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Integration Watch: A Micro Focus, but what’s the vision?


By Andrew Binstock
June 15, 2009 — 
As many readers discovered last month, part of Compuware’s product line is now property of Micro Focus, an English firm famed for its current dominant COBOL tools. Micro Focus also acquired the remains of what was once Borland. (Previously, CodeGear, the division of Borland that made IDEs—notably C++Builder, JBuilder and Delphi—had been sold to Embarcadero Technologies). The remains, which I’ll discuss in a minute, were what Micro Focus purchased.

The wheeling and dealing had all the feel of a three-team baseball transaction in which the teams acquire and unload players to make a stretch run. And, as in baseball, the nature of the trade showed companies going in different directions in the same area.

Let’s start with Compuware, as it’s the easiest. For a very long time, Compuware has had two sets of product lines: one oriented to mainframes and enterprise back-room operations, and one for Java and .NET developers. The latter products established the company’s name at many IT sites due to their consistent high quality.

But for all this acclaim, Compuware was never able to really establish its line of QA and quality-management products: Optimal Trace, File-AID/CS, QA Director and other tools. In May of last year, the company announced a restructuring of its product offerings, dubbed “Compuware 2.0.” Products that were neither market-leading nor core to its established lines were to be cut free; this sale was part of that process.

Its purchase by Micro Focus is difficult to explain. Micro Focus is exclusively a COBOL and PL/I product vendor. Every tool feeds into that mission. Its acquisition of Borland’s application life-cycle management tools is an attempt to provide a true end-to-end mainframe and enterprise product line.

The problem is that the Borland tool chain consists of many links that don’t interlock very well. They include Caliber (requirements), StarTeam (SCM), Silk (testing) and some project-management tools gathered under the “Team” moniker. Of these, the consensus is that the Silk testing tools, which were acquired from Segue, are the best and the only ones that could truly compete head-to-head with offerings from bigger companies. So, with this in mind, it’s difficult to see why Micro Focus would pay Compuware US$80 million for the tools that directly overlap the strongest part of the Borland suite.

Micro Focus, a paradoxical name for a company that is enterprise-oriented, has made no clear announcement about its plans for the products. While we can expect that a smart or daring master plan lies behind these transactions, the company’s past history is marked by a similar, earlier move that turned out very badly. I am referring to its 1998 acquisition of Intersolv, a company with a respected SCM product and a data integration line of business.

The new company was called Merant. By 2001, the marriage had fallen apart so acrimoniously that the only solution was to split the merged pieces apart. Micro Focus was spun off to be the company it is now; Intersolv’s data integration business was spun off as DataDirect Technologies; and the SCM products were absorbed by Serena Software. The word on the street at the time was that the two parties’ management fought from Day 1 and were never able to work together. Presumably, Micro Focus’ current management has learned something from its recent history. But the proof will be in the pudding.

Micro Focus’ big advantage is that it has easy entry to thousands of large, enterprise sites via its COBOL products. Its challenge is that there is no compelling reason for those sites to adopt the tools that Borland could not turn into profit makers. Presumably, Micro Focus will have to integrate its COBOL and PL/I products with the Borland and Compuware product lines in order to have a compelling story. The question is whether it can do this well and, even more important, whether it can do so quickly. The company borrowed funds to make the pair of acquisitions, so it’s under pressure to make the acquisition pay off soon.

Because Micro Focus had probably reached maximum market penetration with its COBOL and PL/I tools, it had to do something to continue building revenue. Whether spending $155 million for these two purchases is the right thing is hard to tell. Micro Focus now enters a space with considerable competition that is well established, better financed, and in possession of integrated product lines and trained sales people. To come out victorious, it will need great management and more than a little luck.

Andrew Binstock is the principal analyst at Pacific Data Works. Read his blog at binstock.blogspot.com.


Related Search Term(s): Micro Focus


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Comments

06/16/2009 09:10:29 PM EST

Andrew, I have some questions/comments for you: 1) As Microfocus hasn't completed its acquisition of Borland yet (in fact, there's a rival bid at $1.20/share), don't you think it's premature to expect them to communicate a go-forward strategy regarding how they will integrate the Compuware and Borland tools into their business? 2) Are you aware that the primary software that was acquired from Compuware was QADirector, TestPartner, QALoad, and DevPartner? Optimal Trace was a relatively recent acquisition, and File-AID C/S was never more than an occasional add-on to Quality sales, and was not part of the acquisition. 3) Regarding Silk, were you aware that the Compuware tools (particularly in the functional area) were often rated better in several analyst assessments over the past few years (e.g. - Ovum, Forrester, etc)? 4) Did you attempt to contact Microfocus? I'll be honest -- in my opinion, your statements on this topic seem amateurish and uninformed, perhaps relying on out-of-date third party summaries rather than any recent direct research on your part.

United StatesJim


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