Micro Focus revitalised by legacy revival

It is an unsung technology, people are passionate about it and its use is growing all the time. Is this some of kind of new mobile device? Or a new software technique fresh from Silicon Valley?

Not exactly. These are the terms that Mike Gilbert, director of product strategy for Micro Focus, uses to describe Cobol, the programming language that was first specified more than 40 years ago, in 1960, and very shortly after became the de facto standard for programming large computers.

Cobol has been condemned by pundits hundreds of times. It is widely perceived to be both ancient and obsolete and is almost universally viewed as directly or indirectly responsible for both the millennium bug and the impenetrable complexity of so-called legacy computer systems.

Micro Focus CEO Dr Tony Hill is used to hearing such criticisms. He runs the only software company of any significant size in the world entirely dedicated to Cobol. But whereas past Micro Focus CEOs were put on the defensive by such claims, and even attempted to diversify away from this core, Hill is unruffled.

After all, there are 200 billion lines of Cobol in use at present, and this number is growing by some 5% a year. That represents some 10 billion lines of code in 2003 alone – and with Micro Focus dominating the supply of non-mainframe Cobol compilers and development tools, it also represents a very good business opportunity.

So good, in fact, that it revenues grew by one-tenth last year to £115 million and Hill believes that if Micro Focus was public, it would rank in the “top few per cent” in terms of profitability.

That Micro Focus is not public, of course, is all down to its convoluted history in the 1990s.

It began the decade in much the same position it is now, leading the Cobol product market alongside IBM and growing steadily. But it was also public, listed both in London and the US, and as the decade wore on, investors, analysts and eventually the management became worried about its long-term future.

Conventional wisdom suggested that mainframes and Cobol were both dying, with many arguing that after the millennium bug boom had been worked through, a steep decline would swiftly set in.

Eventually, in 1998, Micro Focus bought InterSolv, a US software engineering tool supplier, and became Merant, still listed on both London and Nasdaq.

That was where it all started to go wrong.

Although, says Hill, “there was a genuine attempt to create one company”, the Micro Focus side became peripheral. Merant’s results deteriorated and it blamed Micro Focus. At one conference, its then CEO Gary Greenfield even proclaimed to his customers: “Cobol is dead.”

Hill thought otherwise. Although he joined Merant from the Intersolv side, he persuaded the US venture capital company GoldenGate to buy Micro Focus for a knockdown $60 million in August 2001. It was, he says, “a liberating event”. Gilbert agrees: “When we became independent, a cheer went up in the building.”

The company is now buoyant, expanding and, Hill insists, there is no hedging of bets and no non-Cobol product development work going on at Micro Focus. Nor is there any question of merely milking the maintenance stream: the company is investing one-fifth of its revenue in research and development to exploit a raft of new opportunities.

This is largely because of a rapid shift in sentiment towards preserving, rather than ripping out, legacy systems. This, in turn, is partly due to the IT spending clampdown and partly down to the development of web services technology.

Several suppliers, among them Micro Focus and WRQ, are specialising in making Cobol legacy applications available to other systems as services, using the new web services protocols.

Because of its long-standing expertise in Cobol, Micro Focus has also been able to work at deeper levels of integration. In particular, its Net Express product for developers is bundled with Microsoft’s Visual Studio .Net and its Cobol implementation is one of the languages that now runs natively in Microsoft’s .Net environment.

The ‘new’ Micro Focus now has a clear, three-pronged, strategic mission: to ensure that Cobol is a “first-class citizen” when web services is used to integrate applications; to ensure that Cobol and Java interoperate; and to ensure that XML support is provided.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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