Boole & Babbage, Inc.
Boole & Babbage, Inc.
Sales: $197 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: BOOL
SICs: 7372 Prepackaged Software
Boole & Babbage, Inc. is the oldest independent software vendor in the systems management industry. A worldwide leader among providers of software for managing computer networks and mainframe systems, Boole sells more than 40 products in North America, Europe, Asia, Australia, and Latin America. The company’s 6,000 customers across the globe include most of the Fortune 500 list and about two-thirds of the world’s largest commercial banks. Boole’s COMMAND/Post network management software is the market leader among all solutions of its type.
The Early Years
Boole & Babbage was founded in 1967 by two men, but neither of them were named Boole or Babbage. The company was started by Ken Lolence, a physicist and software specialist, and David Katch, an expert in computer software monitoring. These two computer professionals decided to join forces to create software for measuring and managing the performance of mainframe computer systems. They named the company after two earlier geniuses whose work had made computers possible: mathematician George Boole, the inventor of Boolean algebra, and Charles Babbage, inventor of the first computer engine. To bankroll their project, Lolence and Katch found the Asset Management Company, led by venture capitalist Franklin “Pitch” Johnson. Previously, Johnson had provided seed capital for a number of pioneering Silicon Valley companies.
Boole’s mainframe monitoring package, which could track how many hours a day big, expensive computers and peripherals were up and running, was the first software of its kind, and as such it set the industry standard for years to come. By late 1968 the company had collected its first million dollars in sales. In spite of the special niche Boole was creating, however, the company had difficulty remaining profitable. In 1972 Boole made Bruce Coleman, a Harvard graduate who had been with the company less than two years, president. From his previous position as head of the sales and finance department, Coleman saw that Boole’s expenses were far too high for the revenue it was generating. As president, Coleman went to work on the problem. By the following year Boole was breaking even. In 1978 Boole earned a pretax profit of more than 15 percent.
By 1978 Coleman felt ready to run a bigger company. He left Boole to join another software developer, Informatics General. He later went to work for Walker Interactive Systems, a San Francisco-based producer of accounting software packages. In Coleman’s absence, Boole fell on hard times. As the IBM computers on which Boole’s software ran evolved, the company’s product line started to become obsolete. An ill-advised investment in another software company made matters worse. By 1980 Boole was teetering on the brink of bankruptcy.
To right the ailing company, Boole brought in Jack van Kinsbergen as president in 1980. Van Kinsbergen was seen as an ideal candidate for the job because of his background at IBM—where he had helped develop the mainframe computers that ran Boole’s software, and at Hughes Aircraft—where the software was put to practical use. When describing what it was that Boole & Babbage provided, Van Kinsbergen was fond of resorting to an automotive analogy. “If you bought a car and all you had was a steering wheel, pedals and an ignition but no gauges,” he was quoted as saying in a 1986 Business Journal article, “you could drive the car but you’d probably have some difficulty figuring out how far you’d gone, how many miles you could get out of your gas tank, how much gas was left, etc.” Boole’s software provided the computer’s metaphorical driver with just that sort of information.
In 1982 Boole made what investor Johnson—chairman of Boole’s board since 1970—described in Boole & Babbage Magazine as “the single most important acquisition we’ve ever made” in the purchase of The European Software Company (TESC). The leading independent software distribution company in Europe at the time, TESC became a wholly owned subsidiary of Boole and was renamed Boole & Babbage Europe in 1990. The addition of TESC gave Boole a presence in all of Europe’s most important markets, including England, France, Germany, Spain, Italy, and the Scandinavian countries.
Ups and Downs in the 1980s
Boole enjoyed a couple of strong years in the early 1980s. New mainframe management products were added, and the company went public in 1984. The following year, however, IBM threw Boole a curve by changing its operating system, leaving the company with a batch of out-of-date software products on its hands. Reeling from IBM’s move, Boole was forced to discard nine of its 25 products and lay off 100 employees. For fiscal 1985 the company lost $6 million on sales of $28.5 million. Still smarting from this turn of events, Boole looked to former president Coleman to turn things around. Coleman returned as president and CEO, while van Kinsbergen stayed on as chief technical officer, allowing him to focus on the technological end of the business, where he had always been most comfortable.
Coleman saw that Boole’s problems went beyond events at IBM. “The changes in the IBM operating systems had hurt, but the company had over-expanded, too,” he was quoted as saying in a 1986 Industry Week article. “It got a little too optimistic about its ability to generate revenues.” Coleman quickly took measures to cut expenses, and he placed a renewed emphasis on sales and marketing. Three new products that supported the new IBM systems were added by the end of fiscal 1986, and plans were made for two more to debut the following year. For 1986, Boole’s sales grew comfortably to $34 million.
Boole’s revenue grew steadily through the rest of the 1980s, reaching $41.7 million in 1987 and $56 million in 1988. In 1988, Johannes Bruggeling succeeded Coleman as president and chief executive of Boole. By the following year Boole was selling 40 products, all of them software packages for mainframe computers, in the United States, Europe, Asia, and Latin America. Those products, part of the Main View systems management architecture, included monitoring systems, automated operations products, and advisers. Sales at Boole climbed to $74.8 million for 1989.
Challenges in the 1990s
As the 1990s began, the company faced a gigantic challenge. Boole had staked its entire operation on the primacy of mainframe computers. By 1990 it was beginning to look as though mainframes were going the way of the dinosaurs. Throughout the business world, large central computers were being replaced by networks of small, personal computers all fed by a powerful “server”—a system known as “client/server.” Boole began working on its first client/server software in 1990. COM-MAND/Post was described in company literature as a product for “managing availability and service levels in complex distributed environments.”
Even with the introduction of COMMAND/Post, however, the transition to client/server was a traumatic one for Boole. The company’s health was still dependent in large part on that of IBM and the mainframe. The entire mainframe industry began to bottom out in 1991. Mainframe manufacturers such as IBM and Amdahl Corporation saw their sales go into freefall, and Boole joined them in their descent. For 1991 the company reported a loss of $11 million on sales of $101 million. Boole’s products were becoming obsolete so fast that some of them did not even generate enough revenue to cover the cost of selling them.
To help stop the bleeding, Boole brought in a new president, Paul Newton, a veteran of software pioneers University Computing Corp. and Ingres Corporation. Newton immediately took measures to bring Boole into the 1990s. The first thing he did was to fire 11 percent of the company’s employees. A large portion of those layoffs came from the sales force, which had doubled in size during predecessor Bruggeling’s tenure. Next, Newton began to scrutinize the company’s product line. He determined that the best course of action was to narrow Boole’s focus. His goal was to concentrate on just a couple of products and to make them very well.
Through its large international customer base, Boole & Babbage transparently manages business applications that touch the lives of millions of people each day. Working behind the scenes, we ‘re there during point-of-sale transactions at shopping malls, gas stations, restaurants and convenience stores. We keep passenger reservation systems available for the world’s largest air carriers. We ensure the availability of ATM networks serving banking customers everywhere. At major public utility companies, our software helps keep households supplied with electricity and natural gas. We help the global telecommunications industry connect the world with quality phone service. We protect the availability of online consumer services accessed via the Internet. And much, much more. In every instance, Boole & Babbage is there, supplying the advanced enterprise management solutions that keep these kinds of key business applications available to their end users, keeping information moving, ensuring customer satisfaction.
The company began selling only two kinds of products: software that minimized computer downtime and software that helped customers minimize operating costs. Their target customers would be the same as they had always been—namely, companies that used lots of computers. The only difference was that these companies were now relying overwhelmingly on client/server setups rather than mainframes. In many ways, the transition away from mainframes could now work to Boole’s advantage, since client/server systems are much more complex and, therefore, prone to foul-ups than are mainframe systems.
COMMAND/Post quickly became Boole’s flagship product. Another step in the company’s rebound was a marketing blitz based on a Star Trek theme. Boole was able to purchase a two-year license to use Star Trek imagery from Paramount Pictures for a mere $75,000 a year. Star Trek star Jonathan Frakes served as the company’s pitch man for the campaign.
Newton had Boole back in excellent shape within a couple of years. In 1994 COMMAND/Post was “enhanced with intelligent agent technology for event management, operations and administration of UNIX, Novell NetWare and Windows NT server,” according to company literature, making Boole software useful to an even greater portion of network-reliant corporations. For the fiscal year ending in September of 1994 the company earned $8 million on sales of $132 million. There was also $35 million cash on hand and no debt to service. Meanwhile, Boole stock tripled in value. By this time the company’s top layer of executives and most of its sales force had turned over since the dark days of 1991. Boole’s fortunes continued to improve as it pressed on with the transition from mainframe to client/server automation software. By 1995 the company’s $150 million in revenue was split about 50-50 between mainframe and client/server products.
In spite of the shift in focus, however, Boole maintained its commitment to making high-quality mainframe products. As a result, the company’s MainView line has retained a solid share of the mainframe monitoring market, at a time when many companies have abandoned that market completely. In 1996 Boole introduced Command MQ, which was, according to the company’s own description, “one of the first solutions for managing the availability of distributed (IBM) MQSeries networks … in terms of automation, performance, administration and configuration.”
The End of the Century and Beyond
Toward the end of 1996, Boole made the bold move of acquiring one of its chief rivals, the McLean, Virginia-based Maxm Systems Corp., maker of the Max/Enterprise network automation software. The purchase of Maxm put Boole at the head of the class among companies producing software for enterprise event management, a market worth an estimated $300 million and expected to triple by the end of the century. By 1997 nearly 500 corporations and telecommunications providers were running Boole’s network server software, including both COMMAND/Post and MAX/Enterprise. Next, the company began working on a new network concept called Desired-State Management. Desired-State Management means, according to a 1997 Computerworld article, that “one policy could describe all adverse conditions and steps required to keep the entire … system available during business hours.” Meanwhile, as the company worked toward a projected mid-1998 debut of its Desired-State product, enhancements were added to its existing network management tools. With sales approaching the $200 million mark in 1997 and networks everywhere growing in number and complexity, Boole seemed poised to finish the 20th century in a desired state, indeed.
Boole & Babbage Europe; Joint Systems and Technology (Japan).
International Operations; North American Field Operations.
“Boole & Babbage,” Business Journal—San Jose, February 19, 1990, p. 26.
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——, “Rivals Manage Merger,” Compute rworld, December 16, 1996, p. 32.
Garber, Joseph R., “How To Repair a Train Wreck,” Forbes, January 16, 1995, p. 92.
Hosteller, Michele, “Boole Well Along on Turnaround from Dark Days of 1991,” Business Journal, May 29, 1995, p. 9.
Musich, Paula, “B&B Enhances Service,” PC Week, February 23, 1998, p. 115.
Patterson, William Pat, “Ex-Chief Returns to Ailing Company,” Industry Week, November 24, 1986, p. 64.
Privett, Cyndi, “Company President Comes and Goes, and Comes Again,” Business Journal, February 10, 1986, p. 37.
Taber, Mark, “Future Quest: Boole & Babbage Inc.,” Datamation, September 15, 1992, p. 44.
“30 Years of Excellence,” Boole & Babbage Magazine, Autumn 1997, p. 4.
—Robert R. Jacobson