Online Strategy - Compuware Inc.

Like many technology industry players in 1997, software and computer services provider Compuware Corp. revisited its strategic plan in an effort to prepare for the future. The firm had recently acquired NuMega Technologies, Inc., one of the world's largest manufacturers of error detection and debugging software for Windows and Java systems. Because the mainframe computers Compuware's software applications were designed for had lost ground to Internet-based networks, the firm decided to reinvent itself as a Y2K troubleshooter. Essential to Compuware's strategy was the goal of retaining as many Y2K customers as possible after the millennium by offering them e-commerce services and solutions.

To set its new online strategy in motion, Compuware published Millennium , a newsletter about the effects the year 2000 would have on the computer industry, in an effort to position itself as an authority on the impending Y2K transition. In 1998, Compuware published Millennium online for the first time. To boost its e-commerce offerings, Compuware acquired CACI Products Co. in 1999. The firm integrated CACI's application capacity planning tools into its existing EcoSystems suite, enhancing its clients' ability to manage the performance of their e-commerce applications. Compuware was ultimately successful in its efforts to become a leading Y2K consultant for companies operating mainframe systems; however, a shortcoming in the firm's online strategy soon emerged. Compuware had simply overestimated how many clients would be looking to move into e-commerce early in 2000. The firm had also sorely underestimated the amount of time and level of complexity involved in training its Y2K specialists to work as e-commerce consultants. The resulting failure to meet earnings forecasts prompted stock prices to plummet that year.

Despite these setbacks, Compuware continued to work toward becoming a leading e-commerce service provider. In 2000, the firm added to its online strategy the creation of Digital Development Centers (DDCs) to offer full-scale e-commerce services to clients wishing to undertake e-business ventures. That year, two acquisitions—Montreal, Quebec-based Nomex, Inc., a provider of Web design and development services, and Kansas City-based Internet consulting services provider BlairLake, Inc.—were converted into Compuware's first DDCs. A third DDC was opened in Farmington Hills, Michigan, at the firm's headquarters complex, shortly thereafter. Other acquisitions that year included Optima, an e-business performance measuring software developer.

Along with making acquisitions, the firm's online strategy also called for the development of new e-commerce technology. One of Compuware's most successful new products, Application Expert, was developed in response to growing demand by e-business operators, particularly those with increasing traffic, for Web site performance management tools. Application Expert allowed clients to pinpoint problems, as well as their causes, and also recommended solutions. Network Computing magazine named Compuware's Application Expert 2.1 the recipient of the Editor's Choice Award in 2001. Also that year, the firm unveiled a version of its Abend-AID fault diagnosis program designed specifically for e-business applications and upgraded its EcoPredictor to include the ability to use simulation to predict potential network bottlenecks. Like most players engaged in Internet-related operations, Compuware will likely revise its online strategy many times as the e-commerce landscape continues to evolve.