Micro Focus Buys Borland And Compuware Division

The UK’s Micro Focus has bought Borland and part of Compuware, to give it more strength in software testing and application lifecycle management – for a total cost of $155 million.

The company is spending $75 million on Borland and $80 million on Compuware’s Quality Solutions product line, in a move which Stephen Kelly, chief executive of Micro Focus described as a “very logical progression”.

“I do think this is a time where the strong get stronger and, sadly, the weak will wither on the vine,” Kelly said. “So it’s an opportunity for us, having had three years together where we’ve doubled the revenues of the company and actually increased profits by about 3.5 times—a very solid foundation for Micro Focus to go to the next scale and to actually assimilate some great assets and really become a leading vendor in the marketplace for testing as well as the core application modernisation and management.” Micro Focus’s testing products already make around $2 billion a year.

Founded in 1983, Borland has been a leading vendor of ALM solutions, providing the flexibility to manage, measure and improve the software delivery process.

The Compuware unit acquisition includes development, sales and customer support teams, as well as specific technologies. The $80 million transaction is expected to close in the second quarter and will impact about 330 employees.

“This move is another step in the Compuware 2.0 evolution announced last fiscal year,” said Bob Paul, president and chief operating officer at Compuware, in a statement. “It will allow Compuware to dedicate more investments and management focus to core categories where we can be best in the world. This transaction will result in more differentiated value for our customers and better bottom-line results for our shareholders and employees. Micro Focus will continue to provide the superior level of support that our Quality Solutions customers deserve.”

Added Paul: “Our industry is at a strategic inflection point with the challenge of application performance. Poorly performing applications make companies less responsive, less competitive and less productive. New, disruptive technologies like Web Services, virtualization and cloud computing only increase the difficulty of getting applications to deliver value back to the business. By sharpening our focus, Compuware will provide customers with the most comprehensive, proven and scalable solutions for ensuring applications work well and deliver value, regardless of the technology or applications used.”

According to a Micro Focus backgrounder:

“The acquisition of Compuware’s testing and ASQ Business is an opportunity to establish a significant presence in this fragmented market, which fits closely with Micro Focus’ existing application management and modernization offering. Micro Focus already operates in the ASQ market through its Data Express product.”

Regarding Micro Focus’ Borland acquisition, Bola Rotibi, a principal analyst with Macehiter Ward-Dutton, told eWEEK:

“Micro Focus is a bit of a left field surprise seeing as many—myself included—might have thought an acquisition of Borland by Oracle might have been more in line with the latter’s supposed desires to cement a more credible role in the ALM market. Borland’s acquisition has been in the cards for some time, certainly for the last couple of years and even more so with the sale of its tools division CodeGear to Embarcadero last year and its poor share price. That said, the company has got some good tools, particularly with respect to the Borland Management Services platform and the focus on applying greater analytics and obtaining better intelligence and metrics from the development lifecycle process. The embrace of agile development and delivery processes is also a worthy note that has seen operational costs looking fairly lean. So in this respect, Micro Focus has got a reasonably good purchase with very little overlap of their own tool set and a lot to complement their strategy and direction for application modernisation.”

The Compuware purchase, on the one hand, “is a good purchase, since once again the tools are strong in capability,” Rotibi said. “However, the overlap between the testing and quality management solutions that Micro Focus is acquiring from Compuware and those that it is getting from Borland [Segue’s SilkTest] will certainly take some sorting out going forward, although it is not inconceivable to keep both brands going. What it does suggest, however, is that testing and quality management is a major strategic direction for the company. Clearly, Micro Focus is not leaving anything to chance by buying up two strong tool sets—complete with their development and support structures and customers.”

Jeffrey Hammond, a principal analyst with Forrester Research, said: “It is an unexpected move on the part of Micro Focus, but it certainly establishes immediate credibility for them as an ALM player. They will need to stabilize their newly inherited customer base and make some investments in the technology stacks to bring them up to par with other recently introduced products from competitors like Microsoft, Serena, HP and IBM, but it certainly helps that they have a well-established set of existing developer products and a healthy revenue stream that will give them time to stabilize the products they’ve just taken on.”

And Thomas Murphy, an analyst with Gartner, said the acquisitions “make Micro Focus the No. 2 player by revenue in testing, and it initially is a good thing in that it is a more stable company, they understand the market, etc.”

However, Murphy said he is not sure if Micro Focus will keep “both testing tools going moving forward. In many ways, I don’t see how it fits any known strategy from Micro Focus to become a serious ALM player.”