January, as the start of the calendar year is a time full of anticipation and trepidation as well as an opportunity for metaphorically starting afresh, with new resolutions, promises of change and all good intentions.

Compuware’s announcement on 8th January that it is divesting its Changepoint, Professional services and Uniface business units to Marlin Equity Partners for $160 million certainly beats to this tune.

As an analyst that has covered Compuware and the software industry these past 14 years this latest announcement is somewhat poignant. Firstly it signifies the end of an era for a company that has been the custodian of a solid portfolio of quality software development tools and services with a loyal client base that has stuck with many of the products for many years – decades in some cases.

Like so many vendors with its length of service in the market, Compuware is a company that has undergone significant transformation over the years. Much of that transformation has been dictated by the shift in its fortunes. The company has transitioned from an industry power player in the application development and lifecycle management market in the 1990’s to the early 2000s to where it will by the beginning of February 2014: a vendor of Application Performance Management (APM) and Mainframe tooling and services.

Tracing the fault line
Ten years ago in 2004, Compuware was on a big acquisition trail, acquiring Changepoint an IT governance and management product along with Covisint a marketplace and portal solution strong in the automotive industry and DevStream to boost Vantage, its application service management facility for the distributed computing environment. More was to come in 2006 with the acquisition of SteelTrace, an Irish-based business requirements capture and management solution provider. In this year also, Compuware was considered to be one of the only significant testing tool vendor that had started to include support for risk-based testing in its test management product. Back then, it was a committed supporter of the risk-based testing concept. Given the importance of risk and the rush to handle it more effectively in software today, one wonders what opportunity was lost.

Ten years on from 2004, the company has now divested most of its long standing portfolio to go it alone with two components it believes core to its survival and future.

So what went wrong, especially if you believe something has gone wrong for Compuware?

Sacrificed to market changes

Of course the application development and delivery market has changed considerably in the last 15 years. Both the market and technology arena is certainly more vibrant – mobile, Cloud, Social, analytics, UX, Internet of Things etc. It is also more nimble, competitive and open. Many of the past industry stalwarts have been overrun with the next generation of ISVs and movers and shakers, but the requirement for solid quality based development products and platforms still remains a solid goal for many software development and delivery teams.

In Compuware’s defence, the company has adapted to align its portfolio to accommodate market and industry changes. It has not been afraid of making some bold decisions: pulling the plug on tools it had made the wrong judgment call on – as in the case of OptimalJ; selling off product that were not pulling their commercial weight or it did not consider itself in the top two slots in the market – as in the case of its quality and testing portfolio. The company even gave a much needed level of freedom and self rule to its Uniface product team based in the Netherlands, setting them up as separate business unit responsible for their own profit and loss balance sheet.

But crucially, Compuware has made some core mistakes, one of them in a notable core area.

Walking the walk but not talking the talk
Hindsight is 20/20 vision as the saying goes. However, it is not hindsight to know that the one area that Compuware has been notably weak in, is in “bigging-up” its capabilities and marketing itself in a way that more successful peer competitors were not afraid to do. In May 2008, Compuware tried to take the initiative with the launch of Compuware 2.0 a marketing rebranding exercise that seemed behind the times even as it went to market. By mid 2008 many in the industry felt that the idea of labelling things “2.0” had had its day and that to do so negatively left a “me-too” perception.

This was a shame because the underlying message was that of a company that was evolving into a more dynamic organisation that would make more of its global footprint with an upbeat and sexier message for helping IT organisations to do a better job.

There may be many routes to a particular state of play, but I have longed thought and written over the years that Compuware needed to be less conservative and shy about hiding its metaphorical light under a bushel. The company needed to demonstrate more passion, do more chest-thumping and be more vocal and explicit with its marketing to appear more relevant and prominent to those outside of its traditional customer base.

The silver lining
Whilst my reflections might seem on the slightly gloomy side, the announcement on 8th January 2014 should be seen in a positive light since all the businesses being divested and the ones remaining with Compuware are solid businesses in their own right with opportunities for strong growth if the right investments continue to be made.

For the Compuware Uniface team this evolution is a logical progression to their self rule. Within Marlin Equity Partners there is likely to be the kind of investment that will provide opportunities to expand the roadmap and take the group to the next place. The Uniface management and marketing team has already demonstrated that it is a strong pair of hands for shaping and directing the company for the future. Since its creation as a separate business unit in April 2009, Compuware Uniface has run successfully, delivering revenue, profit and a viable growth agenda. In marketing terms, the child has taught the parent: showing an aptitude for more adventurous marketing campaigns and supporting content.

The Uniface team has modernised: implementing Agile and using social and viral distribution practices to get specific messages out to core customer groups. The results have been refreshing to watch – not least because it shows a group that recognises the new generation of developer audience that it must compete to attract.

Unfettered from it is metaphorical shackles, The Uniface team, as we say in our CIC Vendor Spotlight Review report looks strong with healthy growth margins and good projections for the future. More specifically we say:

The Uniface business unit looks strong, with healthy growth margins and good projections for the future. The team has expanded the Uniface presence in key markets such as China and Latin America. It has also maintained strong footholds in other emerging economies such as Mauritius, where the Uniface platform is running inside all of the country’s main sugar processing businesses.

The past is clearly a lesson well learnt for the Compuware Uniface team as they have put in place a connected go to market and educational support strategy for future growth, long-term maintenance and ongoing training. Its employees are globally dispersed and agile is an underlying working practice.

Discussed in full in the main report, it is one that is visibly more dynamic than past offerings, and is better aligned with the needs of the Uniface customer audience base. It also offers an attractive proposition for prospective customers.

Those within the Uniface client base that I have spoken to, have been reassured by the way the Uniface technology and portfolio is being managed since it embarked on self rule in 2009. More importantly they value the better access they get to the development and management team and the focus that the group can put into the platform from both at the technology and support level.

This is clearly no “pig in the poke” purchase for Marlin Equity Partners but what it must do is demonstrate that it is willing to continue to invest and bet on the businesses it has acquired to show that it has faith in their respective futures. Marlin has a solid reputation in the market for long term growth investments which will bring great comfort to all concerned. The FAQ on the company website suggests that existing clients of all the brands will be supported and are unlikely to be impacted by the transition.

“Que sera sera”: what does the future hold?
With any acquisition, or in this case, divesting announcement, it is difficult to know what the future will actually bring.

For Compuware, the application performance monitoring and mainframe products and services hold great potential. The mainframe technology has undergone its own renaissance in the past few years with the key vendors in the market (most notably IBM) evolving and advancing the platform to make it as relevant (even more in some cases) for the compute and workload requirements of today and in the future. Application performance management is certainly as important, if not more so, in a Cloud, mobile and Internet of Things driven world where network bandwidth and traffic start to dictate. The acquisition of dynaTrace was an astute move that underpins Compuware’s APM strengths and the marketing around this core capability has been significantly more vocal and out there.

$160 million is a good sum to have in the bank for an acquisition war chest to either further the APM cause or to reinvent oneself in the mainframe market. It also presents an attractive sweetener for someone else seeking to fatten its portfolio in both markets.

So while the future is yet unclear, hindsight dictates that Compuware would have better gone with the campaign message “Compuware Next” than with Compuware 2.0, resulting in a more progressive goal no matter the journey it has undertaken.