Progress Software CEO Richard Reidy Talks “Major Transition” and “Whole New Strategy”
Who’s the $500 million tech company that nobody has heard of? That would be Bedford, MA-based Progress Software, one of the largest software makers in the state. Progress (NASDAQ: PRGS) has been on quite a run lately, with its stock rising steadily since September—from a low of $26.71 on Aug. 31 to around $41 for the past few weeks in December.
In advance of the company’s quarterly earning announcement later today, I spoke with CEO Richard Reidy to get an update on the firm’s, well, progress toward some pretty ambitious goals. I particularly wanted to know what’s new at Progress since March 2010, when Reidy (pronounced “reedy”) and chief technology officer John Bates sat down with my colleague Wade Roush for an extensive two-part interview (here and here). One comment Reidy made in that Q&A stood out to me—that Progress is like a $500 million startup in some ways.
Turns out he didn’t mean that in the usual sense that big companies talk about—that they can innovate, do lots of R&D, and be nimble like a startup. He meant that Progress is making a fresh start, given its 30-year history—it has been publicly traded for 20 years—and given its extensive experience in lots of distinct business software markets. “Now we’re in a major transition into a very focused company,” Reidy says.
“We’ve always been way too entrepreneurial, way too curious, and meandering all over the place,” Reidy adds. “The notion of the ‘$500 million startup’ is now we’ve got all those assets, customers, technologies—what do we do to double the size of the company going forward? We’re embarking on a whole new strategy.”
Progress’s focus in the past year has been on selling software that helps companies be much more “operationally responsive.” That means if you’re an airline or travel agent, and your customers are all grounded by the Eyjafjallajokull volcano, you figure out the logistics of trains, boats, and cars, and help them get on their way. If you’re a telecom company, you handle the day-to-day billing and services as mobile customers sign up across different devices. If you’re a bank, you need software to manage your computerized trading and react quickly to changes in the market.
In all these cases, what Progress provides is a sort of “control tower” that a business or operations person can use to track patterns and adjust to events as they occur. The interface goes beyond any standard kind of dashboard and gives employees real-time alerts, performance indicators, and interactive tools. And besides reacting to complex events, companies need to manage business processes and transactions efficiently—and Progress makes software along those lines too.
Reidy had talked previously about becoming a billion-dollar company. He pointed to 70 percent revenue growth in the quarter ending in June—we’ll hear the most recent quarterly results later today—and said he thinks “the billion-dollar mark is achievable through some acquisitions, to accelerate our core strategy” in about five years or so.
That brought us to the topic of Progress’s acquisition strategy. The company has made 14 acquisitions in the past 20 years, including Savvion, a process management software firm, back in January. Not surprisingly, Reidy says Progress is looking at ways to add different capabilities, and will also try to form partnerships to fill gaps in its technology. His advice to smaller companies that might get courted by a big company like Progress: “When they make a phone call, return it.” (You’d be surprised how many don’t, he says.)
As far as any rumors that Progress itself could be acquired by a giant like Oracle, IBM, or Microsoft, Reidy dismissed them, saying, “We are an acquirer, not an acquiree.” Though he added, “Ultimately the shareholders would decide, if they made a huge offer.” (Progress isn’t big enough to move IBM’s financial needle, Reidy says, but it also isn’t a small startup that could be swallowed up and turned into a new feature.)
Reidy joined Progress in 1981, and he became CEO fairly recently, in 2009. I asked him about his leadership style and the culture he is instilling. “The culture change I’m bringing to the company is to be much more focused in specific areas,” he says. “It wasn’t that we didn’t have a strategy. We had too many.” His leadership style is to bring in the right people, he says, and to make sure the company is disciplined and focused on executing and growing in the right way—rather than being first to market with an interesting new technology, say.
Lastly, I asked him how Progress fits into broader trends in computing—big data, social networks, mobile applications, cloud computing, and so forth. “As a company, we always anticipate and take advantage [of trends],” he says. “But it tends to be 10 to 15 year cycles in major changes of how people build applications. There’s a lot of noise.” The next big application development environment (which is already happening) will involve cloud and social computing, he says, and will address “the vast volumes of information and things people need to think about to make business decisions.”
As Reidy sees it, the “holy grail of software is to put control in the hands of the business user.” He adds, “It’s more than that the world needs new developer tools. The world needs more tools so businesses can adjust the automation they use to make decisions.”
And if his company continues the trajectory it’s on, the world will be hearing a lot more about Progress too.
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