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Company Brief
Progress Software

by Faulkner Staff

Copyright 2019, Faulkner Information Services. All Rights Reserved.

Docid: 00011363

Publication Date: 1912

Report Type: VENDOR

Preview

Progress Software offers a platform for developing and deploying critical
business applications. Founded in 1981, Progress has restructured and rebranded to focus on
platform-as-a-service. This company brief provides an overview of Progress
Software’s history, latest developments, and product offerings.

Report Contents:

• Fast Facts
• History
• Key Executives
• Major Products
• Major Competitors
• Recent Activity

Fast Facts

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Name: Progress Software Corp.
Headquarters
14 Oak Park Dr
Bedford, MA 01730 USA
(781) 280-4000
(800) 477-6473
Web: https://www.progress.com/ 
Type: Platform Development Software Vendor
Service Areas: International
Founded: 1981
Stock Symbol: PRGS (NASDAQ)

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History

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Progress Software, founded more than 30 years ago, is a provider of
enterprise program development software for cloud platforms, mobile platforms,
and data-driven programs. Its main product areas focus on business application
development, cloud application development, platform development, and data
connectivity. As of 2017, more than 100,000 enterprises and two million
developers use Progress Software applications.

Early Years: Application and Database Development. Progress Software
was founded in 1981 under the name Data Language by Clyde
Kessel,
Charles Ziering, and Joseph Alsop. With a focus on application development and deployment software,
the company released its Progress database management and applications development system
in the mid-1980s.
By 1987, Data Language changed its company name to Progress Software, and in
1991 filed an initial public offering.

Growth and Acquisitions. Progress Software rode the software
development wave of the late 1990s, including the company’s 1997 acquisition of
Apptivity. This allowed Progress to offer tools for developing
Java-based applications. In 1999, Progress launched a unit to offer products and services to independent software
vendors entering the ASP space.

In 2001, Progress split into three business units: Progress
Company, its development software business; Sonic Software Corp., a wholly-owned subsidiary
focused on offering messaging software; and its NuSphere Corporation subsidiary aimed at
delivering open source software and services. In 2002, Progress also introduced its PeerDirect
Corporation unit, which focused on distributed computing applications.

The company continued to grow in the first decade of the new millennium
with a string of acquisitions. From 2002 to 2010, Progress acquired XML database software vendor
eXcelon, data connectivity systems vendor DataDirect Technologies, and SOA systems provider Apama
as well as Persistence Software, NEON Systems, Actional, OpenAccess
Software, Mindreef, IONA Technologies, and Savvion. In 2017, Progress acquired
DataRPM, a provider of cognitive predictive maintenance for the industrial
Internet of Things market; and Kinvey, a backend-as-a-service company that
enabled developers to create and operate a cloud-backend for any type of
app. 

Internal Instability. Despite its successes, Progress Software has faced
internal instability. In 2006, the company launched an internal investigation into its past stock-option grants. The result of
the investigation led the company to restate its financial results
back through the 1996 fiscal year.

Executive leadership has seen rapid changes
from 2006 until the present, with continued efforts to renew the company’s
strength. In 2011, President and CEO Richard D. Reidy stepped down after
naming
his replacement, Jay Bhatt. Bhatt launched a strategic planning and
restructuring process that included
layoffs and divestitures of non-core product lines, making strides in shifting the company’s focus and appeasing shareholders
who were engaged in a proxy battle to sell the company.¹ Bhatt then
announced his own departure. A third leader, Philip Pead, was named Executive
Chairman and President in 2012 and CEO in 2013. Again in 2016, the company’s CEO
stepped down, and was replaced by Yogesh Gupta who had previously been president
and CEO of IT management cloud software company Kaseya, Inc., as well as CEO of
Fatwire Software.

Strategic Reorganization. To meet its goals, Progress underwent a
strategic planning process in 2012 and 2013, hiring consultants to reorganize
and rebrand the organization. In addition to a new CEO, Progress debuted a
redesigned logo and launched a community forum for developers. The company also
divested ten non-core product lines and laid off 10 to 15 percent of its
workforce. The main goal of these moves was to gain an edge in the
platform-as-a-service (PaaS) marketplace, including cloud, multi-platform, and
data-driven applications. Businesses relinquished during this period included the
company’s recognized SOA product lines, exiting a market in which Progress
Software held weight.

In 2017, the company initiated restructuring efforts to consolidate
facilities, roll out a simpler organizational structure, and cut overhead. More
than 400 jobs were eliminated – over 20 percent of its workforce – but Progress
cut $30 million in expenses.

Shift Toward Platform-as-a-Service. In 2013, the company
acquired Rollbase, a provider of
development platforms for on-demand applications. It also released
Progress Pacific, comprised of Rollbase and DataDirect Cloud, together with
assets from OpenEdge, DataDirect, and Corticon. With these
additions, Progress increased its revenues during the fiscal year. In 2014,
Progress Software continued to expand its refocused product lines with the
purchases of several developer platform providers. 

A Debacle with a Key Investor. Progress Software refused to force its
chairman to step down or purchase a privately held enterprise software firm upon
demands by its activist investor and second-largest shareholder Praesidium
Investment Management. Praesidium, which owns an approximate 8.8 percent stake
in Progress Software, complained in a September 2017 letter that although it had
gone to "great lengths" to work with the board of directors at
Progress, attempts had been met with "a series of elaborate obstructive
tactics and delays." Praesidium also said that private information between
itself and Progress had been made public by Progress Software. In its letter,
Praesidium called Progress out on 18 failed acquisitions between 2003 and 2016 –
which resulted in losses of $871 million of shareholder capital. The two
acquisitions that Progress Software made in 2017 have been called "wildly
speculative" by Praesidium. In a rebuttal statement, Progress Software
said, "We value Praesidium’s ideas and perspectives… However,
Praesidium’s mischaracterization of its engagement with the Company and our
Board of Directors is disappointing. Moreover, Praesidium fails to acknowledge
the successful execution of the strategy we announced earlier this year, which
followed a comprehensive evaluation of the Company’s offerings, customer needs
and the rapidly evolving business landscape in which we compete."
Praesidium sold its $200 million stake in Progress in early 2018. 

Key Executives

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Progress Software’s key executives include:

• Yogesh Gupta – Chief Executive Officer
• John Ainsworth – SVP, Core Products
• Stephen Faberman – Chief
  Legal Officer
• Paul Jalbert – Chief Financial Officer
• Loren Jarrett – General Manager, Developer and Tools Business 
• Katie Kulikoski – Chief People Officer 
• Tony Murphy – Chief Information Officer
• Gary Quinn – SVP, Core Field Organization
• Sundar Subramanian – General Manager, Cognitive First Business
• Jennifer Ortiz – VP, Corporate Marketing 

Major Products

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Table 1 outlines Progress Software’s core product areas.

Major Competitors

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According to Progress Software, its main competition comes from
Salesforce.com, Amazon, Software AG, Red Hat, Pivotal Software, Microsoft,
Oracle, and IBM.

• Amazon: https://www.amazon.com/ 
• IBM: https://www.ibm.com/
• Microsoft: https://www.microsoft.com/ 
  Oracle: https://www.oracle.com/
• Pivotal Software: https://www.pivotal.io 
• Red Hat: https://www.redhat.com/ 
  Salesforce.com:
  https://www.salesforce.com/
• Software AG: https://www.softwareag.com/

Recent Activity

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Progress Software’s focus consists of a cohesive product strategy and a streamlined approach to more efficiently drive
revenue. Tenets within this strategic plan include: 

1. Alignment of resources to drive profitability – Progress
   Software is primarily focused on customer and partner retention and success
   for its core products. 
2. Protecting and strengthening core business – By using its application development
   platform capabilities, Progress Software plans to provide both the platform
   and tools so that customers can build "cognitive applications."
3. Holistic allocation of resources – Progress Software is committed to
   returning up to 80 percent of its annual cash flows from operations to
   stockholders. The company has also adopted a more stringent approach to
   mergers and acquisitions in an effort to drive stockholder returns. 

In 2019, Progress Software acquired Ipswitch, a provider of secure data file
transfer and network management software, in a move valued at $225 million. This
deal boosts Progress’ core offerings for small and medium-sized businesses as
well as enterprises. Acquired products include: MOVEit, WhatsUp Gold, and WS_FTP. 

References

¹ Kevin Kingsbury. "Progress Software’s One-Year CEO: Sale?
Analyst Wonders." The Wall Street Journal. October 8, 2012.

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