Rational Software has called a halt to its spate of acquisitions which has seen it swallow up eight companies in the past six years. The company’s insatiable appetite for more software has seen it devour companies like Requisite Inc, SQA Inc, SoftLab AB, and Pure Atria Corp. But now the company says: There will be no more acquisitions in the foreseeable future. And this is just as well since the company already appears to be struggling to make sense of all its products. In early 1996 Rational looked like an Ada and C++ language environment player with shares valued at a meagre $8 and little to recommend it. But then Microsoft stepped into the picture, signing an agreement to bundle Rational’s analysis and design tools with its own Visual Basic, Visual C++ and Visual J++. At the same time, Rational paid $23m for Microsoft’s Visual Test – thereby entering the much more dynamic market of software testing tools. The smog seemed to have lifted – and the share price rocketed to an all-time high of $44 in November. Since then the company has bought, bought, and bought again, with the vague goal of being able to help companies to adopt software as an asset. Ask the company which areas it is targeting post-acquisitions and you’d better have a pen handy: requirements management, visual modeling, development environments, testing tools, process and project management, software documentation, software process, and training and consultancy.
Overlaps between products
On the announcement of the Pure Atria acquisition the shares lost nearly $7, leaving them trading at $13. The concern seems to center around exactly how the company is going to integrate all of its products. While Rational admits there are overlaps between some of the acquired companies’ products, it says it will not be selling any off or dropping them. The biggest duplication, according to the company, is between SQA’s LoadTest, Preview from Performance Awareness, and Pure Atria’s Performix. Rational says it will produce a single product from the three – which it is thinking of calling AssetMate. There are other overlaps between its own Summit CM Configuration Manager and Pure Atria’s ClearCase; and its Summit PM Process Manager and Pure Atria’s ClearGuide. In both cases the products will be merged, and are likely to keep the ‘Clear’ names. In other areas Rational is working hard to enable close integration of products via VBA compliant API’s. Before the end of the year the company is hoping to have its flagship Rose visual modeling tool working alongside the Requisite and SQA suites. Rational’s not sure yet if it’s going to port the Requisite and SQA products to the Unix platforms that Rose already supports – if it doesn’t developers on Unix will only be able to use Rose natively. If all this is supposed to amount to a concise and well-measured strategy Rational still seems to have a lot of work to do. The company has made much of the fact that it has confined the fallout of each acquisition to one quarter, and it says it won’t trail red ink when it posts its first quarter figures. It says it’s come out of its buying spree with cash in the bank. But Rational’s newly combined sales force – not to mention its customers – are likely to find it hard to know which product goes where. If it can’t sensibly rationalize its own plethora of tools it may suffer the same fate.
