Progress Software moves towards united front

Integrating acquired companies is one of the key skills required to run a successful IT company.

Not only do the acquired technologies themselves need to be integrated with existing products, but business models, marketing messages and, of course, people also need to be aligned. IT infrastructure vendor Progress Software has to date taken a maverick approach to this core competency, an approach that echoed the ‘loosely coupled’ ethos of the service-oriented architecture (SOA) software it sells.

Rather than forcing the many companies it has acquired over its 30-year history into one single entity, Progress allowed many of the larger brands – such as enterprise service bus vendor Sonic Software and data integration provider Data Direct – to operate as semi-autonomous divisions, each with their own sales force and marketing effort.

This is an approach to acquisitions that many of the larger IT companies have mirrored, as can be seen in the official title of, for example, ‘EDS – an HP company’. But now Progress is moving away from that defining feature.

“We are asking how we can now leverage all these assets as one Progress,” says Rick Reidy, a 20-year Progress veteran who was appointed CEO in March 2009. “In fact, ‘one Progress’ is our rallying cry right now.”

So why the change of heart? That ‘loosely coupled’ strategy, says Reidy, was appropriate for Progress’s customer base and market channels in the past. But times have changed.

“That was a good strategy then, but it’s not a good strategy for today,” he explains. “Previously, we didn’t have a mature enterprise customer base or a direct enterprise channel. But now we have a large direct enterprise installed base and we have relationships with major corporations throughout the world. Now is the time to start thinking about sales as a unified effort.”

That is one way to justify the change of strategy, but another might be that it simply wasn’t working. Progress Software’s revenue fell 9% to $117 million in the second quarter of the financial year; the previous quarter saw a 1% revenue fall. Of course, these results are set against a backdrop of losses across the industry, but that will provide little comfort to Progress’s investors. Either way, Progress has set about rearranging its sales division around key accounts and regions, not products, and expects to be fully integrated by the end of 2009.

Building ‘one Progress’ also has a technical component, Reidy explains. “We have a whole set of products in the SOA integration space, and in data infrastructure, that clearly have affinity, and we have strategies to make sure they will work together even better in the future,” he says.

“People will be able to install it all together and manage it all together.” But is all this enough to combat a wider challenge facing Progress? As IT budgets are being slashed, enterprisewide infrastructure projects that make no immediate revenue contribution are decidedly unpopular, and this is exactly the kind of project that Progress’s software serves.

Reidy is unfazed, arguing that its tools can be easily be spun as revenue-protecting, mission-critical components. “We have a product called Actional, that we used to sell as an SOA management tool, and we did OK,” he says. “But today that product is rocking, because we’re selling it as business transaction assurance.”  

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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