Steady Progress

For a company that is a 30-year veteran of the application development market, Progress Software is not afraid to embrace entirely new concepts. By seeking to establish its credentials as the go-to vendor for a service-oriented architecture platform, it is attempting a risky pirouette manoeuvre, one that pits it against some of the heavyweights of the software industry.

Service-oriented architecture (SOA) has been heralded as the key enabler to deliver a flexible, business-responsive IT infrastructure. There is no shortage of vendors “consciously SOA-enabling their products to help customers overcome the perennial IT challenge” of integrating their legacy systems and middleware components into an agile end-to-end application, says Massimo Pezzini, analyst at research group Gartner. (see ‘SOA wars’ for an in-depth analysis)

But the decision to re-invent the company as an SOA platform provider was essential, because that is the way organisations will organise their software, says Jeff Stamen, senior vice president for corporate development and strategy at Progress. “In a world where there is a lot of distributed computing, lots of different products and where business processes are changing all the time, what else can you do?”

“SOA is at a critical point where there is no established leader.”

Jeff Stamen, Progress Software

To achieve this transformation, Progress has gone on a huge acquisition spree. In just under two years, it has bought a number of rival companies in the SOA market, including: event stream vendor Apama; EasyAsk, a natural search language for relational databases; mainframe data access vendor Neon; and Actional, a web services management tools provider.

This last acquisition, in particular, differentiates Progress from other infrastructural application vendors, such as IBM or BEA, who have built SOA platforms around their development tools – Actional remains a product unit of Sonic, Progress’s Enterprise Service Bus (ESB) division, with both products being sold as SOA-specific tools.

This has helped Progress ride a wave of interest within the ESB market. In 2005, the ESB market grew by 160%, according to figures from Gartner – and revenues for the Sonic ESB line increased from $8.7 million in 2004 to $18.5 million in 2005.

So far, the acquisitions have also helped drive revenue growth. In fiscal 2003, total revenue was $309 million; in 2004 this grew by 17.5% to $363 million; and in 2005 it increased a further 12% to $405 million.

Stamen believes that the product sets acquired through this series of acquisitions will help Progress further position itself for “markets like SOA which are about to really explode.” And there is room to grow: “Our view right now is that SOA is at a critical point where there are no established leaders.”

Of course, making acquisitions is the easy part; proving that the combined entities can really deliver more than the sum of its parts is far harder. And the software industry is notorious for the number of acquisitions that have failed.

Stamen remains confident of Progress’s strategy: “We think we are at the right place, at the right time and with the right products,” he adds.

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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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