COMPUWARE CORP.

Compuware Corp. makes and sells software that allows clients to test and debug corporate mainframe systems. It also offers a suite of system management tools, which have become increasingly important to companies conducting business electronically. Compuware's services, which bring in nearly half the firm's revenues, include systems integration and capacity testing. Compuware also operates three digital development centers (DDCs), which offer Web site design and creation and related e-business services. One of the firm's goals is to offer comprehensive e-commerce services and solutions to its clients.

EARLY HISTORY

Along with partners Thomas Thewes and Allen Cutting, Peter Karmanos Jr. founded Compuware Corp. in 1973. Based in Southfield, Michigan, the company offered professional data processing, computer installation help, and a team of programming consultants willing to take on short-term projects. Compuware operated on the premise that its technical services allowed clients to spend more time running their business, rather than dealing with technology concerns. Four years later, the firm unveiled its first software product, Abend-AID. The fault diagnosis tool made the jobs of programmers easier by examining corporate mainframe systems for errors and offering suggestions for alterations. Abend-AID's success prompted the firm to establish a separate software division.

In 1978, Compuware established an office in the northeastern United States. A year later, the company developed an interactive analysis and debugging software program called MBX Xpediter/TSO, which eventually won an International Computer Program (ICP) award. Sales exceeded $1 million in 1983. That year, Compuware shipped File-AID, a data management software line for IBM and IBM-compatible mainframe computers. The firm created its first automated testing tool, MVS PLAYBACK, in 1986. The following year, Abend-AID received an ICP award, and Compuware expanded internationally for the first time by purchasing European distributors. By the end of the decade, sales had grown to roughly $100 million. Software brought in 65 percent of that total, while services accounted for 30 percent.

In an attempt to shore up its position in the interactive analysis and debugging industry, Compuware acquired Centura Software in 1990. The firm created its first personal computer (PC) software product in 1991 by developing a PC version of File-AID. However, most of Compuware's new products continued to focus on improving the performance of large corporate mainframes. Other product releases included database manager DBA-XPERT and Pathvu/2, an interactive analysis and debugging program for the OS/2 platform. The purchase of XA Systems Corp. gave Compuware access to a business-critical application testing and management software program. In 1992, the firm completed its initial public offering.

International growth continued early in the decade with the creation of Tokyo-based Compuware Japan Corp. and Compuware Corporation Do Brasil. Compuware upped the number of its software product lines to nearly 30 with the acquisition of Landmark Systems Corp.'s Eyewitness software. Compuware also bought EcoSystems Software Inc., including its client/server network management software. According to the firm's corporate history, the acquisition was a pivotal one because it allowed Compuware to offer "the most comprehensive suite of end-to-end applications and e-commerce performance management tools available."

MOVE INTO E-COMMERCE SOFTWARE AND SERVICES

In the mid-1990s, Compuware acquired Uniface Holding B.V., a client/server software producer based in the Netherlands, and CoroNet, a management systems software maker based in Los Altos, California. Compuware then renamed CoroNet's software EcoS-COPE and merged it into its EcoSystems software line to increase the comprehensiveness of its network management tools, including those related to e-business. The firm continued its plan of growth via acquisition with the 1996 purchase of London-based automated software testing products and services provider Direct Technology Ltd. and the 1997 purchase of NuMega Technologies Inc., one of the world's largest manufacturers of error detection and debugging software for Windows and Java systems.

Because mainframe computers—what Compuware's software attempted to debug and enhance—were losing ground to Internet-based networks, the firm shifted gears in the late 1990s. It devised a plan to spend a few years preparing firms for the Y2K transition and then retain many of those same firms by offering them e-commerce services and solutions once the transition was complete. In 1997, to position itself as an authority on the impending Y2K transition, Compuware published Millennium, a newsletter about the effects the year 2000 could have on the computer industry. Sales exceeded $1 billion for the first time that year. Millennium was published online in 1998.

To augment its growing base of e-commerce holdings, Compuware purchased CACI Products Co. in 1999. The firm integrated CACI's application capacity planning tools into its EcoSystems suite, allowing clients to better manage the performance of their e-commerce applications. Although Compuware was ultimately successful in its efforts to become a leading Y2K consultant for companies operating mainframe systems, it soon found that it had overestimated the number of clients who would be looking to move into e-commerce early in 2000, and underestimated the amount of time it would take to train its Y2K specialists to function as e-commerce consultants. As a result, the firm failed to meet earnings forecasts for the first time in several quarters, and stock prices tumbled by roughly 80 percent in 2000.

Despite the difficulties Compuware experienced as it worked toward becoming a full-scale e-commerce service provider, it continued to expand into other ventures. For example, in 1998 Oakwood Healthcare Inc. and Compuware established a joint venture called CareTech Solutions Inc. to offer technical application services to healthcare providers. The firm also continued to add to its software offerings. The acquisition of Programart Corp. marked Compuware's first foray into application performance management (APM) software. In 1999, the company moved into the western and southeastern regions of the United States when it bought Data Processing Resources Corp.

In 2000, Compuware turned two of its acquisitions—Montreal-based Nomex Inc., a provider of Web design and development services, and Kansas City-based Internet consulting services provider BlairLake Inc.—into digital development centers (DDCs). The DDCs were designed to offer full-scale e-commerce services to clients wishing to undertake e-business ventures. A third DDC was soon opened in Farmington Hills, Michigan, at the firm's headquarters complex. The purchase of Optima, an e-business performance measuring software developer, further increased Compuware's e-commerce holdings.

Network Computing magazine named Compuware's Application Expert 2.1 as the recipient of its Editor's Choice Award in 2001. The firm developed the product in response to growing demand by e-business operators, particularly those with increasing traffic, for tools that would allow them to manage their Web sites' performance. Compuware's Application Expert helps clients to pinpoint problems and their causes and also recommends solutions. Also in 2001, the firm unveiled a version of its Abend-AID program designed specifically for e-business applications and upgraded its EcoPredictor to include the ability to use simulation to predict potential network bottlenecks. Research has indicated that online customers who wait more than eight seconds for a page to begin loading will likely go to another site. Compuware's products, which work to address these crucial performance issues for e-businesses, seem to bode well for the firm's future as an e-commerce software developer and service provider.