The Agenda - Fast Change

The first year after the deal took place, Neath says, "Tivoli was basically in denial." Indeed, the company was so worried about preserving its independence that it largely ignored the rest of IBM. John Thompson helped ease the transition by creating an office that screened the flood of concerns and questions that came from employees at both companies. Meanwhile, Tivoli made decisions not according to IBM policy but according to the demands of the market. Thanks to Thompson, people at the smaller company had permission to say no without fear of being "escalated." This decision-making ability made sense early on. "We wanted to preserve and grow Tivoli and to use the things at IBM that made sense," Neath says.

Eventually, though, Tivoli began to let down its guard. Even the most die-hard Tivolians began to recognize that IBM could be useful to an operation that had 1,000 new employees, along with huge new customers from around the world. "We were like [NBA sensation] Kobe Bryant," says McClain. "We went straight from high school to the pros. We had a lot of raw talent, but we had missed four years of college, so we had to learn a lot on the fly."

Like most small software companies, for example, Tivoli had lacked a sophisticated process for testing its software. Its coders far outnumbered its testers; bugs got worked out in the field. Today, using thousands of computers at test labs in Austin, Raleigh, and Rome, Tivoli can simulate the dynamics of customer networks and put new software through realistic test runs.

"As an organization, Tivoli got fast-forwarded about five years," says Todd Praisner. "And some of us weren't prepared for that change. I heard IBM people talk about being a 'mature software company' so much that I wanted to throw them out of my window. But now I realize that they understood what it means to be a billion-dollar software operation."

Praisner didn't expect to stick around after the merger. He didn't see himself joining some "nameless, faceless, corporate tide." After all, back in 1992, he had left a big company, General Dynamics, to work for Tivoli. So why has he stayed? Because, he says, "none of the things that attracted me to Tivoli have changed. We have cool machines and work on cool software, we get all the caffeine that we could possibly consume, we get to walk around in shorts, and we get to work with really smart people."

Deep Purple

As with any merger, of course, some people did leave: IBMers who couldn't fit in with the Tivoli style; Tivolians, including Moss and most of his management team, who missed the raw thrill of working at a startup. But, according to Tivoli, the turnover rate has been remarkably low, hovering at 5%. And of Tivoli's first 236 employees, 203 remain with the company. No wonder that when Bill Foster looks around, he sees purple.

Tivoli's chairman and CEO, Jan Lindelow, is a purple guy. Lindelow, 53, a former engineer in Sweden and a former executive at Asea Brown Boveri, a European engineering giant, appreciates both sides of Tivoli: its culture and speed, and its access to IBM's resources. "I see myself as having two jobs," he says. "One is to lead this company -- to be visionary, to make sure that we are efficient in our execution. The other is to be a bridge to the parent company. I'm proud to be part of the senior IBM management team. I don't make any attempt to hide that."

Today's Tivoli is the fastest-growing segment within IBM's $14 billion software division. Despite its relatively modest size, Tivoli is often mentioned in IBM's quarterly earnings reports. Since its acquisition by IBM, Tivoli itself has acquired three companies of its own. It has also established a global presence: Half of its business is now international. The development process of the combined operation is twice as fast as the same process was at the old IBM, and the software is more polished than it was at the old Tivoli.

Last September, for example, the company released Tivoli Enterprise, its most powerful software package and its "highest-quality" release yet, according to Neath. Tivoli beta-tested the product for eight months, working with 50 of its biggest customers until the software met with their approval. Tivoli's software has to be better, Neath says, because the stakes are now higher. Only a few years ago, when the company passed the 1,000-desktop mark, Tivoli celebrated by tossing Frank Moss into a fountain. Now its software manages hundreds of thousands of desktops -- and Tivoli is counting on Tivoli Enterprise to generate about $1 billion in revenue from customers like Ford, USAA Real Estate Co., Reuters, Wachovia Corp., and AT&T.