With mind-boggling and diverse software applications, the chief technology officers at major corporations are understandably overwhelmed. Yet, there are software providers that help manage the complexity, developing technologies called software change management and application lifecycle management.

A leader in the space is SERENA Software (NASDAQ:SRNA). Recently, the company purchased Merant. While Serena focuses on mainframes, Merant has a footprint in the client-server marketplace (also known as distributed systems). Moreover, the combined entity has 15,000 customer sites, with 49 of the Fortune 50.

By being independent, Serena has the opportunity to use best-of-breed technologies from big-time partners, such as Microsoft (NASDAQ:MSFT), Oracle (NASDAQ:ORCL), SAP (NYSE:SAP), and Hewlett-Packard (NYSE:HPQ).

Despite a weak IT environment, Serena has been able to grow its business. This was evident yet again in its latest quarterly earnings report.

Earnings were up 38% from the same period a year ago to $0.24 per share. Revenues increased from $24.4 million to $33.7 million. The company also upped its guidance, forecasting $0.24 to $0.25 a share for the second quarter (Wall Street consensus was for $0.17 per share). Also, during the quarter the company generated an impressive $16.5 million in operating cash flow.

On the earnings news, the stock price of Serena surged 22% to $20.60. Yes, now the company has even more market cap to use for further acquisitions.

Then again, Serena may catch the attention of much bigger companies that want to buy it out. After all, it was IBM (NYSE:IBM) that bought Serena's major competitor, Rational Software, for about $2.1 billion at the end of 2002.

Do you think IBM should consider buying Serena? Give your opinion on our IBM discussion board.

Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements. He does not own shares in any of the stocks mentioned.