Progress Software has pledged to devote intensely in R&D for Chef Software after its $220 million acquisition bid closes, but the two companies have to close a sizeable hole to catch up with hot IT automation developments.
Progress has its origins in a fourth-generation computing language released in 1981, now identified as OpenEdge. Most of the firm’s revenues are even now tied to its OpenEdge merchandise, but it has amassed a whole of 24 acquisitions considering that 2001, and seven in the IT automation and DevOps house considering that 2014.
These involve Telerik, which created a .Internet UI/UX developer instrument that includes the open up supply Fiddler debugging instrument Kinvey, maker of a reduced-code application dev platform and Ipswitch for managed file transfer. Progress also sells network monitoring applications WhatsUp Gold and iMacros, acquired with Ipswitch.
Even so, most of Progress’ profits is linked to OpenEdge, in accordance to the firm’s 2019 ten-K submitting with the SEC, and CEO Yogesh Gupta acknowledges the firm is perceived as a legacy participant.
“Progress is a forty-year-outdated software package firm, and I never know how numerous of those exist on this planet,” Gupta reported. Microsoft and Oracle are around the identical age, but “people only speak about companies that ended up founded this century — there are couple like us.”
Progress Software spends a lot more than 20% of its profits on investigate and enhancement. That compares favorably to larger companies these kinds of as Oracle, which spent fifteen% of profits on R&D in its fiscal year finished Might 31. Gupta reported Progress plans to improve R&D investment to aid develop Chef merchandise, while he declined to specify a path for that enhancement forward of the acquisition’s close, which is expected in 30 times. He also declined to say which, if any, of Chef’s current workers will be a part of Progress.
Progress has practical experience doing the job with open up supply communities through its Fiddler software package, and Chef’s open up supply licensing update two decades ago was a portion of its attractiveness as an acquisition target, he reported.
Innovation or maintenance method?
Chef customers will almost assuredly obtain ongoing strong support from Progress, and Chef’s current business enterprise will be sustained for the foreseeable foreseeable future, Forrester Exploration analyst Charles Betz reported. But in the long run, it truly is an open up question irrespective of whether Progress and Chef will be capable to build contemporary attractiveness in IT automation, Betz reported.
“They’re about a $four hundred million firm [dependent on past year’s revenues of $397.six million] and they paid $220 million for Chef,” he reported. “The question is how substantially R&D Progress will be capable to sustain.”
For now, the deal seems like “an outdated-university custodial invest in,” related to those manufactured by other legacy companies these kinds of as CA, Betz reported.
“They aggregate smaller corporations, do the economic engineering and maintain the business enterprise, but massive innovation is off the desk,” he reported.
Chef Software also confronted the Innovator’s Dilemma in excess of the past five decades, as containers and Kubernetes ushered in ideas these kinds of as immutable infrastructure that manufactured the firm’s original configuration administration differentiation to some degree obsolete.
Charles BetzAnalyst, Forrester Exploration
The firm began to increase its portfolio in reaction to that pattern in 2015, but more recent merchandise these kinds of as Chef Automate and Chef Habitat have struggled to seize market buzz related to rival open up supply projects, which involve Google’s Tekton and Netflix’s Spinnaker. In simple fact, some Chef customers have discovered that an best use for Chef Habitat is to update legacy applications but have reported it has not been as excellent a in shape for more recent cloud-indigenous applications.
On top of that, HashiCorp’s Terraform also overshadows Chef in infrastructure as code, a layer down below configuration administration. Chef’s InSpec policy as code instrument has discovered some recognition in the past couple decades, mainly among the current Chef customers.
There is lots of legacy infrastructure and legacy applications that will keep on being for numerous decades to come, Betz included, but they never essentially have to have substantially innovation at this point.
“Record is actively playing alone out here,” Betz reported. “This seems like a tech generation moving into legacy, which includes the gadgets that desired configuration administration and the software package that managed them.”