Monday, September 7, 2009

Pour the Chardonnay …

It’s been some time since I was last in Sydney and I really do miss the place. For nearly two decades I have been “commuting” between Sydney and America – often several times a year. After working in the U.S. I returned to Sydney at the end of ’87 so that I could join Tandem Computers in Cupertino. I had been living in North Carolina but U.S. visa rules required me to return to Sydney, work for Tandem Computers (Australia) for one year, and then reapply for a new U.S. visa. The picture I have included here is of Sydney's famous Manly Beach!

All up, not a bad deal as it gave me the chance to convince local Tandem Computers management to create a Tandem User Group in Australia – a community that was launched in 1989. I came up with the name OzTUG and it gained enough traction with the community that it remains active as an organization to this day. In early ’89 I returned to the U.S. and while I waited for the visa, I commuted between Sydney and Cupertino. In all, twelve return trips, as well as the final one-way relocation trip before Christmas, ’89 that gave me 25 Pacific Crossings for the year.

OzTUG flourished in the ‘90s – my good friend Tony Bond, who I had worked with on getting OzTUG launched, had joined the board of International Tandem User Group (ITUG) and in 2000 became the Chairman of the ITUG user group. And with his rise to the chair, and following some lengthy email exchanges, I stood for elections in 1999 and won a seat as Director. It wasn’t long before the support of OzTUG included ITUG Board meetings that were held immediately after their annual events – a simple way to show support and to swell the ranks of participants.

And the strange thing about the annual user event in Sydney, from 2000 on, was that the vendor participation increased significantly. Many executives found Sydney a great place to spend quality time with their users and with few exceptions, you could see all the CEO’s, Presidents, and Managing Directors sipping chardonnay’s and exchanging small talk as dusk descended over the sands of Manly beach. And it was hard to miss the many quiet exchanges that took place between the vendor leadership and the NonStop executives as product and technology strategies were discussed and new opportunities explored.

With what I observed at these gatherings, it was easy to tell that there were different strategies being pursued. Some executives were very eager to work closely with NonStop while others were anxiously pushing for bigger user communities. Everyone wanted to see the size of the NonStop user community grow even larger and were constantly pushing NonStop execs for the inside scoop on what new marketing program was to be launched. From all of the discussions, there were clearly only two paths that these vendors could pursue – expand beyond NonStop and take what they have learnt on NonStop and adding support for more platforms, or expanding within NonStop by either moving up the stack and embracing applications, or adding additional application and middleware stacks.

The ambitions of the leadership of the first group had end-games that resulted in either going public (through IPOs), or positioning themselves for profitable Merger and Acquisition (M&A) opportunities. Prognosis succeeded with its public offering on the Australian Stock Exchange while InSession sold to ACI Worldwide in a deal beneficial to all involved. And for these vendors, their original product offerings on NonStop had been complemented with offerings on other platforms, and with the balancing of their product portfolios that this led to, their valuations improved significantly!

Other vendors in the NonStop space, however, stayed within the NonStop market. I have always been a strong believe in niche markets – particularly when you have products that allow you to successfully penetrate a high percentage of the niche. To competitors, niche’s often look small and the barrier to entry prohibitively high. But for the incumbent, this can be a very lucrative business. In some discussions that I have had of late, some very successful niche vendors are looking to move up from the middleware and infrastructure offerings they provide today, and to test the market by adding applications. With all that’s happening in the financial services segment recently, this could be fertile ground for imaginative vendors with prior experience in this space who see the value in moving vertically to grow their business.

But perhaps the more visible approach by vendors is where those who are successful within a niche, acquire the technology and markets of other vendors in that niche. Probably no vendor in the NonStop market is doing this more aggressively right now than comForte, and it’s clear to many of us who watch this space that the leadership has a strategy of expanding horizontally, adding more products to their portfolio and all the while, growing their international presence.

Last year, we saw comForte buy a number of companies and use the HP Technology Forum as the venue to unveil their first moves to expand. In the press release of June 16, ’08 they announced they had made moves to “acquire Unlimited Software Associates, in and the Intellectual Property Rights for the security solutions from Baker Street Software, Inc and Cross-El Software Solutions, Inc.” But this announcement wasn’t just about products and markets, the announcement went on to add “The North American region is key to comForte and the addition of USA Inc is another major milestone in the execution of comForte’s strategic plan for growth.”

For a European company like comForte, getting a strong foothold in the Americas represented a major expansion of their international coverage. I was very impressed to read only a few days ago that comForte has now purchased Gresham Software Labs (GSL), a NonStop softwar vendor based in Sydney. The origins of this company go all the way back to the small company Tony Bond started after leaving Software Developments International (SDI), the authors of NET/MASTER.

According to the press release of August 28, ’09 comForte said “through the acquisition of GSL, comForte adds the software product ‘The operations Pack’ (TOP) to its portfolio as well as product support staff and a new office location in Sydney, Australia! Dr. Michael Rossbach, CEO of comForte, was reported as having added “its people and products are very complementary to comFortes product and solution offering …the addition of GSL is an important step in the execution of our growth strategy.” Dr Rossback then added “this acquisition is great for comForte’s customers as we are now able to offer real, global 24 * 7 support through the addition of product support staff in Australia.

In a follow-up exchange I had with Thomas Burg, comForte’s CTO, I asked him about the growth strategy, the increased global presence, and whether this was all part of the plan to expand horizontally within the NonStop marketplace. “we are still gaining market share – but we are looking at a broader product set beyond security, emulation, SOA enabling … (comForte) has no plans to go off-platform at the moment, We still see growth opportunities ‘on platform.’” Thomas then added “I don’t think bigger is always better (but) that said, we do believe that 1 + 1 > 2 in case of ‘fitting’ mergers or acquisitions (into comForte).”

comForte represents one of the new breeds of software companies we are beginning to see emerge in the NonStop space. A vendor strongly committed to the NonStop platform that recognizes the value that can be obtained from pulling together many of the smaller vendors and developing programs to cross-sell. It is part of a new breed of vendor I suspect we will be reading more about. Other companies will pursue similar strategies, I am sure, but for the moment, comForte appears to be the leader.

Many years ago I arrived at Manly very early to prepare for the OzTUG event and for the ITUG board meeting that was to follow. I took an afternoon off to walk along the Manly beach and around to the adjacent Shelly beach that backs on to a public nature reserve at the very southern end of Manly. There is a famous restaurant tucked in behind the palms called Le Kiosk – and as I walked past, there was Dr Rossbach, seated by himself at a corner table overlooking the beach, enjoying a quiet glass of chardonnay. From the very brief conversation we had, I could easily see he had fallen for the Sydney lifestyle!

With the announcements coming from comForte these days, and the clear goal they have of growth and better supporting their global customers, I just have to wonder whether the impact of those early vendor gatherings had a deeper impact on Dr Rossbach than I had at first thought. Perhaps this latest move has as much to do with setting up a place of business in a city he is just plain fond of … and I cannot blame him for that or fault the strategy for one minute. Perhaps all I can add is that the commute will be long but Dr Rossbach will surely love his glass of Chardonnay at Le Kiosk – and I’ll look for him there whenever I’m down under.

No comments: