Borland Focuses on ALM with Acquisition, Divestiture

By eweek  |  Posted 2006-02-08

Borland Focuses on ALM with Acquisition, Divestiture

Borland Software on Feb. 8 announced both its acquisition of Segue Software and its divestiture of its integrated development environment tools business that has been synonymous with the Borland name since the companys inception. Tod Nielsen, the companys CEO of three months, and Rick Jackson, Borlands chief marketing officer and senior vice president of R&D, discussed the moves with eWEEK Senior Editor Darryl K. Taft.

Click here to read more about Borlands decision to divest its IDE tools business.

What is the bottom line of your news? How did you get to this?

One missing piece weve had in our owning of the application lifecycle has been in the quality arena. So were announcing that were acquiring Segue Software.

They have great products in the quality space. We talk about software delivery optimization; they talk about software quality optimization.

Borland had embraced Segues products as a partner.

In addition, were announcing were going to divest of our IDE businesses. So our Delphi, C++ and JBuilder businesses, were going to divest them. Those are still super-important businesses, and we think this will be a good thing for that product line and those customers because well make sure they get put in the hands of an owner that will be able to invest in and focus on them, and focus on that go-to-market model. Because right now when you think about the go-to-market for software developer channel and open source and all that versus the enterprise IT application lifecycle management … it induces too much complexity into the overall Borland progress. And for me to have a growing business that can deliver the kinds of returns that my shareholders expect, I need to focus and get that top-line growth.

Read more here about Nielsens plans to put Borland back on top.

We think that software development tools are important, but theyve been almost commoditized.

Just as weve become the multivendor platform player as far as supporting .Net and Java, on the tools side we need to support open source, we need to support JBuilder, we need to support what have you, because much like in software, how the API stack kind of moves up over time, in software development, in order to really innovate we need to move the API stack up to the whole software developer life cycle, and the IDE piece is simply a component of that overall offering.

Jackson: If you look at how our ALM business is evolving and maturing, you can see that really ALM is about the life-cycle processes. And when we talked to our customers they said what they needed from us to invest in and advance was really independent of platform, the language, therefore the IDE, and how do they manage everything throughout the life cycle.

So its that concept thats in our SDO business, which is how do you help it [software development] become a managed business process, and thats where we said we have to turn our heat there. Because all of our largest customers are pushing us on that angle, and our feeling is we think there are things we can still do in the IDE world. But its hard when every time you turn around you have EDS, Verizon, Kaiser, Pepsi, etc., saying, "No, no no, we need you to put heat over here." So we keep doing that.

And the IDE business is not going to create the next wave of innovation in ALM. Its still got opportunity for developer productivity, for merging of open-source assets with JBuilder assets, for example. But were in a position where were going to rob Peter to pay Paul. We feel like were at that point where we have to decide.

Nielsen: And we needed to get a win-win for both.

And the other thing is I think we have an opportunity because if you look at the competitive landscape, nobody else is really "incented" to innovate in the pre-deployment side. IBM, Microsoft, Oracle, BEA—all of them are focused on runtimes and say well just give the tools away. Were in a unique position where we can almost rekindle our role as software innovator in the industry.

Next Page: Targeting a new customer view.


This targets a completely different customer view.

Right. I had a meeting with a significant customer to tell [him] whats going on. His response was great: "I want you guys to continue to focus up and focus on owning the boardroom. I dont want to hear about features. I dont want you in the weeds, I want you up solving the problems so that from the boardroom I can see whats going on in my software development investments."

And we hear that over and over again—maybe in different articulations, but the same message from our core customers.

Jackson: Our hope is that as we identify the new owner for the IDE business that we will establish an immediate partnership with them and as we are designing our ALM technology, our whole design goal is that you should be able to take an IDE of choice and plug it into the environment so that as developer[s are] working, they are getting access to the other assets that support the life cycle, and all of their actions are going into the data capture system.

So we believe that well continue to work with our JBuilder customers and the Pelaton customers.

So somebodys taking all the IDE stuff?

The announcement were making is weve had some inquires from third parties who have said they are interested in buying this business. And weve always said, "No thanks." Now were saying it is our intent to divest from this business. We dont have the buyer picked yet, but the commitment were making to our community is were going to make sure that it goes into a world that you will be taken care of and invested in. Fly, be free, is sort of the thing I say.

So will it necessarily be one vendor to take all the products?

The assumption is it will be because theres so much synergy between those communities that I cant imagine it being multiple vendors. And the interest thats come to us has been along the lines of a single company.

Was this move necessary because you were bleeding so badly from the IDE business that you had to get rid of it?

No, its not a matter of bleeding, its a matter of focus. For instance, in marketing, Rick wears one hat that says Im focused on the enterprise. The other hat is I have a channel-based business where Im slinging boxes and making things happen. Im doing two completely different things and I have two different organizations. And its almost like Borland was becoming two companies. And were not big enough to be two companies; we need to be one focused company.

Its absolutely a healthy, vibrant business. We just had to make a choice.

What kind of impact do you think this move will have on Borlands mindshare with developers? Borland has always had a big community following.

If you look at the Borland I used to think of prior to coming here that was certainly a core contingent and focus. But if you think about it, the most common statement when you talk to people about Borland is: "Gosh, Borland. What have you been doing the last 10 years?"

So when I got here and spent time with customers I found out that theres a core set of customers who identify us with ALM, and then theres our Delphi and JBuilder folks, [who] had us in another bucket.

So our hope is that well develop some clarity that hey, were hanging onto our developer roots and were expanding it. Much like Microsoft evolved from DOS to Windows, were evolving from IDEs to the full software development process.

Well, theres still that mindset out there that Borland is an IDE company.

Absolutely. But the interesting thing is that community is vibrant and contained, but its not growing. And its very loyal.

Next Page: Differentiating from Rational and Microsoft.


Well, you say youre innovating, but I guess I dont see you guys doing anything different than say Rational. It looks like youre becoming a Rational.

Irrational? [Laughter] My experience has been that when we talk to customers that have chosen us, they say we are head and shoulders above what Rational is trying to do. Rational is trying to say, "How can we either use Global Services or drive our middleware?" Thats where their focus is. Their focus isnt about whats the core development process and how to address that issue. We believe were uniquely positioned and solve our customers problems.

Jackson: You have to look at Rational pre-IBM and Rational since the acquisition. Rational pre-IBM I think had a lot of strong vision about what needed to be done. And then post-IBM the focus got changed toward WebSphere and their middleware stack and away from some of the key things they were trying to tackle.

So in a lot of areas weve had a lot of overlap in our product portfolio around ALM with Rational, but where were now trying to drive those and take those is much more focused than what Rational is doing with their products. Weve had a pretty good streak of hiring Rational people. … Were bringing back the innovation mojo into this company. Its there, its just been latent and we havent allowed it to surface.

What can you do that is so much different than IBM or Microsoft?

Jackson: Well, were not thinking about things in terms of tools or integrated tools anymore. The biggest challenge I have across R&D is its not about taking my tool and integrating [it] with another tool. Its about understanding what is the best practice for this process as it spans an entire organization. And then how would you best implement that process if you could have the technology you wanted.

And what were finding is, that because of the way this market developed from a product point of view …, certain tasks are automated through the products. But anybody who has a task that spans a product, or anybody who needs to know whats going on in the bigger picture; its that management layer that is completely focused on manual methods.

So we have to think about not just the implementation of the practitioner tool and how information is integrated from other tools, but how do you create a management layer above that?

And in Segue were not just buying a company that has testing assets. The thing that were impressed with in Segue is theyre building a testing management layer and theyre tying that back to other parts of the life-cycle process.

What type of relationship do you expect to have with IDE providers?

We expect to have positive relationships with IDE vendors. For instance, Microsoft we have a good relationship with because we integrate with Visual Studio and do things to help .Net. Well make sure we reach out to them and to everybody else.

Next Page: Drawing inspiration from Apple.


Well, I guess you proved everybody wrong: The word was that your job was to come in and prep the company for sale.

There is a real opportunity here for us to change the software world again and get back to the role that Borland once had as far as being a software innovator. And Im doing everything I can to get us back to do that. Everyday I drive to work, I drive by Apple because theyre just across the street. And I think about how they went through the heyday and then they went through the valley of the shadow of death, and now theyre back. And its an inspiration to say we can do that.

Sure, there are some comparisons, but thats maybe not the best analogy because what brought Apple back was new and sexy stuff, and requirements management is kind of stodgy.

Well, it depends on your perspective. Transforming software development is sexy. Its the one untapped area of IT. Its tackling the weakest link. Thats sexy. Now if you want to say how we do it with specific features, OK …

Right, like process.

Yeah, process is not really sexy, but the interesting thing is as an industry we hold up the spend-the-night-under-your-desk, pizza-eating guys as heroes, but businesses cant achieve success that way. What thats done is caused them to be over budget and unpredictable. Were turning it into a managed business process. And the CIOs we meet with, when we show them what we can do for them—its as sexy as the iPod is to any teenager.

What kind of hit to headcount do you anticipate?

Well, part of it depends on how much the [company that buys the IDE business] decides they want. Do they just want the engineers, or do they want the engineers and some of the channel sales people, etc. A lot of its going to depend on who the suitor is and how much of the IDE business they want.

But the absolute commitment were making to our customers is that their products ecosystem continues and thrives.

These moves indicate youve certainly had a busy early tenure here at Borland. How have things been otherwise?

Ive been here for 75 days and one of the things I did early on is I set up 100 one-on-ones with various people in the company to find out what was going on. And one of the things that I found was the core management team before I got here spent a lot of time laying the groundwork for what Borland needs to do. And in addition to spending time with employees, I spent time with customers. And whenever I talked to customers they said the weakest link in every IT organization is the dysfunctional software development process. No ones really solved that.

And weve been focusing on application lifecycle management. One of the things I got from employees is we need some focus and clarity as far as what do we want to be when we grow up.

When you look at the 24-year history of Borland, the core history has all been about software development. When Philippe [Kahn, Borlands founder] did his little thing where he expanded to try to take on Microsoft and get into business apps, he failed. Then you look at what Del Yocam tried to do with Inprise and said were not going to be software development, were going to be runtime. He left the heritage and failed.

So were making it very clear to our employees, customers, partners and the world that we are serious in this application lifecycle space.

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