There are few companies that can say they have been around for 35 years, let alone software companies. But Compuware is among that select group, and what’s more, it’s just had another great year, with revenue up by around $200m to $1.23bn, and net income before restructuring charges up by almost $8m to $164.6m.
The firm, which offers a wide range of portfolio management, IT service management and application lifecycle management, has just undergone one of the more dramatic rebranding exercises in the history of IT companies. It’s calling it Compuware 2.0.
With a new tagline for the company, “We make IT rock around the world”, you would be forgiven for thinking the firm thinks it is a new Apple or even Nintendo. The company announced the new positioning with a temporary website – wemakeITrockaroundtheworld.com.
Using rock music as its theme, it compared the founding of Compuware with the birth of Led Zeppelin, and compared its founders, Peter Karmanos, Jr., Thomas Thewes and Allen B. Cutting, with the rock heroes of the Seventies. Somewhat tongue-in-cheek perhaps, but the company is serious enough about the rebranding along rock-god lines that it has incorporated four guitar plectrums into its official logo. That’s not a temporary measure, either.
Although the rocking website that introduced the rebranding has now gone, the allusions to rock music live on at its official site, Compuware.com. “Use our instruments and rock,”; “Why just keep IT rollin’ when it could be rockin’?” and “Colleagues are about to become fans,” are examples of the way that Compuware believes, in the guise of Compuware 2.0, that it can help to turn CIOs into stars.
Stars in their eyes
Of course, the rock and roll theme could be taken as a bit of light-hearted fun, but that would be to underestimate the changes that the firm claims have been going on behind the scenes for some time. Speaking to CBR, the company’s president and COO, Bob Paul – who masterminded much of the transformation – said: “We thought, why not put a ribbon on the package representing all the changes that have gone on inside the organisation?”
Compuware installed Paul as COO back in February. He was formerly president and COO of Compuware Covisint, leading the Covisint division that Compuware bought back in February 2006. Covisint did messaging, portal and web services technology, bringing them together as a collaborative platform for the automotive industry.
When he was appointed as overall COO of Compuware, its CEO Peter Karmanos said: “Bob has the vision, the passion and the leadership skills to ensure Compuware maximizes the performance of its sales and services teams.”
Compuware 2.0 is Paul and the rest of the management team’s strategy to set the company up for coming years. But according to Paul, it’s about far more than a few Led Zeppelin references and guitar plectrums: “We started this process in mid-December, just before the official change in my position,” he says. “Our Q4 was about the transformation of Compuware: we had put the building blocks in place for more consistent quarterly performance and for the year, break-out growth. Compuware 2.0 represents that transformation.”
Paul did not mince his words when describing some of the perceived failings with Compuware 1.0, if you want to call it that. On the wemakeITrockaroundtheworld.com repositioning page, Paul was featured in an interview saying: “We have limited brand equity outside our client base and our corporate identity is frankly none existent.” But. having survived to reach its 35th anniversary this year, and with over 23,000 customers including 80% of the Fortune 500, does it really matter if it’s only well known by its own customers?
Shot in the arm
Paul argues that the company needed a serious shot in the arm: “We have been a $1.2bn company for a number of years,” he says. “We have seen growth in earnings but top-line revenue growth has not really been there. We have this vast portfolio of products but we have not been in the right position to emphasise their value. We diffused the opportunity across too many categories and that diluted the opportunity overall. Now we are looking for break-out growth in a smaller number of category areas.”
So how did the company decide on the areas on which to focus? “We had a dialogue both inside the company and with our customers,” says Paul. We asked, ‘who are we selling to’, ‘what value are we creating’, and ‘what is our position against our competitors?’. Were we a commodity in a certain space or a value leader? Is a particular market saturated? We decided to do fewer things but to do them well and be the best in class; we think that creates a pull in the market versus being a jack of all trades.
“We also needed to get some clarity into the market as to what Compuware does,” says Paul. “I met one technical editor who thought we were a hardware company, that’s how poor our visibility has been in some quarters.”
As for the areas Compuware 2.0 is focusing on, they are probably much as you would expect, unless you have been living on a desert island for the past 10 years and think the company is a hardware firm. “We are the best in the world on IT performance,” says Paul. “We can give you a dashboard looking at IT performance from not only a client/server, but network, application and end user perspective.” Compuware owes much of its capability here to its acquisition of IT governance firm ChangePoint back in April 2004, a company that competed directly with Kintana (bought by Mercury, which was itself bought by HP) and Niku (bought by CA).
“Then in quality and testing,” says Paul, “we have a really strong position in the market, and we are now the gorilla that we have not been in the past, because lots of the traditional competition has been eaten up by companies that are not as focused.” Here Paul is referring to deals such as IBM’s Telelogic buy and HP’s Mercury acquisition.
“Then we have portfolio management,” Paul says, “where we have best in class capability to solve problems. The issue today is that many of these solutions are too generic. It is a growth market but it is not necessarily getting CIOs grabbing their chests in pain and allocating budget to solve it. We will sharpen the edge in our saw there.”
Leader of the pack?
Paul also claims that the company has a leadership position in various mainframe tools categories, which is true. Its Abend-AID mainframe bug-detection and corrective tool was its first product launched back in 1977, and it is said that there are still at least 8,000 copies currently in use. The mainframe association, both via its software and services businesses, is surely the reason that many think of the company as a hardware firm.
But whatever enterprises think of Compuware, wasn’t Paul a little too downbeat when he said during the rebranding exercise that, “Our corporate identity is frankly none existent”? “I know you think I’m down on the company, but I’m not,” he said in response to a CBR blog on his firm’s rebranding exercise (tinyurl.com/6lyvuk). “It’s only because the company is not fully leveraging its position. We need to have more dialogue around value creation with our mainframe customers. We need very specific reference and ROI [return on investment] documents form our reference base to show that we do what we purport to do. We need to be more focused on market share in the categories that we are now going after.”
”Compuware 2.0 is not a campaign, a one-time initiative or a message,” says Paul. “Compuware 2.0 is a rebirth based on the company’s long-time principles and anchored by definable, actionable and measurable objectives.
“’While there is a marketing component to Compuware 2.0, the core of this effort is in approaching the market in a fresh way and delivering quantifiable economic value to our customers,” he says.
Of course, the company is not without competition. IBM, HP, Oracle, CA and BMC are amongst its competitors in various product categories. CA, for example, is equally focused on the IT infrastructure management space, and has just launched a raft of new products in pursuit of this market.
CA announced CA Data Centre Automation Manager and enhancements to nine additional Enterprise IT Management (EITM) and Governance offerings last month, which it claims are designed to help organizations improve the economics of IT and provide greater business value. “Effectively managed IT is central to the success of any organization, especially in today’s challenging economic climate,” said Ajei Gopal, executive vice president of CA’s EITM Group. “CA’s new and enhanced EITM solutions improve the economics of IT for our customers by giving them the flexibility to adapt to rapidly changing economic conditions and the agility to seize new business opportunities.”
According to Compuware’s Paul though, refocusing Compuware will keep it in good shape for the next 35 years. “We had miscellaneous ‘skunkworks’ projects going on, marketing programs that were done on a one-off basis – lots of inefficiencies,” he says. “We needed to create a vision for what the company is doing in fiscal 2009, and that is what Compuware 2.0 is all about.”
Will Paul and CEO Karmanos think about spinning off product lines that are no longer seen as core? “We will support our customers,” says Paul. “To put it obtusely, we are looking at all options. Breaking things apart or spinning them off could be one of those.”
Summing up Compuware 2.0, Paul adds: “We’re creating an environment for optimising IT performance. We are global, cool, innovative. We wanted Compuware 2.0 to highlight the best of where the company has been, with something a little edgy. Right, wrong or indifferent, we want to be noticed. Heck, it got your attention!”
While the launch of Compuware 2.0 should perhaps have happened five years ago, it is not too late for the company to reposition itself. With it being its 35th anniversary it’s chosen a milestone year, too. The company is profitable, growing, and has leadership status in a number of categories. Its problem, historically, has been marketing. Whether the comparisons to Led Zeppelin and use of guitar plectrums in its logo are enough to solve that remains to be seen, but you can’t deny they combine into a bold statement. CBR suspects that it is the internal refocusing more than a change to the logo and tag-line that should put Compuware on a more robust footing as it enters its 36th year. Happy anniversary, and rock on.