From Falling Knife To Agile: Chatting With Compuware After Its Acquisition And Split
Compuware is not the same company it was in December 2014, when it was acquired by private equity firm Thomas Bravo and split in two with the mainframe part of the business remaining in Detroit under the leadership of CEO Chris O’Malley.
O’Malley had the unenviable task of implanting a startup mentality on what was once a corporate Nasdaq-listed giant while, at the same time, trying to convince corporate clients that their mainframe operations needed an “agile” makeover.
In a follow-up conversation to one held shortly after the breakup, Compuware CEO Chris O’Malley spoke with Benzinga about how the company has fared thus far.
Benzinga: When this journey started, you said Compuware had to have a startup mentality. How has that strategy worked out?
Chris O’Malley: For the four quarters that ended September 30, we increased bookings year to year for all four quarters. Our total annualized bookings in the last quarter increased year to year. The speed of the transformation has been shocking.
Two years ago, Compuware was a falling knife. It looked like it was in an uncontrollable dive. Now, the ratability of our business has gone up. We’re doing things more like a SaaS company than a traditional software company and we’ve done it the old fashioned way.
Every quarter since we last spoke, we’ve come out with a new product as well as upgrades to our classic base of offerings. That’s culminated in a strategic and significant shift for the company.
BZ: Compuware is all about helping large mainframe-based companies become agile. How does that happen?
O’Malley: First and foremost, they have to change the culture. Many big companies try to create shareholder value through managed decline or managing cost. If you do that long enough, you lose your innovation.
For many companies it’s like a game of Survivor. Or like the New England Patriots – playing just to win. They literally have to remake themselves in ways that create new and compelling value that allows them to go after opportunity in the market.
After culture, tools and processes become the enablers. When you think about competition in decades to come, it’s all going to be through digital means.
Companies can’t look at developers and say, “Let’s give them a whole bunch of crappy tools and put them in a locked basement.” They have to view them as sales people.
The last mile of business is not about people and bricks and mortar anymore. It’s about algorithms.
BZ: In January you announced a series of partnerships. What’s this all about?
O’Malley: Large companies are starting to understand that startups are doing things they can’t. Big can’t beat small any more.
As a result, many of them are bringing in groups they call “DevOps renegade cowboys.” These groups are the startup mentality catalysts for large companies.
They know digital techniques and are trying to build value to allow organizations to gain competitive advantage. The partnerships we unveiled in January offer the tools that are beloved by these renegades.
The problem is, the tools won’t work on a mainframe. A mainframe is a proprietary black box.
So we’ve gone in and brought visualization to these incredibly involved mainframe systems that allows the renegades to use their tools. This way the mainframe becomes different only in syntax.
BZ: You also announced acquisition of ISPW. How does that figure in to Compuware’s mission?
O’Malley: One thing you learn through the process of creating a new product or upgrade every 90 days is that you have to be able to measure better. We’re going from waterfall to agile. Waterfall is sequential. Agile is parallel. In order to do quarterly drops, you have to do parallel.
ISPW allows that to happen. It’s a newer, more modern technology for source code management that fits the idea of doing parallel work. Source code management is the heart and soul of moving to an agile way of doing things.
BZ: What has been the biggest surprise you’ve experienced over the past year?
O’Malley: In addition to the speed with which we’ve done better, I’ve learned some things since we last spoke that I wouldn’t have known a year ago.
For example, we’ve done surveys of CIOs and others. More than 90 percent of them know, for better or worse that the mainframe is a relevant part of the future. Yet, less than 40 percent have any sort of plan for how to handle their aging mainframe workforce.
This is why we make the argument that you can’t rebuild the mainframe siloed organization. In about 10 years you’re going to have to do it in a different way. We’re the only vendor working on this.
BZ: As Compuware moves forward will the 90-day promise continue?
O’Malley: Yes. If anything we want to shorten it. Initially I made the promise for our customers. People generally think you’re a liar until you make a bold promise and keep it. So part of the reason for the promise was to rebuild the covenant of trust between Compuware and our customers.
So, yes, we are going to continue to keep the promise. Of course, I’m the guy asking, “Can we get it down to 80 days? Or how about 75?”
BZ: With all the changes that have taken place, what provides unity and continuity?
O’Malley: We came out with a vision and we fought for a vision that sees 50 years into the future. We forced everyone to become agile. We actually did it twice because the first time it didn’t stick.
Now, every time we keep the 90-day promise we have a party. We do it to remind ourselves that one more time we kept our word.
We also have a bell. Every time we close a deal we ring that big honkin’ bell. The engineers are hearing that bell along with everyone else and it’s a direct correlation to their efforts because, ultimately, we’re all in this together.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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