Compuware Shifts Focus: Optimization and Performance In, Quality Out

|
 |  Includes: BORL, CPWR, MCFUF
by: Dana Gardner

Well, okay, maybe that headline is misleading, but the details aren’t.

Detroit-based software giant Compuware (NASDAQ:CPWR) isn’t really dropping the quality of its products, but it is selling off its Quality Solutions product line to help refocus its business on areas where it can compete most effectively.

On Wednesday, Compuware announced an agreement that Micro Focus (OTCPK:MCFUF) would acquire Compuware’s Quality Solutions line, including the products themselves as well as the 330 people in the development, sales, and customer-support teams. The deal is valued at $80 million and expected to close this quarter.

Micro Focus is also buying Borland Software (BORL) for $67 million, placing Micro Focus more powerfully in the applications quality and lifecycle management arena.

Compuware has never been a company that moves fast — but for them, and their customers, that’s been a good thing. For years, Compuware has been a reliable, steady and practical IT partner for governments, mainframe-oriented IT shops, and large organizations.

But this announcement, which Compuware portrays as another step in its “Compuware 2.0 evolution” (read relatively slow-moving corporate transformation process), is expected to allow Compuware to invest resources and energy in what it sees as high-opportunity markets, from application performance and mainframe optimization to IT portfolio management and healthcare collaboration.

Perhaps another way to read this is that while Obama’s stimulus package has the potential to jack up the need for new technologies, modernization of healthcare and other government IT environments, it doesn’t necessarily mean that companies will be spending significantly more on code testing or development tools.

With Micro Focus acquiring Borland (which, after all these years, many of us still have a soft spot in our hearts for... who can ever forget Turbo Pascal, SideKick, or Dave Kelly's Turbo C [that was a great development tool!]). Of course, more recently, Borland had spun off its traditional developer tools group into CodeGear (sold last year to Embarcadero Technologies (EMBT)), and had refocused on open application lifecycle management.

Former Borland CEO Todd Nielsen is now a poobah at VMware (NYSE:VMW).

Micro Focus hopes that by acquiring complementary technologies from Borland and Compuware, it will be able to create a market-leading position in the application testing/automated software quality market. Such a position would work well to broaden Micro Focus’s leadership in the application management and modernization business.

And although this move makes some sense from Compuware’s perspective, don’t kid yourself that quality or good old testing is dead—it isn’t. And even though the next five years will no doubt see a big inflection point between traditional, workstation-oriented development products and processes and cloud-based ones, there are still plenty of applications and organizations that can benefit from solid application quality solutions.

Longer term, however, the real winner in that market will be the company (perhaps Micro Focus?) that’s able to deliver forward-looking (i.e., cloud-oriented) technologies that span these IT needs and deliver practical solutions to increasing software and application quality.

Disclosure: Borland is a sponsor of BriefingsDirect podcasts.

David A. Kelly, president of Upside Research, provided research and editorial assistance to BriefingsDirect on this blog. He can be reached at info@upsideresearch.com.