-up connections. "Anything more than an hour of downtime is unacceptable," says Rudy Panigas, Guardian's network analyst.

Time-Saver
Panigas says he chose Tivoli for its ability to monitor a mixed environment of NT, NetWare, and AS/400 servers, and implemented the system within two weeks. The result: Guardian simplified system monitoring. And the $20,000 price tag for about 200 users was easier to justify to management than a large OpenView or Unicenter TNG implementation, he adds.

By all accounts, the market for network-management tools for mid-tier companies is booming. HP, for example, says sales of its OpenView products to companies with three to 25 IT professionals are growing 20% to 30% annually, outpacing revenue growth from enterprise sales. Market-research firm Dataquest estimates worldwide sales of network-management software to companies with $50 million to $1 billion in revenue will reach $2.6 billion this year, compared with $2.2 billion in 1998. By 2002, Dataquest expects that number to reach $5 billion.

Dataquest analyst Stephen Elliot says the small-business and middle market remains underpenetrated because of a historical disconnect between products' price and their perceived value. "These companies probably aren't looking at network management right away, but as they move up the revenue scale they do because they're looking to maintain satisfaction among their end users." Top-tier vendors have also been slow to respond to small customers' needs, analysts say, since they sell through indirect channels.

But aggressive online startups are interested in managing their network correctly from the outset, Elliot says. "Their revenue lifeline is determined by network and application availability," he says. "If they're properly used, these products can help ensure higher availability. When companies get serious about management, they turn to a serious vendor."

Yet perception problems for the major network-management vendors remain. Scott Eggers, director of information systems at Wham-O Inc., a San Francisco toy maker that supplies products to Wal-Mart and other mass merchants, says he manages 100 workstations and eight routers across three locations on an $800 niche application, called InterMapper. "There's a gap in the market," he says. "Unicenter and Tivoli are for huge operations. They are completely cost-ineffective."

For companies wary of large up-front expenditures, outsourcing network management to a service provider or value-added reseller can provide access to enterprise-class tools, remove costs from the balance sheet, and ensure predefined service levels. Frank Picarello, group VP for services at consultant MicroAge Inc., says he sees more revenue opportunity among small and midsize companies managing growth from extranets, E-commerce, and dispersed workers who access the network through Internet service providers and remote-access software.

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