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August 3, 2009

Changing Lanes

Progress Software’s technologies are used by 60,000 organisations in 140 countries, but still it doesn’t quite capitalise on its strengths. Can a new CEO start a renaissance? Jason Stamper reports.

By Jason Stamper

Every time I have met Progress Software in the last five years, I have asked their executives the same question: can a company the size of Progress successfully support quite so many different brands?

When I asked Jeff Stamen, SVP for corporate strategy that question in 2007, he argued that the company was doing more to bring together the technologies within its OpenEdge 4GL, Sonic Enterprise Service Bus (ESB), Actional SOA management and DataXtend data integration product lines. He said they were putting a variety of these products into a new Enterprise Infrastructure Division that would solve the broader challenges customers were facing in service oriented architecture (SOA).

But the company still didn’t do a lot in the way of marketing that move; as far as customers were concerned there were undoubtedly still at least four, and possibly now five different product lines. Many of Progress’ rivals were already touting the idea of SOA or integration suites at this time.

Of course there are precedents for Progress’ approach in the IT industry. IBM supports Lotus, Tivoli, Rational, WebSphere brands and more besides. But IBM’s vast range of products means it makes sense to have a ‘brand umbrella’ for each.

Is the same really true of Progress Software? I asked that question of Rick Reidy, the firm’s new CEO who took the top job at the end of March. Even if it makes sense to retain those divisions rather than just having product names under a single Progress Software banner, has enough been done to show prospects the potential integration between many of those product lines? “I take your point absolutely,” Reidy told me when I caught up with him last month. “While I was COO I started an initiative I called New Frontier, which was really a rallying call for ‘One Progress’. It is about having a single face to market, and raising the level of awareness of Progress’ capabilities.”

Does Reidy concede that marketing has never been Progress’ strong point? “It could be better, for sure,” he says. “The way I describe it to folks is that 10 years ago, by and large we sold through indirect channels and we didn’t have a diversified product portfolio.” At this time the firm’s bread and butter was its OpenEdge 4GL application development technology.

“But then we started diversifying our product portfolio,” Reidy continues. “At that time we had to go to market through seemingly independent channels like Sonic because we needed to develop some traction for our new technologies, as well as preserve the best things about some of the companies that we did acquire.

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“But now I believe that the time is right to consolidate our go-to-market messaging around the Progress brand. We need to think from the market backwards. Whether a deal starts off as multi-product or not, we need to bring our products together in order to sell more products into tier 1 accounts and to solve their challenges for them and help them become more agile.

“I’ve hired the first chief marketing officer in the company’s entire history, which should tell you something,” Reidy says.

Not to have had a chief marketing officer since the firm was founded in 1981 does indeed say something, especially about Joseph Alsop, who was also CEO until Reidy took the reins.

Progress was founded by several MIT graduates including Alsop, and was originally called Data Language Corp. Its first product, the OpenEdge 4GL (fourth generation language) is still relied on by thousands of ISVs, while the best known application written in that language is MFG Pro from QAD.

The firm was renamed Progress Software in 1987. Fifteen years later it bought eXcelon for $24m, which gave it an XML database which is now part of Sonic Software, and a high performance Object Database, ObjectStore, which is part of the Progress Real Time Division.

A year later it bought DataDirect Technologies, a supplier of data connectivity tools, then Persistence Software and next Apama, a leading complex event processing (CEP) player. In 2006 it bought mainframe data access firm NEON Systems, then Actional for SOA governance. It made a few smaller acquisitions before it bought Xcalia, Mindreef and Iona, all in 2008.

The acquisition of Dublin-based Iona for $162m was one of the firm’s larger buys, and the fact that founder and CEO Joseph Alsop stepped aside just over six months later raised the suspicion in some observers’ minds that the board had not shared his enthusiasm for the purchase.

But not according to Reidy, who argues that his succession into the role had been planned for some time (hear Reidy discuss the timing of Alsop’s departure, as well as more on his vision of ‘One Progress’ and strategy for the firm in a CBR podcast at

Marching on

Either way, Reidy says the Iona buy has if anything exceeded their expectations so far. “We’re all quite happy with the Iona acquisition,” he says. “The [Iona middleware] business generates good cash, and is synergistic with our business. It’s like an Austin Powers ‘Mini Me’: they’re smaller than Progress but they have great products, are cash generative and so on. I’d say it’s been an unmitigated success.
“I’m not saying it’s been easy, because we needed to get it integrated into the fabric of the company, but we have senior Iona executives in senior management positions in Progress, and customers seem quite pleased.”

It’s not the first time that Progress has made an acquisition though, so why is it only now that Reidy thinks the time is right to push the ‘One Progress’ button? “I think until recently we didn’t have something to say,” Reidy explains. “We didn’t feel we had a relevant enough message that would stick. That’s why it was not unusual to meet a customer and find that although they had four of our products, they had never heard of Progress.

“But now we think we have something coherent to say, so we will be doing a campaign called Business Making Progress. You find that people are leveraging several of our products to help make them more agile and minimise complexity. That’s a message that resonates well in this market,” he adds.

So far, Progress is finding the market pretty tough, just like many of its competitors. In its latest quarter ended May 31, revenue was up 1% to $117m on a constant currency basis but down 9% without that adjustment. Software license revenue – a barometer of future maintenance revenue – was down 14%, or 7% adjusted for currency fluctuations. But as Reidy pointed out, the company is cash generative at least – it posted GAAP operating income of $11.5m, or $24.3m if you take out acquisition-related costs.

But Reidy remains optimistic. He tells me that he believes he can get the firm to the $1bn revenue mark within “five plus” years, though he concedes that his vision will need to include a number of acquisitions.

With its mixture of application development, integration, SOA management and other technologies, there’s no reason the firm couldn’t achieve that milestone, if it finally gets its marketing right.

Meanwhile its chief technology officer, Hub Vandervoort, tells me that there are two other markets that may yet become more lucrative for Progress: open source software and cloud computing.

Progress’ Iona acquisition gave it an entry point to the open source space thanks to Iona’s FUSE ESB product. “We had been looking for the right place to enter the OSS space,” Vandervoort says, “and Iona gave us that. We think the hybrid model [some products open source, some not] is really attractive to the market.”

Vandervoort also says the firm is seeing its plethora of OpenEdge ISVs starting to use the 4GL to build Software as a Service (SaaS) applications that reside in ‘the cloud’. “We won’t do cloud computing ourselves but I have Expedia doing 150 million transactions a day using Sonic, and I have Travelocity handling 60 million transactions a day on FUSE,” he says.

Yet after all these years, there is still integration work to be done between those various product lines. “We’ll have Actional interceptors for OpenEdge in Q3 this year,” Vandervoort says.

Still, with Reidy at the helm, it does look as though Progress Software is finally making headway in that vision of becoming ‘One Progress’.

For more on Progress, don’t miss the CBR podcast with Progress Software CEO Rick Reidy, at

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