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Progress Software Corporation Business Information, Profile, and History

14 Oak Park
Bedford, Massachusetts 01730

History of Progress Software Corporation

Progress Software Corporation is a global supplier of application-development and database software products and services for information-service organizations in business, industry, and government. The company's Enterprise Division markets the company's PROGRESS product line which includes a software application development environment (ADE) that consists of the PROGRESS fourth generation language (4GL), the PROGRESS relational database management system (RDBMS), and related application development tools. PROGRESS products enable developers to quickly and cost-effectively create and deploy enterprise-class client/server software applications for PROGRESS, Oracle, Sybase, SQL Server, ODBC, and DB2/400 databases. The company's Crescent Division is a leading supplier of software tools and add-on components, services, and support programs for corporate users developing business-critical applications with Microsoft Corporation's Visual Basic application development environment. The products of Progress are sold directly to organizations and through more than 2,300 resellers offering thousands of applications and serving a wide range of industries. The company markets and supports its products in more than 60 countries through a network of more than 20 subsidiaries and more than 30 distributors operating in Europe, Australia, Latin America, and Asia.

Progress Software Corporation was founded in Bedford, Massachusetts, in 1981 by three veterans of the mainframe computer application development market--Joseph Alsop (nephew of the political columnist Joseph Alsop and older brother of future computer industry commentator Stewart Alsop II), Charles Clyde, and Ziering Kessel--and incorporated that same year as Data Language Corporation. Alsop went on to become president of the company, while Clyde became director of development and Kessel became chief technical officer.

Targeting the need for comprehensive and high-level application development products able to enhance information processing productivity in a growing midrange computer systems market, Data Language Corporation was launched after its founders developed the PROGRESS Application Development Environment (ADE), designed to enable development and deployment of software applications that were scalable, portable, and reconfigurable across client/server, host-based and mixed computer environments. Opting to avoid head-on competition with established mainframe computer software companies and choosing not to develop software for the then-young IBM personal computer (with limited memory), the company's founders initially developed the PROGRESS ADE for only the Unix operating system, closely associated with the third generation Cobol or language C, a programming language then popular only within academic and scientific communities.

In 1984 Data Language released its first commercial version of the PROGRESS ADE for Unix and the following year unveiled a version for MS-DOS. In 1985, the company's first full year of product shipments, Data Language recorded its first profitable year. By 1987 the company had released PROGRESS software for computer networks and the VAX/VMS (a Digital Equipment platform) and CTOS/BTOS operating systems and was gaining increasing marketplace attention and brand name recognition; as a result, the company changed its name to Progress Software Corporation to reflect the name of its software.

By the end of the decade Progress's growth was being recognized by business periodicals. In 1989 the company was ranked 38 on Inc. magazine's list of the 500 fastest-growing private American companies and was first among that list's $10-million software companies as well as the largest supplier of database and application development software on Inc.'s list. In 1989 Progress was also ranked seventh on the New England Business list of the 100 fastest-growing private and public companies in that region.

During the late 1980s about half of Progress's revenues were being generated annually from international business which stemmed from a network of wholly owned subsidiaries in Europe and Australia that had grown in number to ten and a distribution system spanning Europe, Asia, and Latin America. By 1990 Progress sales had mushroomed sevenfold since 1987, from $6.1 to $40 million.

Between 1989 and 1990 Progress released PROGRESS Version 5 and Version 6, both enhanced versions of its 4GL language and RDBMS. New features of Version 5 included support for ANSI-standard Structured Query Language (SQL) and a DOS memory saver. Applications developed with Version 5 could run unaltered on multiple operating systems--such as microcomputers and minicomputers and diverse and dissimilar networks of different hardware, operating systems and network protocols--including VAX/VMS, MS-DOS, UNIX, XENIX, ULTRIX, AIX, A/UX and CTOS/BTOS and also networks using NetBIOS, TCP/IP, DECnet, OpeNET, and SPX/IPX protocols. Version 6 allowed users to access, modify and integrate data in and among databases made by Progress, Oracle, and Digital Equipment Corp. (DEC), and the updated RDBMS additionally allowed users to access third generation language (3GL) and as many as 240 databases simultaneously.

By 1990 Unix had become a commercially popular operating system because it was not restricted to particular computer brands and functioned on a multiple-user network. Unix was as a result popular with Progress's customers: large corporation computer programmers writing custom-designed software for in-house use, representing about one-third of the company's business, and resellers, typically selling deployment versions to clients in retailing, medical accounting, manufacturing and trucking. Entering the 1990s the company's marketing focus was directed towards these "value-added" resellers that utilized Progress products to develop their own commercially sold software applications. The middleman resellers of PROGRESS products purchased program development software from Progress and then in turn spawned business as their clients purchased dozens of scaled-down program versions, each requiring a deployment license from Progress and thereby generating substantial follow-on revenues (represented by more than 60 percent of the company's 1990 North American revenues).

In 1991 Progress expanded its cross-platform reach after agreeing with Micro Decisionware Inc. to develop and market a link from the PROGRESS 4GL and RDBMS to IBM host environments that could connect to Micro Decisionware's database. That same year the PROGRESS ADE was chosen over competing systems made by Oracle, Ingres, Informix and Sybase to support the new second-generation library automation system made by CLSI Inc., a leader in the library-automation industry.

In July 1991--with the popularity of the Progress's computer development language and database growing--Progress went public, selling 1.2 million shares of stock (half by the company and half by certain stockholders) at an initial offering price of $25 as the company's stock debuted as one of the most active stocks in over-the-counter trading on the New York Stock Exchange. Proceeds were used to cover working capital needs through the 1992 fiscal year. With technology stocks a hot commodity on Wall Street, within a week of the initial public offering Progress's stock had climbed to 28 and three-quarters and by November of that same year risen to $44. For its 1991 fiscal year, Progress's earnings rose 58 percent to $6 million on revenues that jumped 46 percent to $58.3 million.

After broadening its focus in 1991 to include IBM platforms, in February 1992 Progress released PROGRESS/400, an updated version of its application development software for the IBM AS/400 operating environment. The new software allowed AS/400 developers and users to create and run client/server applications in the AS/400 environment and for the first time to support development and implementation of distributed applications that allowed users to access data across a network of MS-Windows, OS/2 and RS/6000-AIX that was linked to IBM AS/400 database servers. The release of PROGRESS/400 not only brought the capabilities of PROGRESS to the IBM AS/400 mid-range computer family; it also marked a formalization of a marketing and sales agreement that named Progress an IBM "industry applications specialist" and helped spawn an agreement for Progress to develop cooperative applications for J.D. Edwards & Company, a leading supplier of AS/400 environment software.

In 1992 Progress and Object Design, Inc. agreed to jointly develop and market software linking the PROGRESS 4GL to Object Design's ObjectStore object-oriented database management system. That same year Progress linked up with Avis Inc. to develop a new transaction-processing system for rental car tracking based on the PROGRESS system.

By the close of 1992 the global operations of Progress had been expanded to 12 subsidiaries and 34 distributors operating in more than 50 countries. For fiscal 1992 Progress's earnings mushroomed 58 percent to $9.61 million on revenues which leaped 46 percent to $85 million.

Progress entered 1993 fifth in the $1.2 billion Unix market for application development tools (controlling about 4 percent of the market), with its shares trading at $57, down from a 52-week high that peaked in December 1992 at $61.50 but substantially higher than its 1992 low in the mid-20s. Progress's business strategy had evolved by this time to include competing with major application-development forces such as Oracle in the open database system market by producing application development tools which could run on both PROGRESS and Oracle databases. And while larger competitors often targeted a customer base that focused on central corporate offices such as accounting, Progress's products targeted individual lines of business within corporations that tended to require customized applications and thereby offered a marketing niche for Progress.

In order to broaden the ability of PROGRESS to support other operating systems, in 1993 Progress expanded its strategic alliances and was named an "independent software vendor" for Unisys, making the PROGRESS ADE the first to be jointly marketed under the Unisys developer relations program. That same year Progress also signed a cooperative software marketing agreement with IBM, becoming one of the first application development tool vendors chosen by IBM to join its market development program designed to increase the number of AS/400 application development tools available. In 1993 Progress additionally signed an agreement to support Novell Inc.'s network operating systems (which in turn could be connected to IBM's AS/400 midrange platform) and an agreement with Santa Cruz Operation, an international leader in open systems software, for joint engineering, training and support.

Delays in the delivery of PROGRESS Version 7 pushed the company's stock into the mid-30s range in 1993 before the new operating system was released late that year in Progress's first worldwide marketing initiative and global positioning of its product line. Version 7, a cross-platform ADE featuring new capabilities for client/server environments, expanded Progress's stake in the server and application development market to include Windows and Motif graphical user interface (GUI) platforms, with versions released for Windows, SCO Unix, HP/UX, AIX and SPARC operating systems. Version 7's cross-platform ADE allowed users to create both character-based and GUI applications and move applications to Windows or Motif without any code changes, making it easier for developers to create new Windows and Motiff applications.

In 1993 Progress continued expanding its marketing reach, adding three new wholly owned subsidiaries--in Spain, Mexico, and Singapore&mdashmed at strengthening the company's position in Asian/Pacific, Latin American and European markets. By the end of the year Progress had 15 international subsidiaries and the company was ranked 82nd on Fortune magazine's list of America's 100 fastest-growing companies and 86th on Forbes 1993 list of the 200 best small publicly traded companies. Progress also had a network of more than 2,000 resellers using the company's application tools to develop custom applications, with 60 percent of the company's revenues in 1993 coming from these activities and add-on sales of deployment software versions. For 1993, the company's earnings rose 34 percent to $12.8 million on revenues that broke the nine-figure plateau for the first time and rose 31 percent to $111.64 million. Despite the company's move into the IBM AS/400, more than two-thirds of the company's revenues came from Unix products in 1993.

By 1994 Progress had a range of products that could work in a variety of development and deployment environments and support graphical, character mode and block mode application deployment using either the PROGRESS RDBMS or other high performance dataservers to work across networked, client/server designs. In 1994 Progress began focusing on speeding up the process of application development and providing greater access to various operating systems, resulting in the release of PROGRESS Dataserver, a Windows-based program enabling users to access information in databases of two competitors, Oracle and Sybase. That same year Progress entered into a cross-platform support agreement with Novell.

In June 1994 Progress formed a joint venture subsidiary with Nissho Iwai Corporation, one of Japan's largest diversified general trading companies. The new 50 percent-owned subsidiary, designed to market PROGRESS products and expand the company's presence in the Pacific Rim, was later incorporated as Progress Software KK.

With more 250,000 product licenses worldwide and a network of 18 international subsidiaries and 33 distributors operating in 60 countries, Progress entered 1995 by substantially expanding its product line through a signficant acquisition. In January 1995 Progress acquired Crescent Software Inc., a Connecticut-based leading developer of add-on components for users of Microsoft's Visual Basic (VB), for $3 million (including about $2.5 million of in-process software development). At the same time Progress created two divisions within the company: the Enterprise Division, to develop and market all PROGRESS products; and the Crescent Division, to market existing Crescent add-on components and develop an integrated suite of high-performance products to enhance and make application development within Visual Basic easier. The acquisition of Crescent targeted Progress's growing interest in serving an estimated one million Visual Basic users and giving those developers of client/server applications more options when working with the Microsoft application development program. With Visual Basic growing in popularity as a client/server tool for personal and workgroup market segments, the acquisition resulted in several strategic benefits: it legitimized the market for VB add-ons (which previously were often of low quality and developed by smaller software firms); it expanded Progress's product line into low-end software; and it provided the company with a means to turn around a two-year slide in sales growth by capitalizing on the growing popularity of Visual Basic and offering developers tools and components to build more complex applications.

At the time of the acquisition Crescent developed and sold VB tools and components and had its own communications add-on code; in addition, Progress set its new division on a course to create development tools for faster VB applications and announced the planned development of new VB add-ons that could translate VB code into C++ (a modified version of language C). Two months after Progress acquired Crescent, the company unveiled the division's first new product: PowerPak Pro, a suite of VB development tools and components designed to provide users with more efficient development and deployment of workgroup and departmental applications for businesses.

Progress continued expanding its international operations in 1995. In February the company opened its first Central European subsidiary (and its 13th European subsidiary) in Prague, Czech Republic. The new subsidiary, Progress Software SPOL, S.R.O., was formed to market and support the company's PROGRESS ADE in the rapidly growing republic and serve governmental and industrial customers, including those in banking, finance, healthcare and manufacturing. In June 1995 Progress opened a centralized technical support facility in Rotterdam, The Netherlands to serve its operations in Europe, the Middle East and Africa. The new EMEA Technical Service Centre--offering a laboratory, training capabilities and engineers fluent in local languages--initiated service for The Netherlands with support for other countries expected to be phased in through 1996.

In November 1995 Progress released its PROGRESS Version 8 ADE, making client/server application development easier and faster by capitalizing on the power of Object-Oriented (OO) programming, a component-based visual programming development environment. Features of Version 8 included the new PROGRESS SmartObjects that capitalized on the advanced OO technology and provided reusable application components (or pre-programmed components) that could be assembled into applications. The Version 8 RDBMS was expected to be released in early 1996.

In late 1995 Progress announced it would support Digital Equipment's Alpha systems running on Microsoft Windows operating system, and the Crescent Division released its new VB4 Jump Start Kit which could assist corporate developers with their transition to the Microsoft Windows 95 operation system and VB 4.0. Crescent also introduced OLE Custom Controls (OCX) versions of its entire product line, enabling corporate developers to create more sophisticated VB business applications using custom controls.

In 1995 Progress was listed 116th on Forbes 1995 200 Best Companies in America. And while Progress's sales growth began declining during the early 1990s--falling from 46 percent in 1992 to 25 percent in 1994 as resellers were slow to convert from the company's older character-driven versions of PROGRESS to the more graphical, event-driven programs beginning with Version 7--that conversion was nearly complete by the close of 1995. For the year Progress's sales growth climbed to 29 percent, and earnings rose 16 percent to $16.68 million on revenues of $180.13 million (compared to 1994 when the company's stock fluctuated from a high of $56.50 to a low of $27.25 and Progress earned $16.9 million on revenues of $139.2 million).

In early 1996 Progress began initial steps to become a major World Wide Web supplier of products by using the Web to market its products, offering buyers the opportunity to secure and order delivery of products. The company also announced that by mid-year its Enterprise Division would sell SmartObjects products through a Web site storefront. In early 1996 the Crescent Division also took initial steps to use the Internet for marketing purposes and launched Code Depot, a on-line storefront designed to serve the needs of VB application programmers.

Progress moved towards the close of 1996 with its principal competition comprised of larger companies: Oracle, Sybase (which in 1995 acquired another competitor, PowerSoft Corp.) and Informix. Nonetheless, Progress had a distinct competitive advantage in its RDBMS which could work on most types of computer hardware, including that made by competitors. The company also expected to profit from the growing Visual Basic add-on tools market by introducing new products and capitalizing on the strong relationship Crescent has had with Microsoft Corporation, allowing Progress to take advantage of the release of new Microsoft desktop standards. Progress additionally hoped to benefit from two business trends: the growth in corporate client/server-based networks and the decentralization of large corporations, making more important the departmental market for application development software.

Principal Subsidiaries: Progress Security Corp.; Progress Software International Sales Corp. (Barbados); Progress Software Corporation of Canada Ltd.; Progress Software GesmbH (Austria); Progress Software Ltd. (Hong Kong); Progress Software NV (Belgium); Progress Software A/S (Denmark); Progress Software Corp. Ltd. (China); Progress Software Oy (Finland); Progress Software GmbH (Germany); Progress Software B.V. (The Netherlands); Progress Software Svenska AB (Sweden); Progress Software AG (Switzerland); Progress Software de Argentina S.A.; Progress Software KK (50%) (Japan); Progress Software Ltd. (United Kingdom); Progress Software Pty., Ltd. (Australia); Progress Software S.A. (France); Progress Software SPOL, S.R.O. (Czech Republic); Progress Software A/S (Norway); Progress Software International Corporation; Progress Software Europe BV; Progress Spain S.A.; Progress Software de Mexico S.A. de C.V. (Mexico); Progress Software Ptc. Ltd. (Singapore).

Principal Divisions: Enterprise Division; Crescent Division.

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