Almost without being noticed it appears, Gores, the IT holding company with a fondness for acquiring distressed and underachieving technology companies, quietly bought Aonix, the ailing object analysis and design company borne out of the $75m merger of IDE and Thomson Software Products, in January 1999. At the time of the merger back in November 1996, Aonix executives were promising profitability and a pledge of an IPO within 18 months. But that never happened. Sales in fact only fell away, and the multi-billion French conglomerate parent company, Thomson CSF, last year took the decision to offload rather than persist with the software house.
With an estimated $13bn in assets, Gores Technology Group buys and sells companies without purposefully attracting attention to its deal making activities. There are, for example, no references on either company’s web site of this latest Aonix acquisition. The LA and Boulder Colorado-based company says it specializes in identifying and acquiring promising niche market software companies, and providing them with the resources and expertise they require to reach their full potential.
In the past nine years, targets have included the acquisition of significant software divisions of Schlumberger Technologies, Masco, Unisys, and Computer Sciences Corporation. In the last year it sold Information Dimensions, the $20m Dublin, Ohio knowledge management company to Open Text Corporation and bought project management supplier, Artemis Management Systems and Software Productivity Research (SPR), a small software estimation and measurement company that was founded by US software metrics guru, Capers Jones.
Gores claims it will often plow back up to 20% of a target’s revenues into research and development, as it works to refocus a company’s product line to prioritize and fast-track to market those products in the acquired software portfolio that are deemed to hold the most market potential.
The holding company has followed this strategy with Aonix, which has put out a stream of new product releases in the past couple of months. However, there are noises being made among the Aonix user base that while the pace of software releases has improved, the quality of products being put out has in some cases deteriorated. New releases are definitely coming out quicker than they used to, but they may well be coming out too early. Some bugs that we had fixed in earlier versions have reappeared in the new release, one user of the Aonix StP suite told us.
Rob Hadley, VP of marketing at Aonix, accepts that the NT release of StP didn’t meet some users’ expectations but says Aonix products are used extensively for military specification and safety-critical application developments. The fact that products are used by high profile sites such as Boeing and Lockheed should mean the quality of Aonix products is assured. He said some extensive customization and improvements have recently been made to the StP product and that this has undergone a remake as Aonix Lifecycle Desktop. The product is said to provide developers with a process-oriented approach to specific development process mandates such as IEEE 12207 and D0-178B, and can be used alongside some choice third-party software tools.
Under Thomson CSF, Aonix had been allowed to operate with a horizontal approach to the software market, spreading itself thin with a seeming ragbag mix of offerings in the software quality and testing market, the GUI management sector, as well various Ada solutions and 4GL reporting products. Gores has since concentrated the business into two operating divisions of Information Access and Lifecycle Solutions. It has changed the operating style and has consolidated three engineering units into a single site in San Diego. Gores doesn’t micromanage the company. It’s established a direction for Aonix. It’s looked closely at the technology assets and at ways of building value into products, says Hadley.
All commercial software products have a lifecycle and some Aonix products will therefore not be deemed a strategic part of the company’s direction. The TeleUse X-Motif GUI builder, for example, plays in a market that has more or less subsided. On the other hand, the Nomad 4GL has evolved over the years to be extremely efficient at connecting disparate data sources. There may not be a huge amount of mainframe 4GL programming going on today, but there’s a widespread need for tools that help access mainframe data, says Hadley. As a result Aonix has worked at modernizing the offering to produce UltraQuest Reporter for web- enabled S/390 reporting and access to IDMS, Teradata, DB2, IMS, VSAM, QSAM, and Nomad data. However, UltraQuest is less of a 4GL and more of a data access tool with a Java-based graphical wizard to generate reports in a two-tier architecture.
After producing sales for 1997 estimated at $43m, Aonix closed out 1998 with a revenue around $50m. For 1999 the 285 Aonix staff are expected to be able to produce ‘moderate 15% growth,’ that should increase to a 20% growth target for 2000. However, when compared with rivals in the object analysis and design market these revenue targets are pitifully small. The competition has become significantly bigger in the time Aonix has been trading. Between Rational, which closed its fiscal year with revenues of $411.8m, Sterling Software (which has acquired Texas Instruments, Cayenne [Cadre and Bachmann] and Synon) and Computer Associates (which now owns Platinum Software and what was LogicWorks and its market leading ErWin), these three more or less own the object analysis and design sector.
