Manufacturing a Landing Space

Paul Dorius is leading a company that is building a future for HP’s most classic customers. Salt Lake City-based eXegeSys took over HP’s manufacturing applications in 1998, assuming several hundred active sites using the MM-II software running exclusively on HP 3000s. The company’s founders hailed from HP’s own ranks, choosing to pursue a business the system vendor was leaving. It was a situation that has some similarities to HP’s current exit of the 3000 marketplace, where third parties will offer a future HP cannot justify for the 3000.

Dorius would disagree about those similarities, since eXegeSys was founded to follow HP’s business plan to spin off its applications trade to third parties such as his 50-person firm. However, doing something better than HP wants to do it strikes us as a pretty accurate description of both eXegeSys’ ERP offering and whatever third parties will be able to do to extend the 3000’s lifespan. Both seem to be about tapping new possibilities.

The eXegeSys president has been connected to the 3000 community since 1984, first as a salesman selling solutions for HP on the 3000 until 1989. Then he began to recruit HP 9000 channel partners for HP as part of HP’s shift away from its own application business. In 1994 he founded eXegeSys with Steve Quinn to take on the MM-II ERP package of HP’s and champion MM-II’s Customizer technology, software that gives customers a streamlined way to modify their applications. (The company applied for a patent on the technology late in 2001, calling the product eXsyst Anywhere.) At its founding, eXegeSys became the only channel partner authorized to sell HP’s applications on behalf of HP. It added support work on HP’s behalf in 1996, and then took over the MM-II customers and renewed application development in MPE using new client-server technologies.

We wanted to see what an application supplier who we view as a representative member of HP’s 3000 ecosystem was doing to build a future for its customers this year. Its software has been promised to be ready for alternative platforms — the company’s first end-to-end support of systems without any 3000s — by the middle of next year. Considering Dorius’ more than 18 years of close contact with HP, and four years of work to sell a solution that relied on the 3000, we also wanted to see how he views HP’s business choices regarding its end of 3000 support.

You’ve built your company by pursuing a business space that HP chose to leave. What made you decide to do business in a segment HP didn’t want to cover anymore?

Actually, our strategy and efforts are designed to parallel changes in the marketplace, and take advantage of HP’s altered “go-to-market” methods. As most people now know, HP re-crafted its go-to-market strategy in the late 80’s and early 90’s. Instead of focusing to be a “Total Solutions Provider” in a few industries, HP reinvented itself in toward becoming the open systems hardware leader across all industries. Their strategy is to engage channel partners to add value and expertise that addresses the need of clients or vertical industries. HP also realized that offering its own high-level, industry-specific solution was inconsistent with this change.

We were deeply familiar with the MM-II application suite. We appreciated the unique value proposition offered by the applications and Customizer technology. Although much has been said about the challenge facing enterprise applications providers in accommodating individual end-user requirements, no other ERP vendor offers anything even remotely comparable to Customizer. We realized that this could be a superior offering, despite it not fitting in with HP’s changed strategy.

We believed we could apply a level of expertise and focus that HP no longer could, and resolve the dilemma facing customers. We could become the kind of value-adding solution provider that is central to HP’s strategy while protecting and extending the value of the MM-II solution for customers. This seemed a reasonable business proposition.

Would you put your company in the category of migrating its customers, or helping them to homestead?

We’d probably be classified as a migrator, but neither term is tremendously accurate for us as a solution provider. We will have customers who decide to homestead, and customers who move forward in a migration. We have to be able to respond to both sides of that equation. However, for our future as an application provider, staying put is not an option. We are actively moving toward to re-host our applications to provide a viable solution both for our existing installed customers and for new clients.

If a customer chooses to homestead, we’ll do our best to support them within known limits. Certainly for new customers, we won’t be recommending a homestead solution.

Do you see your customers staying with the 3000 beyond HP’s end of support for the system?

Our applications tend to be mission critical. As such, it would not be appropriate for us to recommend that our customers maintain a mission-critical environment in a non-supported structure. It relegates them to third-party support, and knowledge and fixes to the operating system could be questionable.

If they keep the 3000 in a different vein, along with ancillary products that aren’t mission-critical, I could see the 3000 continuing to be used where the customer can accept a heightened level of risk.

How about that third-party support for 3000 hardware: for or against?

For. Third-party support would have the effect of lengthening the e3000’s end of life timetable, and that could be helpful for some users.

But you’re bound to have customers who will opt out of having HP support their systems over the next five years, right?

The decision is the customer’s. Some can tolerate a higher level of risk than others. Our support terms specify a supported environment because of the interactions between our applications and the OS and database. Without O/S and database support, we could be in jeopardy of not being able to provide quality application support. If a customer engages someone who can provide good ongoing support for the 3000, we will do our best to provide application support within that context.

Do you want your customers to sign a different contract if they use a third party for hardware support?

No. Our contract terms require a supported system and current operating system with support from the provider. A customer’s decision not to comply relegates our support to a “best-effort” level. That said, we’ll review this situation periodically to ensure we are doing the right thing.

By 2006, will you want all your customers to be on a hardware platform supported by HP?

Our professional recommendation is for them to be on a platform supported by the manufacturer.

Would you pay HP to reverse their decision about their future with the HP 3000?

No. Would we be supportive of a different timeline, and would we participate in such a thing? Perhaps. Based on HP’s announcements, we’ve taken a course of action to protect our customers.

As far as the timing of the 3000’s end of life, we are supportive of third-party support, or other initiatives that would extend the supported life of MPE and IMAGE. But as HP’s decision is being implemented, we’re addressing reality as it now stands.

Do you want HP to provide the OpenMPE movement with whatever is needed to develop and license a 3000 hardware emulator?

Not as presented. We’re certainly not opposed to the OpenMPE initiative, as that could provide a safe harbor, the part of our strategy that means we’ll protect as best we can the existing implementation and environment. The OpenMPE folks could extend the viability of the safe harbor approach. However, it’s hard to get behind any initiative that isn’t directed at continued innovation and advancement.

The way the hardware emulator was presented [at the Solutions Symposium meeting] by the OpenMPE people and [Gavin Scott of] Allegro, it appeared to be an emulation and support structure — in perpetuity — of what we currently see on the 3000. Even though the hardware emulator would sit on newer hardware, and could interface with disk arrays and newer technologies, the actual perspective of that emulator is to simply maintain the 3000 as we know it today. For instance, it would “block down” advancing disk technologies to whatever limits exist on the 3000 today.

I see all of that as more of a holding position. When the OpenMPE people talked about their initiative, they were very careful to say they didn’t look toward opening up the operating system and making significant changes, enhancements and additions to it. It’s a support as-is for as long as people want that kind of support structure. So, we see the “OpenMPE + hardware emulator” effort as merely a holding action and not a strategy for the future.

What would make it a better proposition for your support as an application provider?

Well I think if somebody of substance was willing to invest in MPE, whose strategy is to take MPE and make it a viable, acceptable and ongoing operating system, competing with Unix, Linux, OS/400 and Microsoft — somebody who wanted to be in the operating system business and enhance MPE — that would certainly be an open strategy we would embrace. That wouldn’t mean we wouldn’t pursue our current strategy simultaneously anyway. Our strategy to host our applications in multiple environments was underway before HP’s announcement on the 3000. The announcement simply focused and accelerated our implementation.

Would you like to see HP do that, since you’re an HP business partner?

Yes, but I also think that the “somebody” has the primary responsibility to take the initiative — to put together the needed capital, level of expertise, and demonstrable ability in the marketplace to advocate MPE as an operating system, and its ecosystem.

How does your customer base line up with the HP estimates of those planning or implementing a migration? HP says 75 percent of the customers are doing this.

It’s not even close. It depends on the way you ask questions and how you interpret questions. If they did a customer list from the mid-90s, you’d find a lot of people who have already completed migrations, facing the uncertainty of the operating system and lack of statements from HP about that platform. It certainly would give you a different picture than if you included people who just purchased a new N-Class or A-Class type system.

Our customers are telling us they are planning on migrating, but the timeframes are very indistinct, ranging from investigating, to beginning the planning in a couple months. Some people say they don’t expect to be off the 3000 by the end of life announced by HP.

I wasn’t surprised by Winston Prather’s comments, saying that since they made their announcement in November everybody’s looking at migration. Once you make that kind of announcement, people who are professional will start looking at their options. They have no choice but to do that. But it’s being done professionally, and we’re not seeing a simple mad rush to the door.

Since they’re hanging on for now, how do you view what HP calls their ecosystem this year?

Languishing, frustrated, irritated. HP’s R&D decisions for the e3000 maintained the “e3000 ecosystem” as one that was separate and distinct from the rest of the world. An alternative tack would have been to really open up MPE make it an equal player in the open systems world — by finishing Posix, by finishing the Unix shell in a way to be certified as a Unix provider. Then they could have embraced the worldwide open system ecosystem. They wouldn’t see it dwindling.

Instead, HP only did some moderate enhancements to the environment and a few hardware upgrades. And their philosophy remained invested in keeping the 3000 as a unique, “proprietary” environment that wasn’t going to move into open systems in a realistic way.

I don’t think HP-CSY really wanted the challenge of trying to compete for market share in the open-systems ecosystem, or of portraying the 3000 as a viable platform. This way, the path they chose was perhaps just easier.

The e3000 ecosystem is filled with talented, bright people who could envision the alternative, who fought to make that alternative real, and who know that this was not the only alternative. Now, they face the end of the product line in which they have invested their careers. Had HP chosen the alternative tack, things might have been radically different.

How does shifting a client technology prepare the 3000 customer for the future?

Both of our migration solutions — “Bridgework to Open Systems” and eXsyst Anywhere — will take advantage of our eXegete Client technologies to provide the user interface. By implementing eXegete Client now, our customer will have resolved one of the migration issues — displacing V-Plus. The customer will also immediately benefit by advancing and improving its current implementation. Then in the future, migration efforts will deal mostly with the back end, with little or no effort to migrate the user interface.

So, this is something that will have to be addressed eventually, and they can start on it today with real rewards in the near term.

Do you think being nudged out into the bigger world of Unix, Linux and NT will be healthy for a supplier of your size?

I think so. I’m excited by that opportunity. In competitive situations we’ve gained feedback the customers were very impressed by the functionality, technology and underlying architectural concepts of our applications, versus the opponents.

Our biggest handicap in attracting new clients has been the platform of choice. While we have been able to successfully convince a few, that’s been our biggest detriment.

Have you been able to sell your solution on another system yet?

We do not have our overall suite offered in any way other than on an HP 3000. We’re working towards that, and since the first of the year telling our customers it would take us 18 months to offer applications on other platforms. We’re working with Denkart. Our project will host our applications on HP-UX, Windows NT and Linux. The databases are Oracle, DB2 and SQL Server.

Does manufacturing continue to offer prospects for new customers for your company? Is it still a lucrative market segment for smaller software and solutions providers?

We believe that there will always be room for true innovation and differentiation. We also believe that the industry watchers who say that “the competition for serving the enterprise is over” are the same ones who announced 10 years ago that the manufacturing industry was fully saturated and there was no further opportunity; that said 20 years ago that the PC was “cute;” and that said 30 years ago that available mainframe technologies exceeded the maximum processing capacity requirements of the world. We believe they are wrong again.

We are finding that far from being satisfied, many manufacturing enterprises are “under whelmed” by their ERP implementations. Many lament the costs, the rigidity, the narrow functionality, and the difficulty of implementation with some of the more noted first- and second-tier solutions. We believe that when someone like Larry Ellison tells his customers that they need to adhere to Oracle’s methods because that is just what they have to do, there must be a better way. And we believe we offer exactly that — a better way.

Yes, we think there is opportunity.