Progress report: John Bates on the psychology of strategic reinvention

In the latter half of the last decade, application infrastructure vendor Progress Software acquired a gaggle of loosely-related technology vendors. These included service-oriented architecture vendor Actional, UK complex event processing start-up Apama and business process management supplier Savvion.

In 2010, as sales and profit waivered, Progress announced a strategy that would, it claimed, unite these disparate products into a single suite and elevate the company to more than the sum of its parts.

That suite would combine SOA, BPM, CEP and more besides into an information architecture that would allow customers to transact, analyse and respond to data in ‘real time’. Progress called this vision ‘responsive process management’, or RPM.

The strategy did not work. Progress’s financial performance continued to decline, to the growing frustration of investors.

"The plan was a good one," insists Dr John Bates, Progress’s CTO and one of the architects of the RPM strategy. "But to execute it, we became overstretched as a company. We were trying to sell the suite ahead of its time, while still trying to be a BPM player, an integration player, a CEP player.

"Eventually, the investors saw [RPM] as a loss-making enterprise, and we ran out of runway to execute the plan," he says.

In April of this year, Progress announced a strategic reinvention. It is selling off ten ‘non-core’ business lines, including Savvion and Actional, and has adopted a new go-to-market strategy.

Selling a suite, Bates says, put Progress in competition with the likes of IBM and Oracle, with whom most enterprise customers have already reached strategic engagements.

Instead, it is now focusing its efforts on application developers, including ISVs and departmental development shops in the enterprise. "There’s a sweet spot between the enterprise-wide deployments and the grass-roots developers that we think is underservered," says Bates. "So that’s small and medium-sized ISVs, and departmental enterprise deployments."

This, Bates believes, gives Progress a defined, addressable market, something that it lacked in the RPM years, and that close rival TIBCO Software, whose sales rocketed in the same period, did not. "TIBCO has a customer base of integration [specialists], and they could sell their other products into that base."

Progress now wants to attract an application development base with its remaining product lines – development platform OpenEdge, data connectivity platform DataDirect and Apama’s CEP and analytics functions.

These, Bates claims, are ideal for building the kind of location-aware, mobile, real-time analytical applications that are currently in vogue. And next year, these components will all be available as cloud services, managed by Progress itself.

Psychological battle

Repositioning the company so drastically has taken some strong internal leadership, Bates admits.

"We’ve had to evangelise internally to make sure people don’t feel that we’ve failed," he says. "Some of our employees have said, ‘this isn’t for me’, but I’ve told them – we’re not throwing everything we worked on away, we’re just focusing it in a different way.

"Sometimes you just need to give people a cuddle. And sometimes you have to recognise when an employee has reached a point of negativity where it’s never going to work."

For Bates himself, it is the scale of Progress’s ambition that has kept his motivation up during the transition.

"If we’d turned around and said, we’re going to be a low-level cloud development platform, it would not have been the best fit for me," he says. "But instead we’re taking what we learned from RPM, about how business is done in real time, and focusing it on the application development community."

"I’m an entrepreneur, I like to start things and get them going. That’s what excites me, and I think we’ve got a real opportunity here."

Yesterday, Progress reported a revenue decline of 6%, down to $107.2 million, for its most recent financial quarter. Net income fell 36% to $5.8 million, although these exceeded analyst’s expectations.

Bates says that the turnaround will start to deliver financial improvement next year. That, of course, will be key to convincing both the market and the company itself that – this time – Progress is onto a winning strategy.

"Success is what removes negativity," says Bates.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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