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December 8, 2008

Micro Focus buys market rival in $10m deal

UK software house Micro Focus International has made another all-cash acquisition to bulk up its portfolio of "lift and shift" application modernisation toolsets, agreeing to pay some $9.7m (£6.5 million) for Relativity Technologies, a smaller US rival.

By Jason Stamper

The move will further help Micro Focus cement its position in the field of application modernisation software tools.

IT shops of all sizes need such toolsets to help them rationalise their application portfolio, particularly now as they face strong downward pressure on budgets. Many want to take advantage of web services to modernise mainframe Cobol applications and exploit low-cost contemporary platforms, such as Windows, UNIX or Linux. 

The problem they face is enterprise applications tend to become more complex and less understood over time. Documentation gradually loses its relevance, subject matter experts move to other roles, and the pressures of daily maintenance lead to rising complexity.

This impairs management’s ability to develop an application modernisation roadmap that aligns applications with business priorities, and is something products like Relativity’s seek to address.

Relativity’s software collects business and technical metrics about application assets and allows IT executives assemble dashboards of their software portfolio and its performance. They can then start to track where software diverges from business goals, and prioritize their application development activities accordingly. The company claims to have over 400 clients, including various software services companies such as Infosys, Software AG, and Syntel.

Micro Focus has assembled a broad range of application portfolio management tools that provide IT shops with a means of best deciding the cost and the risk of targeted application sets being redeveloped, replaced or retired. 

Back in May, Micro Focus surprised the market and augmented its standing in the Cobol mainframe market with a $75 million deal for NetManage, and that company’s line of midrange system application modernisation tools.

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Its latest takeover is intended to further extend its customer base and geographic reach, once it closes by the end of the year.

The deal will be earnings enhancing come April 2009, Stephen Kelly, CEO of Micro Focus, said. For the fiscal year ended April 2008, Micro Focus has witnessed a 33% growth in its revenues – from $171.6m in 2007 to $228.2m in 2008.

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