When COBOL heat lights up the future
May 5, 2008
One year ago this month, Micro Focus announced its purchase of its most prevalent COBOL competitor for 3000 sites, Acucorp. The Micro Focus juggernaut was righting itself after a discouraging era that saw profits and revenues falling. Acucorp had built a successful solution of a COBOL compiler for HP 3000 sites in migration. AcuCOBOL is built to mimic the 3000's HP COBOL II as closely as possible with something created outside HP's labs.
After that $40 million purchase of Acucorp, Micro Focus reported today that is has gone on to set a record for yearly revenue, beating its "Drive to $225 (Million)" sales goal. Now the owner of two-thirds of the COBOL choices for HP 3000 sites will be purchasing NetManage, another $25 million spent to get into a business allied with IT enterprise operations. NetManage sells software "to transform core applications into new Web-based business solutions."
Two years ago, Micro Focus pursued an old, familiar business solution as its new management's goal. In simple terms, stemming the loss of business revenue was Job One. Legacy platforms were the primary means for the solution.
"The primary focus of the new management team is to continue to restore the business to achieve significant, sustainable, profitable growth and to enhance shareholder confidence over time," CEO Stephen Kelly said back then. After two years of buying businesses at a cost that's almost 50 percent of 2006 Micro Focus revenues, it looks like Micro Focus is making progress on the business it desired: Restoration of the Micro Focus operations. Stock traded about $250 a share on May 5.
It took COBOL revenues to make this restoration a reality. Clearly this is a compiler technology that still produced heat, since billions upon billions of lines of COBOL run the world's business. Buying ownership of newer technology is one thing that a company can do with its success in legacy offerings. COBOL for 3000 migrators comes from individual suppliers like Micro Focus. But a move away from it is just as possible as the Micro Focus drive to solutions not tied to COBOL. An HP 3000 software vendor is working on a design that not only leaves Micro Focus out of the picture, but in time erases the need for COBOL altogether.
The other one-third of COBOL choices, Fujitsu NetCOBOL, differs from both Micro Focus products. AcuCOBOL and Micro Focus are interpreted implementations of compilers. According to QSS founder Duane Percox, whose company is migrating its K-12 HP 3000 application to other platforms, "we felt we had less control with those compilers than a compiler like Fujitsu NetCOBOL, which is a native compilation."
Maybe even more important to the migrating customer, Fujitsu's COBOL has no run-time fees.
But even while QSS is using NetCOBOL, its longer-term goals include eliminating as much vendor-controlled technology as possible. Ruby is open source. "Ruby is a standalone object oriented program scripting language," Percox said. "A goal of our Ruby exploration is to begin to replace the COBOL with Ruby wherever it makes sense." QSS has COBOL in all of its software implementations, from the MPE/iX version to HP-UX to Linux.
A former HP 3000 lab expert, Jeff Vance, joined QSS this year for
just this kind of technology exploration. The aim of the project is
similar to what Micro Focus is buying with $25 million in cost cuts and
COBOL growth: a Web application foundation. QSS is employing
"the use of Ruby as a general purpose language for any number of things
(not necessarily Web based)," Percox said, "and when I say Rails I am really saying
'Ruby on Rails' which is the framework for Web applications."
Cutting down lagging products is important in the Micro Focus kind of business formula, because you need the money from somewhere to make the big purchases. It can be the kind of model where design elegance and customer loyalty can't hold a candle to growth's bright light. HP 3000 customers might recall how vital growth was to an HP that had to cut out the 3000 from future plans. Kelly remains at the CEO desk at Micro Focus, a UK company which trades only on the London Stock Exchange. Two years ago he said
Tough action has been taken in regard to costs, the benefits of which we expect to flow through to operating profits in FY2007. Returning to sustainable revenue growth is the key factor that will determine the long term success of the Company. And while I believe we have broadly arrested the decline, our revenue outlook remains cautious as we stabilise and focus the business.