The Making of Compuware 2.0

DETROIT—Motown, the birthplace of music legends, knows how to rock. Now the city's largest IT company is showing how it plans to rock the technology world.

Compuware, a 35-year-old software company based here, announced plans May 15 to refocus the company to better serve its enterprise customers and realign its products and services toward a common set of objectives. The company's overall effort to rebrand itself is dubbed Compuware 2.0.

In line with its rebranding and refocusing, Compuware officials selected a new logo for the company—a three-dimensional guitar pick to signify the role Compuware intends to play in "rocking" the IT world.

The new focus of the company will include bits of technology and best practices from the Java and open-source camps, as well as some elements of the Web 2.0 world with collaboration technologies and SAAS (software as a service). However, Compuware is first building on its heritage. Compuware 2.0 is as much about how to bring a viable old-school IT company into the new world while holding onto its core values of customer service as it is about anything else.

The move makes sense for Compuware, said Forrester analyst Carey Schwaber.

"Even though the term '2.0' is kind of 2005 … I do think that this type of spirit of reinvention is necessary if Compuware is to improve its performance," Schwaber said. "The company has always had good products, but its execution in the field has been troubled for a while. I'm glad to see that there has finally been a shakeup at the top. I think that will make it easier for Compuware to explore new ways of being."

To focus on revamping the company, Compuware CEO Peter Karmanos Jr. reached out to Detroit's lifeblood and hired Jason Vines, a veteran of the automotive industry, as senior vice president and chief communications officer. Vines, who has worked at Chrysler, Ford Motor Company and Nissan and who spearheaded the marketing for the hugely successful Chrysler 300 automobile launch, is leading the charge in the Compuware 2.0 branding effort.

The company has become a stalwart in the IT industry, with 6,500 employees, annual revenue of $1.2 billion and a state-of-the-art headquarters officials hope will be a key to the revival of the downtown Detroit area.

Click here to read about how Compuware is mixing agile and open-source development.

When Karmanos created Compuware more than three decades ago, the mainframe was king and Compuware became successful selling mainframe software to enterprises. Today, many of Compuware's original competitors are defunct or part of other entities. Yet, despite its growth into distributed computing and other areas, Compuware continues to fuel enterprises with mainframe solutions, competing against companies such as IBM, CA and BMC Software.

In an earnings call May 15 announcing Compuware's financial results for its fourth quarter and fiscal year ended March 31, Bob Paul, president and chief operating officer of Compuware, said in the quarter, "Mainframe sales led the way, growing 40 percent quarter over quarter and nearly 80 percent year over year. Who said the mainframe is dead?"

In a 12-page e-mail to employees from late March detailing "The Road to 2.0," Paul said rumors that Compuware might abandon its mainframe offerings "couldn't be further from the truth. Why would we do that? We have a vast customer base representing well over $400 million in annual revenue in mainframe markets."

Therein also lies one of the reasons for the Compuware 2.0 effort. "A lot of our long-term mainframe customers didn't know we did distributed computing products, and vice versa," Vines said.

Vines said while nearly all Compuware's customers vouched for the fact that the company's products—including portfolio management, IT service management, development tools, testing and QA (quality assurance) solutions, and mainframe solutions—help make their IT systems better, a few went further to say Compuware's solutions "rock." Thus the "Rock IT" notion was born.

In addition to the growth in mainframe software sales, Paul said Compuware posted 38 percent growth in overall license revenue in the fourth quarter, as well as 49 percent growth in total product commitment, which he called "the truest indicator of our software-related activity in the quarter."

Over the years, Compuware has seen its share of restructurings and changes in focus, such as adding more of an emphasis on distributed computing solutions as opposed to primarily mainframe offerings some years back.

Yet, "on the distributed side, we remain encouraged by the continued success of our key growth-driver solutions," Paul said. "[IT service management solution] Vantage license sales were up 21 percent year over year and 17 percent quarter over quarter. [IT portfolio management offering] Changepoint license sales for the year were up more than 25 percent." Paul said Vantage offers Compuware the most growth potential.

Forrester's Schwaber said she thinks "Compuware has been organized to win very large deals with enterprise IT organizations. While Compuware has some customers that fit that pattern, most of the Compuware customers I run into are dramatically smaller. I think it's time for Compuware to change its go-to-market tactics in recognition of that reality—or else to change its products to make them more appealing in comparison to the product portfolios of vendors like HP, IBM and Microsoft."