Big Changes Ahead for Borland

In this exclusive Q&A, Borland CEO Tod Nielsen shares insights on the market and his plans for the company.

Like the company he heads, Borland CEO Tod Nielsen CEO has a long pedigree. I first met Tod when he worked on developer programs at Microsoft not long after the introduction of Visual Basic. Since then, Tod helped found Crossgain, which ran afoul of lawsuits from Microsoft, served as CMO of BEA, and worked as a vice president of Oracle. Nielsen took over as CEO of Borland in October of last year and is dramatically changing the direction of the venerable development tools company.

Tod shared insights on the market and his plans for Borland during interviews with several members of Borland's executive team at the company's Cupertino, Calif., headquarters by FTP's Jim Fawcette, Peter Varhol, Terry O'Donnell, and Patrick Meader.

Enterprise IT Needs
FTPOnline: What is enterprise IT telling you it needs, and what are you doing about those needs?

Nielsen: The number-one customer issue across the board is their ability to effectively deliver software. All of them say their projects are over budget, late, and just not meeting the needs of the business.

Regardless of what business they're in, software permeates everything. It is no longer a case of having accounts-payable systems; software is central to their business.

Our application lifecycle technologies and consultants are a chance to help them build their manufacturing line, if you will, and have a core process to gather requirements all the way through to delivering their own software.

FTPOnline: For years people have been talking about the need for enterprise architecture to bridge the silos of technology. How well is that working?

Nielsen: Companies are saying that even within the silo, development can't understand users' requests and be responsive.

It's communications, accountability, control.

One CIO in London last week—I flew around the world visiting customers in the last couple of weeks—said, "You know, with ERP I got visibility via dashboards into the state of my business. I need that for my IT projects. I have no visibility of which developers are breaking the builds, what is productive ...

"In the end I have this army of people that says, 'They suck,' but I don't know who sucks, why, and when.

"What I need is a dashboard of my software process."

FTPOnline: So you're talking IT governance.

Nielsen: IT governance, change control, portfolio management, requirements management, requirements solicitation, quality ... we're talking the whole gamut of software development.

Often a customer will start off with a requirement. They'll say, "I have an IT governance issue" or whatever. But when you drill into it, you see it is a lifecycle problem. It is rare for customers to have a complete approach in place.

FTPOnline: Is it fair to say that the silos the companies are facing are similar to silos that IT is facing? The developers have their tools, and so on.

Nielsen: Absolutely. The architects don't talk to the developers, and so on. Ironically, I can relate. I'm remodeling a house in Los Gatos. Everyone has their remodel or construction disaster story. The same issues relate to software. Yet no one has really tackled it.

FTPOnline: These are all good arguments for lifecycle tools, but do the vertical silos argue against Borland's "Switzerland" approach? Every company has "all of the above" LAMP, FOSS, .NET, and J2EE, but the teams that actually do the projects work separately with little crossover. Is there really a need for cross-platform tools?

Nielsen: No. Much like you see in organizations trying to standardize around a platform, we're seeing standardization around components and integrated processes that work together.

They've proven the current approach doesn't work well and now recognize they must collaborate.

Borland vs. IBM
FTPOnline: When Rational was acquired by IBM, it looked like an opening for Borland. Now, despite Rational's reassurances that it would give .NET equal time, it's clearly put .NET on the back burner. How does Borland capitalize on that and can you quantify how well you have so far?

Nielsen: We have a strong heritage of being the independent company as Microsoft talks about the ALM space. Customers are nervous that Microsoft technologies will lock them into .NET, and the same thing exists with Rational and Java.

One difference going forward, especially after the divestiture is complete: We are the one company whose business model is about pre-deployment. IBM's business model, regardless of what it says, is WebSphere and IBM Global Services (IGS). Microsoft's is Windows. Oracle's is the database. As you've seen over the past 10 years, the response has been, "We don't care how you build it, just build it."

If you look at decades of evolution in the tools, it is pretty much on the runtime. When you look at development, it is still the same basic IDE and hammering some stuff out. There hasn't been the same level of innovation.

One of the things I am trying to do is re-establish Borland's position as a thought leader and innovator.

So, with regard to your question on IBM displacement, many times we go into customers and are able to displace IBM. EDS, our largest customer, was an IBM/Rational house. We're in the process of replacing that.

The key competitive win for us vs. IBM is that we work extremely well in a distributed environment. So if firms are looking to do offshoring, our technology is appropriately tuned for that while Rational struggles a bit with its replication and server technologies.

FTPOnline: Is offshoring an opportunity? Offshoring creates price pressure. Are companies that are hiring developers for $18 an hour going to pay six figures for a tool for them?

Nielsen: The answer is "yes," because at the end of the day they are looking at the total cost of the project and its success. It doesn't matter if you're paying $200 an hour for a developer or $18 or $5; if they're not getting the results you need, your ROI is zero.

What we enable them to do is make sure they have the processes in their manufacturing plant, if you will, to make sure they have the effective balance of labor costs around the world.

FTPOnline: Traditionally, the answer has been, "Throw more developers at the problem." How is that changing?

Nielsen: People have realized, "how many cooks do I need in the kitchen vs. a coordinated process?"

A good example is Borland. Prior to my arrival, the offshoring strategy was that whenever a head count left, [the company would] throw in a new one in St. Petersburg, Russia. I said, "What are they all dong? What are the results?" The answer was, "I don't know, but they're a lot cheaper than the ones we had in Cupertino."

That's a lot of vodka and blue jeans, but what else are we getting out of that?

Net-net people are realizing it's not about how many, but about driving real value.

Partnering With the 800-Pound Gorilla
FTPOnline: The other 800-pound gorilla is Microsoft. You're partnering on Visual Studio Team System. Where does the partnership stand?

Nielsen: Microsoft doesn't have the full suite yet. They don't handle the analyst role and some of the components, and we integrate well with them.

But like anything with Microsoft, it is the classic co-opetition where we work with them and when they are going up against IBM, they will bring us in to complement the suite. But there are times when we compete against them.

From a customer perspective, in the Global 2000 we see a general hesitancy to let Microsoft lock them down to .NET. When it comes to building their software factory, they want to make sure they can be independent.

We run into them more as an ALM competitor in the pure .NET shops, and those are predominantly SMB. You don't see that in large companies.

FTPOnline: One of the reasons you're divesting the developer tools is that the sector has become commoditized. When you see Microsoft's pricing for VSTS, although the individual developers find it high, from the ALM stratosphere it is dirt-cheap. Do they threaten to commoditize that market as well?

Nielsen: In the ALM space, I don't think that is going to happen. The issue with our tools business wasn't Microsoft's pricing, per se. [First,] it was a completely different model from what we have with ALM—where we have the enterprise model vs. the channel-based model—and it was a conflict on where we invest our resources to scale.

Second, very late in the game that group realized there was this thing called open source and it might be important someday. They have now been factoring into the plan how we're going to get JBuilder on Eclipse, but I would argue they were way late to that. We should have done that two years ago, so they are playing catch-up.

We can turn that around, but from a business model and resources it made sense for them to be independent and focus on their customer base.

Win-Win-Win for Delphi Users
FTPOnline: What would you say to the loyal Delphi base? They are very vocal, and they've stuck with Borland for years. How do you convince them this isn't Inprise 2.0?

Nielsen: It's a win-win-win situation. First, it's a completely different situation from Inprise. That was if you looked at our heritage as a software development company and then decided to do a floor wax. It was something we had no history in, no expertise.

Our approach with the ALM space is building on our heritage where we understand software development. Just as software moves up the stack, we're going to move up the logical software development stack.

With respect to the IDEs and the Delphi folks, I'm doing the best thing in the world for you. Every dollar that comes in (to the group spun off to do development tools), they're going to spend on innovation and the care and feeding of your product line. Before, there was a battle: Does investment go to ALM or IDE?

Now, there is an entity that is 100-percent focused on their needs.

When I started I had 100 one-on-ones with the employees. I found in the IDE group that they were the dysfunctional children. They were the guys that had been abused. The minute I said, "Wow. We can do this, and that," I walked through the halls getting high-fives.

Capitalism is a great thing. Now they are motivated and excited. Regardless of what the blogs say today, a year from now they'll be saying "Tod did a great thing."

As you know, Jim, I grew up in that space. I know it better than most. I know if I did anything to screw them, it would come back and haunt me until the end of time. I'm absolutely not going to do that. We're going to take care of them.

FTPOnline: Borland has a noted heritage of delivering products on time. Are you taking any of your internal approaches and applying them to your ALM tools?

Nielsen: Absolutely. One of the first things I did was tell the team we should be our own, best case study. It's one thing to talk about Bank of America and EDS and all our big customers, but at the end of the day, software ISVs have a bad reputation for delivering software on time and on budget.

I told the team, "I will never accept you putting me in the position to say there is an 80 percent chance my software will come out by the end of the year." Imagine if the head of GM said, "There is an 80 percent chance we'll ship our new cars next year."

We're going to be the best example [of managing the software process].

The Marketing of Modeling
FTPOnline: Let's focus on modeling. For more than a decade, I've asked any vendor with a modeling tool this same question: Only 6 to 8 percent of developers use modeling. What will it take to broaden the use of marketing and thus your Total Available Market (TAM)?

Nielsen: In this two-week around-the-world tour, I was asked similar questions by the "modeling groupies." They are the most passionate, excited group. They believe the world should be done on modeling. What I found is: There are the modeling people and the rest of us.

What we've done is to make sure we take care of the modeling people, but if we're going to drive this to become a mass process, we need to distinguish modeling from visualization. It's a core system component for our technologies, but take a look at Caliber DefineIT, which is a new product we released. It is a tool for visualizing requirements, but it is the kind of tool the rest of us can actually use without having to understand the abstract, UML 2.0 details. I gather requirements and go.

We're got a great modeling product, but my belief is that we are not going to say modeling is [the central approach].

FTPOnline: Web 2.0 is trendy. What impact does it have in your market and in the enterprise?

Nielsen: I love the way the runtime evolution has gone with SOA and Web 2.0. For us, that is great. We can say, "Whatever you do on the runtime, you have to have a software development process. Whatever you do, the old software axiom applies: Garbage in, garbage out."

Whether I'm talking to a leading-edge company doing Web 2.0 or a COBOL shop in the Midwest, I can discuss how they can have an effective software development process.

I can be IDE-independent. For customers that want to work with Borland as a single point of entry for an IDE, once the divestiture is complete, we'll have a partnership with DevCo. [DevCo] is internally what we call the IDE business, where we resell their products and they resell ours and we'll be able to deliver that.

FTPOnline: But isn't the push for dynamic languages in Web 2.0 a rejection of what is seen as excessive structure in the large, corporate frameworks, while ALM is the imposition of structure?

Nielsen: At the end of the day, it comes down to, "What is your process?" I don't care if you're doing RUP or Agile or Zero-Defect, or whatever methodology you follow; you still need to have a manufacturing line that you manufacture that process with.

Many of our discussions are less geek bit–oriented and more business process–oriented. Business has spent a great deal of time focusing on business processes everywhere except in IT.

We have a development council of CIOs, one of whom said, "Tod, IT is the last bastion in this space to be tackled. Everyone is focused on better business processes for order-to-cash or sales force improvement, but no one has tackled IT because they've been reluctant, afraid, or unable to."

FTPOnline: Another dimension is the "over-the-wall problem." If you come at this from the perspective of say, an HP OpenView, the argument is that development must be integrated with deployment, while Borland is strictly tackling the development side of the wall.

Nielsen: We think that there is a gray line at deployment. Some of our products such as Silk provide some deployment visibility back into the lifecycle. But I would say we are trying to be as clear as we can at point of deployment to pre-deployment process. It is a slippery slope, but I will avoid the argument that we should go into this space. Arguably, Mercury did that.

We have a partnership with BMC, which OEMs our Silk monitoring technology. Expect us to do more with HP and others.

FTPOnline: Does Borland have visibility at the management level?

Nielsen: Surprisingly, yes. When I meet with CIOs, they often start off by reminiscing about the old days when they worked with the Turbo tools. Then we move on to what we can do for them.

Often people say, "You did great work, but what the heck have you been doing for the last 10 years?" That kind of hibernation is OK, because it is a lot better than say, Sybase, where they say, "You tried, you lost, you failed."

Hibernation is a base I can work out of.

What the Future Might Hold
FTPOnline: What is Borland going to look like in—you pick the time frame—two to three years?

Nielsen: It is all about execution. Assuming we execute, I believe that billions of dollars are going to be spent over the next five years in this whole application lifecycle space. I want us to have our fair share of that.

I use terms like "manufacturing line" and "software factory." In a couple years, "application lifecycle" or whatever the term is will be well-known in the industry, and I'll no longer have to use analogies. People will get it.

We will be continuing significant growth and customer adoption.

When anyone writes a book on Silicon Valley, we'll have a chapter in that book. We're an anchor tenant of the Valley.

Our opportunity is to renovate the historical landmark, or be the guys that knock it down and put condos up. We are working to rebuild the legacy. If we are successful, two years from now people will say, "Borland is back."

FTPOnline: Good luck getting there.

Nielsen: Thanks.

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