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A Motive For IT Spending
Erika Brown, 08.26.04, 6:00 AM ET

SAN FRANCISCO - It's been a tough recession for tech spending and a tough summer for tech stocks. But a Texas software outfit might give investors a reason to get back in the market.

The U.S. recession was especially brutal for IT departments. Desperate chief financial officers took machetes to their IT corps and tech spending. Yet the demands on networks multiplied as companies hooked in customers, suppliers and partners. As much as 90% of a company's IT budget goes toward managing its spider web of servers, computers and software applications.

The folks at Motive (nasdaq: MOTV - news - people ) think they have found a solution: Let the technology manage itself.

Motive, founded in 1997, helps IT managers keep track of all their various brands and versions of technology equipment and software. Its software can also simplify and automate upgrades as well as detect and fix problems, often before they start.

"Technology management should not be an afterthought," says Scott Harmon, chairman and chief executive of Motive. "Our software is built directly into a product so the systems can be more self managing. Companies don't need to buy expensive tools or hire as many systems administrators."

After passing the $100 million sales mark and achieving consistent profitability, Motive took to the public markets in June. But it was overshadowed by the hype surrounding the initial public offering of Google (nasdaq: GOOG - news - people ), and its shares still hover around the $10 mark. With a price-to-earnings-ratio of 55, Motive's shares are selling at about half the cost of Google's. Motive's Harmon expects to boost revenue by as much as 30% this year, to $120 million from $92 million for 2003.

Harmon just inked a deal with PeopleSoft (nasdaq: PSFT - news - people ), which has agreed to bake Motive's self-management software into its enterprise applications. The deal has not yet been disclosed. Harmon is lending his software to PeopleSoft in exchange for access to PeopleSoft's 13,000 corporate customers. Harmon's hope is that PeopleSoft's customers will get hooked on Motive's software tools and buy more to run the rest of their data centers.

PeopleSoft could win, too: If its customers spend less to manage their existing applications, they'll have more money to buy new products. Harmon says he is working on similar deals with other applications companies. "The complexity of the IT environment has reached a climax," says Dean Alms, vice president of tools and technology at PeopleSoft. "With modeling software, our customers will be able to see all the dimensions of their IT environments and visualize the changes that need to be managed....

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