TEC’s article series soliciting vendors’ input on a number of provocative market trend questions and observations showed Infor and IFS as the first two to respond (see Two Stalwart Vendors Discuss Market Trends). The series has since received much attention and reactions from readers and vendors alike. The next in line to voice its valued opinions was Progress Software Corporation (NASDAQ: PRGS), a Bedford, Massachusetts, (US)-based provider of application infrastructure software for the development, deployment, integration, and management of business applications.
Before delving into this vendor’s responses, some background on Progress Software is in order. From initially offering merely a database and accompanying fourth-generation language (4GL) applications development environment, the vendor has since (particularly during the last several years, via a string of prudent acquisitions) garnered a much broader set of infrastructure software. This portfolio spans the realms of what the vendor refers to as services infrastructure (for connecting, mediating, controlling, and monitoring services—or software components, if you will), data infrastructure (for managing, integrating, replicating, caching, and accessing data) and business application platforms (for developing, deploying, and managing business applications). Therefore, today, the Progress Software portfolio includes the following:
1) Services Infrastructure Products
The Progress® Sonic™ product line uses the Sonic ESB® messaging-based enterprise service bus (ESB) to provide integration of new and existing business applications across organizational boundaries and to remote sites.
The Progress® Actional® product line offers Web services and service-oriented architecture (SOA) management, including monitoring, analysis, security, and policy control.
The DataDirect® Shadow® RTE (which stands for Real-time Enterprise) enables early mainframe and legacy applications to participate in contemporary SOA and Web services production and consumption.
2) Business Application Platforms
The Progress® OpenEdge® platform provides development and deployment of business applications that are standards-based, service-oriented, and typically have a lower total cost of ownership (TCO).
The Progress® Apama® event processing platform can monitor event streams, detect patterns, and respond. The product supports event-driven applications, including business activity monitoring (BAM), algorithmic trading, transaction monitoring, market abuse detection, and radio frequency identification (RFID) applications.
The Progress® EasyAsk® product line provides business users and consumers the ability to find the information they need using natural language search and navigation, supporting a variety of applications ranging from customer-facing e-commerce web sites to ad hoc query.
3) Data Infrastructure Products
The Progress® DataXtend™ product line provides data integration for distributed applications and delivers real-time views of shared data in the form applications need. The DataXtend™ Semantic Integrator product uses a common semantic data model to create data transformations, enabling organizations to share and integrate heterogeneous data without disruption to existing applications.
DataDirect Technologies is the provider of software for connecting business applications to data and services, running on many platforms using proven and emerging industry standards. Developers worldwide use on these products to connect their applications to a range of data sources using standards-based interfaces such as open database connectivity (ODBC), Java Database Connectivity (JDBC), Microsoft ADO.NET (evolution of ActiveX Data Objects), XQuery, and simple object access protocol (SOAP).
OpenEdge or Cutting-edge Business Application Platform?
The main breadwinner for the vendor is the very first Progress product, currently used by over 5 million business users. The Progress OpenEdge business application platform nowadays provides a unified environment comprising development tools, application servers, application management tools, a relational database, and the capability to relatively easily connect and integrate with other applications and data sources. By being fairly open to a variety of standards, Progress has created the OpenEdge development environment, in order to isolate developers from the complexities of today's computing environments. This consequently allows developers to concentrate on what really matters: the business logic of their application. Applications built on the OpenEdge platform are reportedly portable, reliable, and scalable, yet require fewer administrative resources than other deployment platforms. In layman’s terms, users describe it as a runtime engine that just runs and can be scaled as necessary. Also, a recent Forrester Research report has rated OpenEdge superior to alternative platforms owing to findings in three areas:
- a 42 percent lower cost of development on the Progress platform
- a 37 percent lower cost of deployment on the Progress platform
- a 48 percent lower cost of ongoing management on the Progress platform
The above benchmarks are likely the result of the OpenEdge development environment’s ability to promote productivity, owing to a purposed business application language called Advanced Business Language (ABL), which somewhat resembles Microsoft Visual Basic or Powersoft PowerBuilder, for faster development. In addition, the industry standard Eclipse.org-based development environment, called OpenEdge Architect, was introduced about two years ago. What possibly matters most, though, is a single environment and language for server, client, data storage, and integration logic. On the other hand, the OpenEdge deployment and management environment promotes efficiency, since the integrated environment provides simplicity, performance, and lower cost of administration, while it can readily scale from 1 to 20,000 users.
Last but not least, the platform has long exhibited support of the most commonly adopted standards (rather than dependency on a certain integration, runtime, or application platform technology) on all architectural layers. To that end, on the client side, users can expect support for Microsoft.NET, Java, HyperText Markup Language (HTML), Java Message Service (JMS), Extensible Markup Language (XML), SOAP, Web Services Description Language (WSDL), Java 2 Enterprise Edition (J2EE) Connector Architecture (JCA), etc. Further, on the server side, there is support for Web services, ESB, JMS, Secure Sockets Layer (SSL), Secure HyperText Transfer Protocol (HTTP/S) and so on.
On the database side, beside the vendor’s own OpenEdge RDBMS (with “RDBMS” standing for relational database management system) that is JDBC-, ODBC-, and structured query language (SQL)-compliant, there is support for other databases, such as Microsoft SQL Server, Oracle, and IBM DB2. Finally, the deployment platform supports many operating systems (for example, Linux, UNIX, and Microsoft Windows), while the OpenEdge Management product is simple network management protocol (SNMP)–compliant.
However, from contributing to a whopping 98 percent of total revenues in 2001, OpenEdge today contributes to “only” about 70 percent of Progress Software’s total revenue, which is nearing the $500 million (USD) mark. Still, the OpenEdge platform remains Progress Software’s Application Partners’ (APs’) primary path to market, through which the channel generates 65 percent of OpenEdge’s license revenue. This business model is apparently highly profitable for both sides, generating over 5,000 new customers every year. Currently, the platform has about 60,000 customers, which represent the combination of direct Progress customers (larger accounts) and users of APs. OpenEdge’s global market presence can be discerned from the fact that its corporate users are
- nine of the top 10 consumer food companies
- nine of the top 10 automotive and parts companies
- eight of the top 10 commercial banks
- eight of the top 10 industrial and farm equipment companies
- eight of the top 10 pharmaceutical companies
- eight of the top 10 semiconductor companies
- the top six hotels, casinos, and resorts
- the top five apparel companies
Progress Software’s primary strength and market presence today is in the manufacturing and distribution sector, which accounts for almost 40 percent of the business, followed by retail, financial services, government, and health care.
A Partner-centric Go-to-market Approach
The company’s primary target market is mid-market enterprises and divisions of large corporations. These are typically existing customers and partners, while brand new customers can be targeted opportunistically. Nurturing partners is the main mantra at Progress Software, whose stated mission is “to deliver superior software products and services that empower its partners and customers to dramatically improve their development, deployment, integration, and management of quality applications worldwide.” In other words, the vendor’s stated goal is “to maximize the benefits of information technology while minimizing its complexity and total cost of ownership.”
Progress Software’s go-to-market approach revolves around matching the selling method to buyers’ preferences, since small to medium enterprises (SMEs) prefer a local supplier that knows their lines of business (in other words, an industry specialist).
On the other hand, a partner channel provides reach for Progress, whereby the vendor has partners in regions where it does not have offices (as examples, Turkey, China, or Malaysia). Further, the partner channel provides scalability, especially in terms of more available service professionals to make Progress Software’s technology deliver on its touted potential benefits. Last but not least, a partner channel provides greater market penetration. For example, Infor has implemented Sonic ESB at over 1,000 sites, whereas Progress Sonic’s direct sale has only 400 sites in total (of course, the revenue received is also different, owing to the larger size of these 400 corporate clients that pay everything directly to Progress Software).
Thus, these individual large enterprise accounts (with revenues over $1.5 billion [USD]) Progress Software targets with its best-of-breed products for heterogeneous SOA, and in a horizontal manner, whereby these enterprises have large IT and development staffs and centralized IT objectives. On the other hand, small regional accounts (with revenues from $20 million to $100 million [USD]) and mid-market accounts (with revenues from $100 million to $1.5 billion [USD]) in some vertical sectors are targeted indirectly via APs or independent software vendors (ISVs). Such customers typically buy packaged applications that custom fit their business or industry needs, and have smaller IT and limited development staff, but require more rapid business returns on investment (ROIs).
This model is quite profitable for Progress Software, as it grows the top-line revenue for a much lower cost of sale, especially in the case of software-as-a-service (SaaS—see What is Software as a Service? ) deployments.
IDC’s report, Worldwide Top 10 ISV Partner Programs 2006 Vendor Analysis: Enabling ISV Partners for Success, describes Progress Software’s partner program as follows:
The Progress Software Partner Program is a global program … [that] has predominantly ISV membership, but is evolving to include original equipment manufacturers (OEMs) and value-added resellers (VARs). ISVs in the program design, develop, sell, and support branded commercial business applications built on ... Progress Software infrastructure technologies. The program has been refined over the years to identify ISVs with growth potential and to support those partners with programs, resources, and staff…. Progress uses its Growth Stage Assessment process to evaluate the financial position, business, and technical acumen and capabilities of ISVs.
In addition to over 7,000 developers within the Progress Software Developers Network (PSDN), the same report notes that there are more than 2,000 partners in the Progress Software Partner Program of all partner types. A Progress Software press release from 2006 points out that these partners have combined Progress Software technology with their specialization in building mission-critical applications. These ISVs participate in the Progress program at one of four levels: Elite, Premier, Preferred, and Member. Resources available to an ISV are determined by the ISV’s growth stage or level. For example, the Elite partner stage targets larger customers and warrants Progress’s taking a one-to-one approach toward enrolling, engaging, empowering, and expanding the partner. Conversely, the Premier and Member partner stages that target SMEs will receive a less involved Progress approach—in other words, one-to-many and partner self-service, respectively.
The same Progress press release (see link above) Progress Software Partners (or APs mentioned above) have developed and deployed over 5,000 distinct applications, which are used in over 60,000 organizations around the world and have been deployed at more than 110,000 locations. Progress cites that it or its APs deploy applications at 10,000 new sites and add 600,000 new users every year. This growth is attributed to Progress’ partner approach being far different than other application infrastructure vendors, and is relevant to two of its major constituencies, partners and users.
First, Progress Software partners enjoy a partner program that is arguably exceptional in the industry. Similarly to other infrastructure companies, Progress provides access to its products, technical support, education and training support, as well as sales and marketing support. But unlike most of its competition, the vendor provides to these partners an extra portfolio of assistance in terms of business and technical empowerment offerings to really help them bootstrap their ability to succeed as a business (for example, helping them with such things as business planning).
This holistic partnering approach to support APs through their business life cycles to ensure joint success includes joint business, technical, sales, and marketing activities. Second, unlike many competitor infrastructure vendors that also sell application software, such as Oracle and Microsoft (and increasingly of late, IBM), that are therefore competing with their partners, Progress Software pledges to never sell application software, so that it will never compete with its partners and cannibalize their businesses.
Product Development “Secret Sauce”
Progress Software cites that OpenEdge’s product engineering focus is on balancing the needs of large end-user customers (who need constant improvements in scalability, availability, and management), application partners (who need added or enhanced productivity tools and languages, and new and more varied user-interface capabilities), and of the overall market (in terms of improved interoperability and integration capabilities, and improved support for new platforms).
To that end, the product development expense is 9 percent of total OpenEdge revenue, with research and development (R&D) staff being located both onshore and offshore (80 percent in Bedford, Massachusetts and Nashua, New Hampshire (US), and 20 percent in Hyderabad, India). The product R&D investment model is balanced with 15 percent going toward customer satisfaction, 20 percent on maintenance, 5 percent on minor enhancements, and the lion’s share of 60 percent on major enhancements or new work.
This can be best seen after analyzing OpenEdge’s historical landmarks, from which Progress Software has been striving to anticipate market trends and make new features possible, easy, and automatic. For instance, in 1993, Progress Version 7 (the previous name for OpenEdge) introduced a graphical user interface (GUI), and in 1995, Progress Version 8 introduced the n-tier client/server architecture. Then, in 1998, Progress Version 9 embraced Web-enablement. In 2004, OpenEdge 10 became SOA-compliant.
It is important to note that no new release discontinued any earlier feature, which possibly explains the uptake—meaning that 10,000 customers are already using OpenEdge 10; the platform saw a whopping 225 percent growth in 2006 over 2005. The vendor’s intention is to continue this growth trend in the future in terms of both advances in development (tools, languages, interfaces, etc.) and in deployment (scalability and manageability). To that end, OpenEdge 10.1A will feature object orientation (OO) within the OpenEdge Architect, OpenEdge 10.1B will support 64-bit storage systems, OpenEdge 10.1C will feature OO extensions for database management tools, and OpenEdge 10.2A will feature advanced GUI (to be released some time in late 2008).
Progress Software partners claim to like OpenEdge because the vendor never takes anything away, meaning that character interfaces and coding conventions are still available if needed. Also, everything new works with everything old, such as OO with procedural languages, GUI with the character (“green screen”) interface, 4GL with XML, and so on. At the same time, Progress Software tries to keep up in terms of languages, interfaces, and platform capabilities, as well as in terms of core values that are highly valued by the market (lower TCO and higher productivity).
Of over 200 ISVs delivering SOA-based SaaS enablement, 40 percent say this model will comprise over half their business by 2010. Some notable examples of mid-market enterprise resource planning (ERP) vendors harnessing Progress’s technologies to SOA-rejuvenate and “future-proof” their products (while protecting current products and solutions, extending common components, and possibly converging to a “superset” product with best-of-breed functions from a variety of vendors) to integrate disparate products within the portfolio are Datasul, QAD, Infor, Epicor Software, Consona, and proALPHA.
While it is certainly possible to see how all of the above might benefit Progress Software’s partners, the question is how will this approach to partners benefit Progress’s direct end-users and the partners’ end-users. The answer is that by fostering an ecosystem of partners that typically cater to the mid-market and small enterprises, Progress has created an ecosystem of applications that are designed for and “fit” the needs of the target market. Sure, midsized companies can find an ecosystem of applications that are not only built on OpenEdge, but that are often not easier to manage and maintain than applications built on the Progress application infrastructure. In the manner of a witty chemist or chef, Progress Software describes its success formula:
Start with the customer, who is looking for best fit, reliable, cost-effective applications.
Add in the application partner with unique combinations of domain knowledge and application engineering expertise.
Mix in the right enabling technology, one that’s quick to learn, easy to use, reliable in operation, and that frees the partner or customer to focus on functionality.
Follow up with direct sales opportunities, and leverage low TCO with additional products and services.
On a negative note, however, all the above traits and approaches remain sort of a best-kept secret in the market. As previously noted in the October, 2007 article QAD: A Software Vendor that Has Survived (if Not Thrived) in the ERP Market,
[t]he Progress Software OpenEdge toolset has struggled to win notable market- and mind-share among a wide group of developers, though it maintains a strong ISV base. … Progress Software has always been a technology-driven company that has not invested much in raising market awareness about its abilities. This becomes an issue for its application partners when they have to explain their ongoing relationship with Progress Software and the use of its technologies. However, in most cases, the company’s product reliability and low TCO scores high points with partners and customers alike.
This is part one of the two-part series A Partner-friendly Platform Provider Discusses Market Trends. In the next part of this series, Progress Software answers several provocative questions about the current state of the market, as well as hoped-for future directions.