Oscar Wilde famously wrote: To lose one parent may be regarded as a misfortune; to lose both looks like carelessness. So Micro Focus losing their CEO on 9 September 2009 immediately following the completion of the acquisition of Borland and Compuware’s Automated Software Quality (ASQ) business was less than ideal, some may think.
Was former CEO Stephen Kelly perhaps not fully behind the purchases? Were there inherent flaws in the strategy? The resulting speculation caused the share price to plummet initially 14% to £3.29, eventually bottoming out at a low of £3.01 in September. The answer it seems is no. Whatever Stephen Kelly’s reasons for leaving, they do not hint at any wider strategic problems. Since the end of September there has been a steady rally with a strong upturn in the value of Micro Focus shares during the course of November to above £4.15. This came on the back of a better than expected fiscal first half performance, attributed in part to the acquired portfolios outperforming their expectations.
So, relieved customers and investors all around? From the latter’s point of view it seems Micro Focus made the right move at the right time. To understand the benefits to the customer, I met up with Micro Focus in November to get a sneak preview of the company’s strategy in bringing together its newly acquired product set.
In May 2009 our briefing report outlined our thoughts on the acquisition and highlighted some of our concerns, including in particular, whether Micro Focus would make the most of the entire Borland portfolio.
Our initial take on what the company is proposing in bringing together its newly enlarged portfolio is positive overall. But there are still some questions that remain unanswered and which the company must act swiftly to address – most notably what it will do with Borland’s modelling facilities that have been languishing in the background with little or no investment.
With Micro Focus’s background in the mainframe market, COBOL continues to offer strong growth opportunities to the company despite (or more likely because of) its 50-year maturity. The mainframe continues to offer unbeatable value and performance for certain types of transaction programming. That said, Application Modernisation remains a fundamental strategic direction and capability for Micro Focus, especially in light of the growing importance and retention of mainframe applications coupled with the need to integrate them with – and make the most of – the latest disruptive technological advances.
Portfolio Management – application and project – along with Software Change and Configuration Management (SCCM) are the core pillars underpinning the company’s enterprise modernisation and management strategy. This is hardly surprising given how the recent acquisitions strengthen Micro Focus’s capabilities in all three areas.
Where we are most reassured is in the company’s integration of the products from the Borland and Compuware ASQ acquisitions. In the case of Borland, there was no doubt that the company had developed a highly compelling message and portfolio around Agile development execution and management, as well as development process improvements through greater intelligence and analytics and quality management and assurance. Micro Focus taking a pragmatic approach to building on top of this solid foundation and moving forward with sensible amalgamations. The overlap that we saw between both Borland’s QA tools and the Compuware ASQ portfolio has been addressed judiciously, opening the way for a better and more targeted focus of the product line going forward.
Looking to the future, not surprisingly, issues such as having the right Cloud strategy and tooling platform for its portfolio are a top line concern and strategic direction for Micro Focus. As applies to everyone with a vested interest in the cloud market, application security and disaster recovery are two clear focal points that they will look to address clearly.
Ultimately there is something to be savoured for both existing and prospective customers, along with some necessary sabre rattling for the competitors. Micro Focus is clearly keen to provide a sense of the new organisation it has become and how all the pieces fit together. As always, the challenge will be to deliver a portfolio where the sum is greater than the whole. What the company demonstrated is that it is wise enough to protect revenue and not alienate customers as it initially focuses on individual solution areas. More importantly they showed the potential of a better and more realistic future for both Borland and Compuware’s ASQ business.
As for its CEO, as we said at the beginning, to lose twice looks like carelessness. Let’s hope Micro Focus takes heed and is as astute in appointing a new CEO.
Tags: Borland, Compuware ASQ, Micro Focus
