Back in 1977, when computers were slow-moving behemoths, Softworks Inc. started out designing and selling VSAM Assist, a program that stored and managed data on computer mainframes.
Though that was light-years ago in computer lineage, the Alexandria-based firm is still in the business of making and selling programs -- including an updated version of VSAM -- that do pretty much the same thing.
Softworks' staying power in the notoriously fast-paced computer industry doesn't come as a surprise to Judy Carter, its president and chief executive. In fact, with Softworks just sold for nearly $200 million, longevity has paid off big for Carter and the company she runs.
"My goal for Softworks was to build a company that would last," she said. "The things people do with computers haven't changed" for the most part, said Carter, a soft-spoken New York native who has held various management positions since she joined the company as a consultant in 1978. Softworks kept up with the changes by "continually reinvesting in improving our products, which generates a lot of goodwill and lasting satisfaction" on the part of its customers, who include 88 percent of Fortune's top 100 companies, she said.
Softworks, a publicly traded company that employs 290 people worldwide, is poised to take advantage of the massive influx of data from the Internet, and of companies' dire need to store and manage that data. Since 1994, its annual revenue growth rate has averaged 55 percent, and last month it announced that EMC Corp., a Hopkinton, Mass.-based data-storage firm, would buy the company for $192 million in cash, allowing it to grow even more.
The acquisition will be completed by the end of the first quarter of 2000.
Carter, who owns 1.2 percent of Softworks, says rapid growth has been part of her vision for the company since she became chief operating officer in 1991. In 1993, when Computer Concepts Corp., a small, publicly traded firm, bought about 35 percent of Softworks, the company's revenue was $7.5 million; by 1998 it had grown to $43 million. Softworks sold stock to the public for the first time that August.
The EMC merger, however, "is going to make our vision a reality much faster," Carter said, by enabling Softworks to seize market share at a faster clip.
The software the company makes resides in the heart of information technology operations -- in the mainframes and servers where businesses' data are stored. The software monitors the storage of data on various systems, and directs traffic flow from a network's various platforms, such as UNIX, Windows and IBM's OS/390.
In short, the software functions as an electronic office manager that backs up important files, tells businesses where their files are stored, how much space they have left, and where they can retrieve information they need.
As mundane as those tasks may sound, the data-storage industry is hot.
Shebly Seyrafi, an analyst for A.G. Edwards in St. Louis, said growth in the worldwide, $11.1 billion external storage market will average 16 percent a year until 2003. The growth of the Internet, intranets and voice and video data transmission will mean "units of data usage will double every year," he said.
Just a few years ago, the ins and outs of data storage would have elicited yawns from top executives who could not have cared less how their information was pigeonholed, said Ian Strain, vice president of marketing for Softworks. Now, because it is such a critical part of their businesses, the subject of database management makes CEOs perk up in their seats, he said.
Last year, online auction house eBay, for example, experienced an outage that closed its site for half a day and drove down its share price drastically, Strain said.
"It's a very acute problem for companies," Carter said. One of Softworks' clients, she said, would go out of business if its network were down for as little as two hours.
More to the point, whereas companies were spending 30 percent of their computer budgets on storage hardware a couple of years ago, they are spending upward of 50 percent now, Seyrafi said. The projection is that companies will spend 70 percent of their information technology budgets on storage in the next few years, he said.
EMC's share of the external storage market in 1998 was 32 percent and growing, Seyrafi said. Softworks will be "an enhancement of [the] overall software capability of EMC," he said.
Being in the field for so many years has paid off in the form of valuable business relationships, Carter said. Softworks has technical alliances with large hardware and software providers, IBM, Oracle Corp. and Sun Microsystems among them, which provide advance copies of their programs so that Softworks can design appropriate software. And the recent merger with EMC will give the company the capital to broaden its customer base, she said.
Softworks, which will operate as a relatively independent subsidiary, will start investing in systems that allow it to integrate a greater variety of computer platforms, including Novell and AS/400 operating systems, said Carter, who will continue to manage the subsidiary.
Carter also wants to put information technology people to work making software that will better monitor database problems and notify companies when their networks are threatened. Automated services like those would both eliminate human error and help reduce the size of a very expensive information technology staff, she said.
A LOOK AT . . . Softworks Corp.
CEO: Judy Carter
Chairman: James A. Cannarino
Symbol: SWRX (Nasdaq)