Software AG reckons one of the main reasons why it has achieved year-on-year revenue growth is that, unlike its competitors, its software works equally well across a wide range of environments. These comprise IBM Corp and plug-compatible mainframes; small and large Unix boxes; mid-range systems, including the AS/400; and desktop systems, including Apple Computer Inc’s Macintosh and Microsoft Corp’s Windows. But managing director of Software AG in the UK, Jeff Graham, says that at some stage during the coming year, the company will implement its software for a mainframe-type platform, which, he claims, will lead to a doubling of group revenues. By this, he could mean Hewlett-Packard Co’s Posix-compliant version of its proprietary MPE operating system, MPE/ix (CI No 1,983), but is more probably referring to the fruits of the group’s agreement with Digital Equipment Corp. At Cebit, Software AG said it would implement its Adabas database system and Natural applications generator for the VAX and Alpha under the OpenVMS operating system. OpenVMS versions will start shipping in July. Furthermore, Software AG intends to implement Adabas and Natural for OSF/1 and Microsoft Corp’s Windows NT on the Alpha. Again, no time-scale was available. Another major cause of the Darmstadt, Germany-based company’s success, Graham believes, is that it is now privately-owned again – or more precisely, its shares are held in a trust, set up by the founders. For a spell, its US subsidiary was publicly traded on NASDAQ, but the company bought the shares back in again. The trust consists of about 15 guardians, made up of management and staff. These guardians do not own any equity individually, and so, if they leave the firm for any reason such as retirement, the shares are handed on to someone else to look after. There are several advantages to being a private company, Graham reckons.

More into research and development

Firstly, Software AG is not obliged to fork out part of its profits to shareholders in dividend payments, and so can pump more into research and development – but then Micro Focus Plc has never paid a dividend. In fact, he says the group spends 25% of its revenues on developing both new products and enhancements to old ones. The average for the software industry, he says, is between 10% and 12%. According to Graham, Software AG divides its expenditure fairly evenly between its three main strands of business: application engineering, which is based on its proprietary Natural generator; data management, which centres around the Adabas database management system; and distributed computing, which is based on its Entire Net-Work communications software. As sales and marketing director Mark Wells put it, the company’s goal is to deliver enterprise-scale computing in a distributed environment. Second, the firm isn’t subject to the whims of the City, and doesn’t have to face crises of confidence if it makes a loss during one quarter – it simply doesn’t publish its results, and is therefore answerable only to itself. Although its figures have yet to be audited, Software AG saw worldwide group turnover rise by 9.6% to approximately UKP321m. No profit figures were available. In the UK, revenues grew 27.3% to UKP16.3m due to a 75% increase in sales of product licences and packages. Profits in the UK are also ahead of last year’s, Graham says, although again no figures were available. Turnover generated from Unix licences, he says, increased fourfold last year, and now makes up 20% of total revenues. Some 70% went to new sites, which includes new departments at existing customer sites, and the rest to established customers. Software AG began selling Unix software in 1990. Sales of mainframe software also increased slightly, he says, because although some clients are downsizing, the majority are freezing the size of their mainframes, and either running applications on Unix boxes or investing their money on mainframe software with more functionality. Graham reckons that the UK is one of the group’s fastest-growing geographic markets – it cu

rrently generates about 5% of total group turnover. While worldwide, he anticipates that revenues will increase by between 15% and 20%, he expects this to be more like 27% to 30% in the UK. The company’s performance in the first quarter of 1993 would certainly back this projection up, he adds, and he is confident that this trend will continue now and in the forseeable future. The UK’s fastest growing vertical markets, he says, are insurance, banking, retail, and government. Software AG has 221 customer sites in the UK and approximately 5,200 worldwide. Catherine Everett