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October 19, 2012

We were holding serve, not attacking: Q&A with Jay Bhatt, Progress Software CEO

Jason Stamper sits down with the president and CEO of Progress Software, Jay Bhatt, who recently announced a major restructuring at the firm

By Jason Stamper

Jay Bhatt, Progress Software

Progress Software had been offering a broad range of application development, deployment, integration and management tools as well as business process management and events processing, until incoming CEO Jay Bhatt announced the firm would sell off 10 non-core products and in so doing lose up to 15% of its staff.

Its new focus? The OpenEdge business, which mostly targets independent software vendors (ISVs), and which it says is perfect as a Platform as a Service (PaaS). Here, Bhatt discusses the decision.

Prior to restructuring, Progress was peddling business process management as a key part of its offering, having bought [BPM firm] Savvion for $49m. Why is BPM no longer core?
I still believe in BPM, that people will want to use BPM-style development. But I had to look at the business. Just because there is some synergy between OpenEdge and BPM doesn’t mean we have the resources to build a business around it. If it’s not part of the core, it’s very hard to win.

Was the board already suggesting that the firm needed quite a dramatic turnaround when you came in as CEO?
Well, the board doesn’t operate the business. But they said we do have a problem – we’re not generating the shareholder returns we should have been with our great products. We were holding serve, not attacking. But I tried not to let anything influence my own analysis. You can’t have multiple missions, it’s too distracting. We were chasing too many different business models.

The central focus on PaaS that you’ve described kind of takes Progress back to its application development roots?
We shouldn’t fight against our core DNA; we should be proud of it. And our 4GL has evolved dramatically and we haven’t really told that story. There was also a shocking lack of investment in go-to-market.

Take a company like Autodesk [where Bhatt was formerly SVP]. They’ve stopped developing on-premise; now they do their development online. We have a pure-play horizontal platform for the cloud.

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We’ve already built in things like multi-tenancy so our ISV customers can deliver Software as a Service. But we need to go even further, so we’ll be doing things like adding more [programming] language support and having more capable data analytics.

You are also hanging on to the Apama complex event processing (CEP) technology, as well as the DataDirect data integration suite. What’s the thinking there?
DataDirect and Apama give us an excellent analytical framework. If we can integrate that into our platform it gives customers cloud analytics. It’s not fully baked yet, we’re getting there. Taking the concept of CEP and baking it into the platform will enable an application to know and respond to events.

With DataDirect the single biggest challenge [building applications] is the need to integrate lots of data streams. If we put that in the platform, with links to most ISVs and every database, it means not having to worry about all those point-to-point integrations. We have the Bentley of integration tools. It’s largely on-premise today, but we’ll move that to the cloud.

When will we start to see some of the integrations?
Early next year you’ll see more analytics and more languages. We can’t do them all so we’ll do those our customers say they have to have, whether that’s Ruby, HTML 5 or whatever.

And by when will those non-core products be sold?
I’d say 12 to 18 months. We’ve already sold one [it sold FuseSource to Red Hat]. We’re thrilled by the interest we have had so far. But we had a bunch of products that were extremely unprofitable. We needed to shrink to grow.

How is morale holding up?
It’s holding up. People connected to the core business are very excited. Then, of course, there are a whole group of people connected to the divestitures who have some trepidation. We just have to communicate as best we can and balance that.

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