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On arriving at Borland in November 2005, new CEO Tod Nielsen was keen to stress the company’s “rich history that is synonymous with application development”. Yet one of his first acts, stamping his authority on the business, has been to orchestrate the sell-off its most famous technology, the JBuilder application development tools.

The decision to cast off its development tools has also been accompanied by the $100 million acquisition of software quality testing vendor Segue Software. Nielsen is a man in a hurry to ring the changes at Borland.

The issue of what to do with the well-known but ultimately small-margin integrated development environment (IDE) products has been fermenting ever since shareholder and ex-board member Robert Coates criticised the management team for a lack of direction and lobbied for the divestiture of some product lines. Nielsen has since admitted that the company was “spread too thin”.

“Tod bought into our SDO [software delivery optimisation] strategy but also made some tough decisions, as a new individual is empowered to do,” explains Mike Hulme, Borland’s senior director of product marketing.

This software delivery optimisation strategy will see Borland focus on application lifecycle management (ALM) , a set of technologies that help businesses oversee software projects through from inception to completion. “Too often people do not look at the process of adopting technology,” says Hulme. “They just deploy it and then wait for the problems to hit later.”

The Segue acquisition fills a hole in Borland’s ALM portfolio, by providing the ability to test software quality in every stage of its lifecycle. It compliments the existing change management, IT management and governance, software configuration and requirements management components.

“Segue has re-engineered its products to cover quality assurance tasks spanning all stages of the application lifecycle, in a vision it calls Software Quality Optimisation. Borland, on the other hand, has for some time been repositioning itself and its product offerings under the banner of SDO,” says Ovum analyst Bola Rotibi.

Furthermore, emphasises Hulme, it is the ALM side of the business that is really driving the revenues – and given Borland’s most recent financial results saw revenues fall 14% from the corresponding fourth quarter of 2004, to just $71 million – it needs to focus on the arms of the business that are going to make money. “For ALM we sell at a VP level, for IDE it’s just to individuals so the deals are of a low value or through the channel. Owning both means we have two lines competing for resources, so both suffer.”

But Nielsen will need to find a buyer for the JBuilder and Delphi units – it is unusual to go public with a sale when a buyer has not already been lined up. Hulme says the reason for the announcement was to help define the company’s new values. “The Borland that exists today is primarily an ALM company although the brand as a development company is strong. We can make no stronger statement in favour of our SDO strategy than to spin off the IDE tools. It leaves no room for confusion.”

Borland would have struggled to pitch itself as an independent maker of application review tools while still selling its development tools.