It has taken Ask Computer Systems Inc six months to put the deal together with Electronic Data Systems Corp and Ingres Corp. Ingres has been talking to a number of companies looking for a financially viable package. DEC was merely one of those companies but talks were leaked and became public knowledge, so the Securities & Exchange Commission insisted that a public statement was made – the disclosure of DEC’s intent made the whole deal sound more substantial than it was. In fact, DEC was merely one of the companies with which Ask was discussing putting this deal together. The whole deal began with the return of Sandra Kurtzig in September 1989. She was one of the founders of Ask along with her husband. She quit the company four years earlier complaining of burn-out. The board asked her to return and give Ask a bit of vision. She decided that she was going to make Ask a billion dollar company and put a five-year plan into action. The basic plan is that Ask needs a broader base – in the 1990s, Ms Kurtzig believes, this means getting into the application market and owning some application development tools. Ask was already working with Ingres but knew that Ingres was struggling financially. Ms Kurtzig believes this is because the Ingres product has been outsold and outmarketed by Oracle Corp. Ingres has allowed this to happen because it is a technically-driven company with a management team that lacks the necessary social ambition to pick up the phone and call people like Ken Olsen – if Ms Kurtzig were putting a deal together she would call Olsen, Ingres tried to deal with sales reps, alleges Ask vice-president of Business Development Peter West. Despite Ingres’ shortcomings it was still an expensive company for Ask to buy and Ms Kurtzig knew she required help. Independently of this whole game plan, Electronic Data Systems was busy reorganising itself. It formed strategic business units – one of these being dedicated to manufacturing and distribution. The General Motors Corp subsidiary decided that it wanted one or two strategic products around which to design its system integration offerings. It talked to various potential partners in the manufacturing software business, but finally chose Ask as its partner in this area and looked to cement the partnership by taking an equity stake in Ask. Meanwhile, Ask was looking for a key toolkit to take its manufacturing applications into the 1990s. It talked to Hewlett-Packard and asked it for advice. Hewlett seconded an individual to evaluate tool sets from around the world. Hewlett has been in the manufacturing applications business for a long time, but West claims that long-term it is pulling out of the applications business altogether so it wants to partner companies like EDS and get all its software from third parties. Therefore, the Ask deal facilitates the Hewlett withdrawal from applications, since it provides users of its manufacturing applications with a growth path – Ask will provide that growth path for MM3000 customers. However, West was adamant that this did not mean Ask was taking Hewlett’s installed base, merely that it offered it a smooth upgrade path. So, Hewlett wanted to make a show of its commitment to Ask and to Ingres, since both are offering users a path into the 1990s in software terms when Hewlett withdraws fully from this market. As far as DEC is concerned, it too was a potential partner in this whole deal that began in March. However, an equity model is not so attractive for DEC because it is not in the manufacturing applications business itself. But it is investing in Ingres through product development activities with Ask and will fund the development of specific DEC products. As for Ask itself, this deal takes it from being a niche player into broader market areas. Ingres will be run as a separate company within Ask and the Ingres brand name will be retained. West is clear that Ask needs the involvement of DEC, Hewlett and Electronic Data to help it make a success of developing Ingres for market sectors other than manufacturing.
Long-term guru insigh
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West admits Ask got Ingres for a good price, although it was more than the company wanted to pay – Ask did not want to go above $9 a share. Ingres will make a loss in its – current fiscal first quarter, but that is a reflection of its activities before Ask acquired it. Ingres debt is believed to be around $15m, and West claims the financial difficulties at Ingres are no more than bad management. Ask will cut Ingres expenses by 15% and there will be some job losses – these are more likely to be within the US than Europe, since the European operation is much sounder thanks to Hugh McCartney. West believes this was the right moment to buy Ingres as it had made the optimum research and development investment and is now waiting to recoup that in sales. It is a make or break point for Ingres. As for Ingres founders Stonebraker, Roe and Wong, they have been offered positions on a new Ask Technology Advisory Council to give the company long-term guru insight. – Katy Ring
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