This IDC Flash describes Borland's (NASD: BORL) strategic product road map, which the company rolled out under the banner of Software Delivery Optimization (SDO) at its annual user conference in September 2004. SDO is more than just marketing: It marks Borland's shift from a development tools vendor to an enterprise-focused, life-cycle solutions provider. Borland expects to roll out increasing functionality in phases heroically named Themis, Hyperion, and Prometheus.

In fact, Borland already has many of the pieces of the application life-cycle management (ALM) solution set. It understands the needs of developers very well, and its acquisitions over the past two years give it compelling offerings in modeling, software configuration management (SCM), and requirements management. What is needed for Borland's first SDO phase (aka Themis) are: coordinated offerings of "best practices" services and an integration story to make its existing offerings appealing to the enterprise customers it hopes to attract for seven-figure deals. Later phases of the SDO rollout should add the process and portfolio management solutions that will raise Borland's value proposition to a CIO-level message.

IDC believes that Borland is taking the right tack with its new strategy. The SDO initiative should help Borland upsell its integrated development environment (IDE) installed base and build traction in the ALM space ahead of Microsoft's delivery of Visual Studio Team System. Ultimately, the company's new strategy, together with its reorganized sales force and beefed-up services organization, should help it return to more aggressive revenue growth than it can achieve in the (now) slower-growth IDE market.

Situation Overview

The ALM market continues to consolidate around two centers of gravity: at one end, the developer-centric ALM vendors, and at the other, the process-centric ALM vendors. Borland is clearly in the former camp. Developers have always responded favorably to Borland's compilers and IDEs. Borland has built out its solutions from this core constituency: Its Janeva provides interoperability between J2EE and .NET; its Ops Center provides deployment and management tools for Java applications; and its TogetherSoft products (acquired in November 2002) give developers, architects, and business analysts modeling tools.

Given Borland's traditional focus on the developer and, by extension, the architect and business analyst it is perhaps easier to understand why Borland put significantly more marketing muscle behind its new TogetherSoft products than it initially did for the StarTeam and Caliber RM products it acquired in the same time frame. Borland also paid considerably more for TogetherSoft than it did for StarBase.

With its SDO announcement, Borland has now articulated its broader ALM strategy, and it has what it needs to fulfill the initial part of its vision. StarTeam and Caliber RM have enjoyed solid reputations, and all that remained was for Borland to demonstrate out-of-the-box integration with its popular IDEs and the link between Caliber RM and TogetherSoft. It has done both.

Borland has also taken pains to clearly articulate the benefits of its ALM solution by "role" whether developer, architect, analyst, or tester (or, ultimately, project manager). This is consistent with the marketing approaches of its competitors, and it is a message that will resonate well with enterprise buyers. Borland is focusing on the pain points by role, and that is where the revenue opportunity lies.

In the longer term, Borland will need to augment its ALM solution with additional functionality in particular, project management, portfolio management, configurable process management, and portal-driven dashboard and analytical capabilities to compete with what will become a convergent market between the developer-centric and process-centric segments. In the short term, Borland can profitably partner with best-of-breed vendors in these areas, but we would expect to see the company make acquisitions or develop its own solutions in these areas as these markets unfold. Interfaces to market-leading ALM products, including those that compete with Borland offerings, will be important in any case, as Borland increasingly pursues enterprise-level sales.

IDC believes that Borland's SDO strategy is well-conceived to position the company as a strategic vendor to enterprise IT departments. Its current offering should resonate well today with VPs of application development. With portfolio and process management capabilities, Borland can take its message to the CIO. This should gain it significantly more mindshare from senior IT and much larger initial orders than sales of its development tools can. Its new vision should spur Borland's growth, given today's emphasis on greater IT efficiency and cost and on reducing software delivery risk.

Borland's SDO message positions the company to claim a spot on ALM shortlists in mixed Java/.NET shops and also in J2EE-centric organizations, particularly those that have adopted JBuilder. It joins Microsoft and IBM in providing a full life-cycle solution. IDC expects to see Borland move quickly to demonstrate seamless interoperability among its ALM solutions, as well as integrations with other leading ALM solutions. Borland should execute on partnerships to ensure that its solutions can out of the box leverage and integrate with its enterprise customers' existing investments.

Like Microsoft and IBM, Borland is addressing some of the needs around the transition of new applications to production, or "closed loop" ALM. It is seeking to help customers bridge the gap from development to operations with "deployment modeling," and its Ops Center server-trace facility helps speed problem diagnosis and resolution for J2EE applications. Borland's competitors have broader system-management offerings, however, which would seem to give them the advantage here. Partnering with applications-management vendors will help Borland leverage its "ops aware" delivery strategy and strengthen its overall value proposition in this area.

Ultimately, it is a matter of execution. Borland will need to execute well to compete as both ends of the ALM market heat up and competitor products provide increasingly comprehensive solutions. The good news here is that enterprises remain underequipped when it comes to full life-cycle solutions.