News

Borland Faces ALM Adversity

Application lifecycle management provider Borland responds to setbacks.

• By Michael Desmond
• 02/01/2009

Application lifecycle management (ALM) tools maker Borland Software Corp. is facing tough times. Chief Executive Officer Tod Nielsen and Senior Vice President of Research and Development Peter Morowski last month abruptly left the company.

Borland also announced it would shed approximately 130 workers-almost 15 percent of the workforce-in a cost-cutting move designed to save between $12 and $14 million annually. The action came after a disappointing Q4, in which Borland revenues were down 30 percent from the same period last year.

Nielsen left Borland to join VMware Inc. as chief operating officer, where he has reunited with CEO Paul Maritz. The two previously worked together at Microsoft, where Nielsen was a key evangelist for Redmond's developer initiatives as vice president of developer marketing.

Erik Prusch, Borland's chief financial officer since 2006, has been named acting president and CEO. Borland also promoted Vice President of Application Development Chuck Maples to fill Morowski's role leading engineering efforts. Prusch says that Borland will continue to pursue its ALM strategy, built around the Borland Management Suite of products and its Open ALM concept.

Open ALM is a framework that enables Borland ALM solutions to interoperate with third-party systems and solutions.

"We're confident with the development team and the organization and the structure that [we'll] be able to deliver on the vision. There is no discontinuity that has formed because of the loss of Tod and the loss of Pete," Prusch says.

	"This isn't a story about viability ... We continue to invest at an aggressive rate to recognize our vision."
Erik Prusch, Acting CEO, Borland Software Corp.

Challenging Times
Industry watchers say the loss of key leadership and staff cutbacks complicate matters in an already difficult ALM market. "It's challenging times for them," says Jeffrey Hammond, principal analyst at Forrester Research Inc. "I think the [Open ALM] vision is good and I think the strategy is sound. But I think they're kind of getting caught between commoditization on the one hand and by larger competitors on the other."

Bola Rotibi, principal analyst at Macehiter Ward-Dutton Ltd., doesn't have issues with Borland's strategy, but says the company must contend with slowing ALM deployments in the down-turning economy. She also questions Borland's ability to pitch its end-to-end strategy to customers.

"The problem that Borland faces is that few organizations perceive them to be large or significantly powerful enough to be the custodians of the application lifecycle management and control framework," Rotibi asserts. "End-to-end ALM is a strategic play that requires confidence in the lifecycle and management process."

Rotibi notes that Borland, which in February 2008 sold its CodeGear programming tools group to Embarcadero Technologies Inc., understands the application development and delivery process.

"They have the history of working well with their community and customers and are of a size to listen and collaborate without ego. Borland should focus on providing solutions with a specific focus within the ALM process," Rotibi explains. "The Borland Management Suite is more than a good start in that direction."

Still on Track
Despite the cuts and resulting drop in Borland stock price-from $1.07 per share prior to the announcements to less than $0.65 at press time-Prusch claims Borland remains on course.

"This isn't a story about viability. There has never been a concern about viability from us," Prusch says. "We've got $167 million in the bank and a commitment to get the profitability and cash flow. And we continue to invest at an aggressive rate to recognize our vision."