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Terms were not disclosed but here’s how Dell described its new acquisition:

“Enstratius is available as software-as-a-service or as on-premise software that enables full control from within a customer’s data center, or via a hosted service … and complements the capability Dell recently acquired from Gale Technologies, now Active System Manager (ASM), by providing enhanced multi-cloud management and application configuration capabilities and integrates converged offerings with cloud systems management.”

For the past few years, Dell has plotted a tricky course as it tried to morph from a PC and server vendor to a provider of software, cloud and managed services. Toward that end it has bought companies ranging from Wyse and Boomi to bolster its cloud credibility and Quest Software for its data center management and automation tools. Like its rivals in traditional IT — companies including HP and IBM, Dell faces growing competition for enterprise and webscale workloads from Amazon Web Services. 

Update: As Dell rolled out its going-private game plan, GigaOM’s Derrick Harris counseled it to get serious about buying up real cloud expertise, which it apparently has.

Here’s how GigaOM described Enstratus (the company added the “i” a few months ago) in reporting the company’s $3.5 million Series A funding in 2011:

“EnStratus is similar to the more widely known RightScale service, although enStratus actually supports more clouds. It currently claims support for Amazon Web Services, AT&T Synaptic Storage, Bluelock, Cloud Central, Cloud.com, CloudSigma, EMC Atmos (e emc), Eucalyptus, Google Storage, GoGrid, Nimbula, OpenStack, Rackspace, Terremark, VMware vSphere, VMware vCloud Express and Windows Azure.”

Not surprisingly, George Reese, CTO of Minneapolis-based Enstratius, said Dell and his company align well. Enstratius runs a tight ship and has managed to stake a claim in enterprise cloud management with “just Series A financing,” Reese said via email.

Reese added that Dell:

“Sees cloud management as a key value point in the cloud computing stack. By acquiring us, they acquire established leadership in cloud management aimed at enterprise needs. Customers don’t want a single solution on a single stack, they want a solution that enables them to interact with many different cloud platforms, public and private. The Enstratius acquisition immediately gives Dell leadership in this area over other large technology vendors.”

Dell ownership gives Enstratius more resources to attack that market faster, he added.

At least one Wall Street analyst agreed (Dell is still trading until its restructuring is complete): Wells Fargo’s Maynard Um characterized the Enstratius buy as a good use of cash. In a research note, Um wrote:

“We believe the acquisition signals 1) management remains focused strategically on transforming the company and 2) from an industry perspective, the importance of being agnostic (though we expect tight integration with Dell’s owned-portfolio).”

This news comes just an hour or so after Quest competitor BMC announced plans to take itself private. Which just goes to show, if you don’t like the current IT landscape now, just wait a minute.

This story was updated at 8:47 a.m. PDT with more context about Dell’s cloud strategy  and Wells Fargo comments.

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Dell blazed the trail in February when it announced plans to take itself off the public market. That move, valued at $24.5 billion, was orchestrated by founder and CEO Michael Dell and Silver Lake Partners. Critics said the price undervalued the company which remains a power in PCs and servers, and is navigating a shift into cloud computing. In the mobile space, Alltel was ahead of the trend, taking itself private in 2007, and was  scooped up by Verizon two years later for $5.9 billion.

Citing unnamed sources, Reuters first reported Sunday that a BMC take-out by an investment group comprising Bain Capital and Golden Gate Partners was under discussion. BMC is not a household name for consumers but in business it’s a pretty big deal for enterprise IT and database admins.

BMC brands include Remedy service management software; BladeLogic automated configuration management; and Track-IT  help desk and asset management. These are the kinds of non-glam tools that keep a data center running.  Dell bought Quest Software, probably BMC’s most direct competitor, in deal that was completed in September 2012.

Who’s next?

Industry watchers said whatever happens with this proposed BMC deal, be prepared for more action. “There’s a seismic shift afoot with enterprise software vendors as they  move from traditional pricing and distribution models to OpEx, SaaS and cloud models. This means a financial disruption for many of them, not just BMC Software,” said Dana Gardner, principal analyst with Inter-Arbor Solutions and GigaOM PRO analyst.

To be sure, Dell and BMC are not alone: HP, IBM, Oracle and Microsoft are face withering heat from shareholders who expect the old profitability models to hold up even as the world of computing changes dramatically.  As an example, IBM last month stunned the market by missing on profit and revenue expectations for its first quarter. As Forbes reported:

“Revenues from cloud computing and analytics initiative continued to see growth in Q1. However, its core software business had a lackluster performance in the quarter and revenues were $5.6 billion, flat year-over-year (y-o-y) and up 1% in constant currency.”

Cloud upsets the apple cart

Cloud is the disrupting force here. As more companies evaluate the economics of putting workloads on massive webscale infrastructure —  outside their walls — they will buy far fewer servers and routers themselves. And as more corporate applications are delivered via software-as-a-service models there are fewer huge upfront software licensing deals. Instead payments are spread out across a year or three. There is also pressure on the massive enterprise service and maintenance fees favored by companies like Oracle.

“There’s a bet to be made,” Gardner said. “Does Wall Street understand such transitions, or does it throw the baby out with the bath water?”

It’s unlikely that giants like Oracle, IBM, Microsoft would go private, but never say never to a flock of smaller companies like BMC that may be sick of dealing with Wall Street pressures. For those smaller enterprise software (and hardware) companies, it may make sense to revert to private control and then re-emerge on the public markets when the coast is clear, or at least less rocky.

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Cleveland-based UrbanCode’s software helps automate the production and delivery of new applications in a way IBM said is aligned with its own SmartCloud and Mobile First initiatives. Terms of the deal were not disclosed but the company’s 50 employees will now be part of IBM Software’s Rational group, according to IBM Software director of marketing Randy Newell.

According to IBM’s statement, UrbanCode will work nicely with IBM’s Worklight mobile application development platform:

” … by combining UrbanCode software with the IBM MobileFirst Worklight technology, businesses can now author and deploy an application for any mobile device in hours, versus a previous multi-day timeline. The UrbanCode solution also works with traditional applications including middleware, databases and business intelligence.”

Legacy IT giants like IBM are trying to find ways to strip out overhead of the development process, particularly for mobile and cloud apps, in order to better compete with leaner, more nimbler startups. For example, last August, BMC, which competes with IBM in systems management tools, bought Varalogix to bolster its devops story.

IBM applies devops concepts to the whole software life cycle including planning, development, testing, deployment, monitoring and feedback phases, Newell said. UrbanCode fits into the deployment piece of the cycle , while IBM’s acquisition of Greenhat in January fills in a testing check box and its buyout of Tealeaf in May 2012, figures into the feedback module.

IBM, the 100-year-old IT giant that has managed to stay relevant by changing when needed, is really focusing on cloud and mobile — and the middleware to power those efforts — to such an extent that it is reportedly thinking of selling off its server business to Lenovo.

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The funding round was led by new investor Summit Partners with additional contributions from Grotech Ventures, Intersouth Partners and Boulder Ventures. It brings total funding to date to $45 million.

The company’s software — which monitors the use of IT assets, provides root cause analysis and automates remediation — is available in open-source and commercial versions. Three-quarters of the company’s user base is outside the US, mostly using its open-source version. “Just 20 percent of our commercial user base is international so we need hire there and better support our global partners Accenture and Cisco, which resell us,” Karpovich says.

Zenoss will also fund more research and development to improve the real-time analytics in its software, he said.

As more companies put compute loads outside their firewalls — to Amazon EC2 or other clouds — the need for a unified way to track operations is getting more critical. The CEO of a startup that’s making its name monitoring businesses’ use of Amazon cloud said the prospect of companies like Zenoss and Solar Winds making a concerted push there is what keeps him up at night. He did not want to be quoted by name.

Karpovich had no comment when asked whether Zenoss — which already offers a “Zenpack” to monitor AWS — will bulk up its efforts there,  but did say that Zenoss can “provide visibility” across the spectrum of physical, virtual and cloud resources.

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Traditional systems management companies like BMC and CA are trying to get better at automating and managing the trickier and more dynamic world of cloud computing deployments. Last year BMC bought StreamStep for enterprise application delivery, for example.

At the same time, younger DevOps vendors like OpsCode and Puppet Labs (see disclosure) are striving to provide more enterprise-class support and services. Opscode just announced a new enterprise services group as well as DevOps “solutions” to make it easier for large companies to automate configuration management.

Pushing out single-tier Windows applications is relatively straightforward, but “in real-life data centers, the automated deployment of complex multitier apps means that database updates have to be sent, that app servers must get new business logic and it all has to happen as a single deployment,” said Jody Hunt, DevOps solutions manager for Houston-based BMC. That’s the task that companies like VaraLogix, Nolio and UrbanCode take on.

VaraLogix does not compete with Opscode or Puppet Labs, but can actually work with them, said IDC research VP Mary Johnston Turner.

VaraLogix technology will become part of the new BMC Release Lifecycle Management product.

Disclosure: Puppet Labs is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

 Feature photograph courtesy of Flickr user 401(K) 2012

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Quest makes management software and tools that could help Dell push beyond its PC roots to become a bona fide enterprise services provider — a goal it has pursued with past acquisitions of Force10 Networks, SonicWall and other companies over the past year. Both Quest and its competitor BMC have been the subject of buyout rumors over the years as bigger IT players look to expand their portfolios.

Dell’s earlier acquisitions of storage players EqualLogic and Compellent also filled in important check boxes as Dell keeps pushing beyond its commodity PC roots. There’s good reason for that push: As Dell’s recent earnings showed, there’s precious little margin left in PCs. Dell blamed its bad numbers in part on Apple’s successful iPad franchise. Rampant iPad sales have apparently sucked most of the air out of the PC business.

By bringing Quest’s server and other management tools into the fold, Dell could arm its sales and services personnel with more data center products to sell and implement.  Dell has been trying to position itself as a higher-end services provider — a la rival Hewlett-Packard — since its acquisition three years ago of Perot Systems three years ago. That deal was seen as a response to HP’s buyout of EDS the year before.

Insight Venture Partners bought Quest, of Alisa Viejo, Calif., last March for $2 billion. Dell could not be reached for comment. A Quest representative had no comment.

Whether this deal pans out or not, it seems clear that the M&A binge will continue among large IT vendors wanting to consolidate and expand their footprint in corporate data centers.

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VCs and startups alike have been in the hunt for operational smarts in the enterprise arena of late. That demand likely will keep growing as the big data wave builds. Splunk went public with much ballyhoo a few weeks ago; Greylock portfolio companies Palo Alto Networks and Service-Now are expected to follow in the near future. Sumo Logic, another Greylock-funded company, emerged from stealth mode in January and will take on Splunk in the big data analysis arena. Other Greylock enterprise-oriented companies include SaaS startup Workday, founded by former PeopleSoft CEO Dave Duffield and Hadoop fan favorite Cloudera.

Ittycheria co-founded BladeLogic — a provider of server-and-storage configuration and management tools – in 2001. He led it as CEO and president and sold it to BMC seven years later for $900 million. He stayed on to lead BMC’s $1.4 billion enterprise service management business. He is also a board member for AthenaHealth and AppDynamics, a Greylock-backed company. Before BladeLogic, he co-founded Applica, an early cloud computing company.

Ittycheria will work out of Greylock’s Menlo Park, Calif., office and focus on enterprise-focused cloud-based services and IT infrastructure. Greylock partner Asheem Chandna said Ittycheria’s expertise will be invaluable to the company. In a blog post, Chandna wrote:

“Having founded two companies, Dev understands that building great technology is not enough, and that equal effort needs to go into the design, construction and management of the company’s distribution channel.”

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