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A larger Sysdeco relocates to U.S.

AFTER BUYING ANOTHER pair of publishing systems vendors, Norwegian software company Sysdeco Group AS will relocate its senior management to the Boston area, at or near the Bedford, Mass., headquarters of Atex Inc., in which it holds a 51% stake since a July 1 loan conversion.

A year ago, Sysdeco incorporated a U.S. company based in Salt Lake City, where, as in Bedford, it is setting up a training center.

Sysdeco Inc. is producing CD-ROMs containing new and existing software tools for the North American market.

"We should be showing products in October," said Sysdeco executive Clive Segal, who noted that the Utah location was chosen for its programming talent and low costs. (While the Group's corporate headquarters moves to Massachusetts and its Sysdeco Inc. subsidiary is set up in Utah, Sysdeco Media remains based in the U.K.)

Late last month, Sysdeco finalized its purchase of 20-year-old U.S. publishing systems developer Dewar Information Systems Corp. (E&P, Aug. 26). At about the same time, it also bought Danish desktop publishing systems and database supplier Uniware AS.

Shortly after acquiring Finnish publishing software developer Sypress Oy, Sysdeco reached agreement last winter to take over control of Atex from those who bought it from the Eastman Kodak Co. two years earlier.

Segal said Sysdeco had complete management control of Atex and "is about to exercise its option" to raise its ownership interest to 80%.

With the acquisition of Sypress and Atex, Sysdeco Media became Sysdeco Group's largest business unit, with a payroll of 300, or about three-quarters of all company personnel. (About half of non-Atex personnel work outside Norway.) Dewar, which is to remain at its new Downers Grove offices near Chicago, has 24 employees. Uniware has a staff of 25.

As reported earlier, Sysdeco will pay over three years approximately $1.5 million for Dewar, almost a third of it immediately. A Sysdeco executive said the acquisition included a further, undisclosed financial outlay. The company is buying Uniware for approximately $465,000 and a further payment based on the firm's results for 1996.

A software tools supplier to the media, utilities, healthcare and insurance industries, Sysdeco was founded in 1980 and trades on the Oslo stock exchange.

In conjunction with its senior managers' move to the U.S. early next year, Sysdeco said it is considering a listing on the Nasdaq market.

A Sysdeco executive said that apart from its publishing systems divisions, the firm remains primarily a software tools developer. Uniware, he said, would fit mostly in Sysdeco's work on geographic information systems.

Sysdeco announced its latest planned acquisitions when it reported earnings for the first half of 1995. Through June 30, it said net profit rose 88% above the year-earlier level, to $3.27 million, on revenue of $29.4 million, up 19% over the same period in 1994.

The company, which calls itself Europe's 11th largest software supplier, attributed the profit to 83% growth in sales of its own software - "products with significantly higher margins for Sysdeco than third-party products." International operations accounted for 60% of revenue in the first half, up from 55% in the first six months of 1994. Order backlog for the same period increased 40%, according to Sysdeco.

Sysdeco reported a "better-than-expected" turnaround at Atex. A small second-quarter profit, of which 19.9% accrued to Sysdeco, was attributed in part to contracts with the London-based Financial Times, Wichita Eagle, Indianapolis News and Star and Houston Greensheet.

For 1994, Dewar had profits of approximately $387,500 on revenues of $4.5 million, while Uniware recorded a loss of $170,500 last year on sales of $2.635 million, according to figures supplied by Sysdeco.

Uniware expands the company's product line and provides further access to the Scandinavian market. When Sysdeco bought Sypress, it also paid $620,000 for Sweden's Grafotex AB, giving it sales and marketing entree in Denmark, Norway and Sweden.

Dewar strengthens Sysdeco's position in the North American market. Since withdrawing from direct sales and support two years ago, Dewar has supplied its well-received new generation of open systems through authorized integrators that range from relatively small firms with a product or two of their own (CNI, ACI) to publishing systems vendors that have moved heavily into integration services (Atex) to large computer firms (DEC, EDS).

Like earlier Atex systems, Dewar's products were originally written to run on older DEC platforms. Atex, which dates from 1973, has a large installed base among mid-sized to large dailies worldwide. Dewar, founded in 1975, has new and old systems primarily at small- to mid-sized U.S. papers. It also developed products for catalog, directory and magazine publishers.

In the early 1980s, when the first personal computers appeared, Dewar was selling its own hardware running on its own network. But it was among the first to recognize the new machines' potential, and by the decade's end had a PC-based system on the market.

By the time Dewar pulled out of sales to users, Atex had already begun emphasizing integration services that included others' products, was unbundling and separately completing components of its long-aborning Total Publishing Environment, and was buying and building desktop-based products for adjunct and lower-end needs.

Sysdeco's absorption of Atex and Dewar lends an ironic twist to the way the companies evolved in response to changes in the product and business models for publishing systems vendors. Sysdeco Media recombines the traditional "front-end vendor" functions of product development, sales, support and installation/integration.

In this respect, Atex client/server group vice president Allen S. Miller said his company seeks to differentiate itself from what he described as "product-oriented" competitors and others that define themselves principally as integrators.

"I sit someplace in the middle," said Miller, adding, "I think you can be an integration company that does product development."

A 14-year Atex veteran, Miller headed the company's push into integration services under its previous owners.

In the past year, the Dewar-Atex combination helped move Lesher Communications' clutch of San Francisco Bay Area dailies from paste-up to pagination. The total installation of more than 200 seats, which began paginating one section last November, was electronically assembling 1,200 pages per week by April and is now up to 1,700 pages per week, according to Miller.

Presumably, the market will compel continuation of the companies' open systems development and open-integration strategy. According to Atex, Dewar products will continue to be sold through other integrators.

After creating the DewarView editorial environment, which tightly integrates various appropriate software, including popular word processing, page design/assembly and database programs, Dewar shrunk to a software-development-only firm.

At the time, Steuart Dewar expressed concern that were he to authorize others' sales of DewarView while his firm remained in sales to users, he would be competing with his own customers.

Now that Dewar and Atex, a DewarView integrator, are units within the corporate division, Sysdeco will not jeopardize relations with smaller DewarView integrators by selling into their market.

"There's a piece of the market at the bottom where it's impossible [for Atex] to compete on price," said Miller.

Sysdeco, he said, will do everything it can to see that firms like Pantheon and CNI succeed in selling DewarView.

In the competition that will exist above that level, said Miller, Sysdeco will remain at some distance from Atex, allowing it no advantage from its organizational proximity to Dewar. He said Sysdeco will take no "punitive" action against other integrators to "discourage" their Dewarview business.

Within Sysdeco, "Atex will be buying licenses from Dewar ... just like any other integrator," said Steuart Dewar. "It's only going to become an issue," he continued, "if Dewar starts to be pressured by Atex" to conform to its product ideas - an unlikely outcome, in his view, because it is "antithetical" to Sysdeco's business model.

Given that arm's-length relationship with respect to DewarView, however, Miller allowed that Sysdeco is willing to live with the possibility that other large firms may drop out as DewarView integrators, if Atex is especially successful in that business.

DewarView release 2.0, with "streamlined layout," is due out in January. Steuart Dewar called 2.0 a complete rewrite in a different programming language. The new release, he said, is "more of a toolkit" than 1.0/1.5, with more customization capabilities.

Atex's first semester

with Sysdeco

The combined international reach of Atex and Sysdeco would seem to afford significant overseas exposure for DewarView. It remains to be seen how DewarView will fare in competition with Prestige, an Atex product for the European market.

Miller said Atex recently won the first big DewarView order from the U.K., and guessed that demand will be substantial following its announcement. Later noting there is but one Prestige installation in Europe, he said that although Sysdeco is still offering Prestige, its future will be considered in light of whatever success it has in placing DewarView at European newspapers.

Sysdeco's success with DewarView is particularly significant in view of the abandoned development of Deadline, the "new" Atex editorial front end. Promoted as a product for even the largest papers, DewarView would also measure how far QuarkXPress-based pagination can be carried up-market. Miller described Lesher's success to date with DewarView as pushing the envelope of XPress-based pagination.

The topic of putting DewarView into the newsrooms of Atex's many major metro customers came up early at the annual meeting of the Atex Newspaper Users Group, held two weeks ago in Chicago. Recalling early assurances that Morris/Information International's PC-based TECS/2 system could meet large dailies' demands, only to have the vendor concede later that it would top out at about 100 users, Minneapolis Star Tribune electronic news systems coordinator Bruce Adomeit asked Steuart Dewar for a realistic appraisal of his system's performance limits.

Well before DewarView was unveiled, its creator disclosed that he was at work on a project that could put his firm in competition to supply new systems to the largest newspapers. Emphasizing that original intention, Dewar said the scalability issue "was put to rest in the first week" of talks with Dow Jones on its ambitious Global News Management System.

Having earlier noted that performance is always improving for publishing systems' platforms, Dewar said that for papers the size of the New York Times, he would now be far more concerned with functionality than with system scalability.

Dewar also suggested that, without a need for universal access, there is no reason why a large newspaper's separate, largely unrelated sections could not rely on their own production databases on separate servers to enhance system performance.

At the ANUG meeting, where it introduced its new corporate owner, Atex reported on its direction and activities after six months under Sysdeco management. Its three principal tasks were resolving outstanding financial and customer-relations issues, promoting integration services and rationalizing its product lines.

From the start, said Segal, Sysdeco spent $2 million to rectify undisclosed problems that came with Atex. Miller said it was probably fair to say "that we were on the edge of the abyss" just prior to the acquisition.

But the new Atex got off to a good start, he said, pointing to nine front-end system sales so far in 1995. Goals for the balance of the year are the resolution of pre-existing account problems and continuation of financial recovery to achieve stability that reassures users and prospective customers.

After outlining its operating structure and naming top managers and those heading projects, sales and support and service, Miller said big and small accounts will get more attention through separate handling of the large, strategic accounts that demand much of individual representatives' time.

Also to be strengthened are marketing and, especially with ANUG, communications, said Miller.

While supporting older systems and selling new ones are big parts of customer relations, a broad range of integration services (needs analysis, system design and specification, project planning and management, implementation planning, installation, software development, as needed, and technical and operational training and documentation) may help preserve some existing business as well as bring in new accounts.

Atex already has served as integrator for a project that involved none of its own products. Provided it could gain or regain customer confidence, said Miller, Atex stands ready to do the same for its existing users who chose to install non-Atex systems.

For the many papers using older Atex systems, the vendor had good news.

"We are in the J11 business," Miller insisted - not only with continuing support, but also with system enhancements. Maintaining J11 systems software and hardware brings in revenue that helps finance development of newer client-serve systems, he said. "We would just be stupid to torpedo that."

For the older systems, Atex is supplying a Postscript driver and enhancement to the Integrated Advertising System. "I can't remember the last time we did that," Miller remarked.

Legacy products that connect to the J11 systems include Classified Pagination, Architect (with Quarkitect for Press2Go and DewarView), Communications Manager, the MPB Gateway, Press2Go Layout release 2.0 (with fixes for single file and jumps) and Preference 1.5 for Windows.

Miller said Sysdeco-Atex will determine if the half-developed Mac Preference product is worth completing. Similarly, Miller disclosed that while EdPage 1.7 is slated for early-November release, the "future development strategy" for the high-end pagination product "is under evatuation."

He said Atex and Sysdeco are looking at current commitments and weighing continuing development costs in light of prospects for more sales and the strengths of competing products.

With a positive evaluation, he added, "the product could be rewritten" and ported to a new system with an improved interface.

The three-year-old RS/6000-based Composition Server will be retired as an unsuccessful product. Developed to support the new pagination and front-end systems with Atex WES composition, it also worked with the earlier systems as a migration product, off-loading the H&J function from applications servers.

The decision may not have come as a surprise to most, given the demise of Mac-based Capriccio, uncertainty surrounding EdPage and abandonment of the Deadline front end.

Miller, whose most recent responsibilities have been in the newer integration services and client-server systems, announced more good new for long-standing customers.

"We are in the process of building a new J11 board," he said, with clock speed doubled and all principle computing functions put on the CPU.

Beta testing of the J11 Turbo board begins in early November, with availability scheduled for January. The hardware upgrade costs $15,000 (less for a dozen or more boards) and requires a monitor upgrade.

Gary Young, custom business unit director, said Atex will survey users in regard to one attendee's warning that the MPB also could use a boost, as it is "getting close to being a bottleneck" for his paper's system.

Customers using the Fault-Tolerant File System may soon have a better system Atex hopes to use as a database server. A versatile and very large High-Availability Cluster Multi-Processor using IBM-acquired software will soon be going into the New York Times. Atex reported FTFS users will need no applications changes when switching to the new storage device.

In response to a user's inquiry, Atex executives said it is "reasonable to expect" that products still being sold will be ported to other platforms. Other integrators, they noted, already have installed DewarView on Sun Microsystems hardware in the U.S., and Atex received a European order for a Sun-based Enterprise advertising system.

The centerpiece of Atex's client-server products, Enterprise will be running under Windows 95 by year end, when it will have enhanced database performance, contact manager and logo management, full OPI support, Edgil credit card capture technology and integrated code conversion to Hypertext markup for online output.

Acknowledging that some U.S. newspapers prefer Oracle to Sybase for the SQL database in Enterprise, Miller said Atex will probably make it available, as it already is in Europe.

In its own new products and those it adopts or adapts, Miller said Atex will continue to adhere to industry standards. "We don't muck around with operating systems, network protocols or databases," he said.

What the company will not continue, however, is last year's "product-of-the-month program," as Miller termed it, saying that even the staff could not keep track of the product line. The resulting consolidation, he said, is made with the understanding that Atex cannot be all things to all people.

In addition to the death of Deadline, the Reflex system may have been "fatally flawed"' said Miller. The production tracking system will go the way of Realtime Tracker before it. Sysdeco fulfilled the Atex contract with the Boston Globe by creating a tracking system expressly for the customer.

The problem with Reflex, according to Miller, was that it was developed at some distance from its prospective users. He said the decision to kill the product was based not so much on how far its development had progressed as on consideration of the possibility and the worth of its completion.

Atex may well rely on its new partner within Sysdeco to meet another of its 1996 objectives: another serious run at the magazine market - for which Miller said he believes "the Dewar product is ... well suited."

He said Atex will "probably have to begin from ground zero" to re-enter that market, and it is a principal reason that a New York-based sales representative will be among the additional personnel Atex expects to take on.

Sysdeco's contributions,

Media's managers

Sysdeco has indicated that all parties to its Media division will play some development role, including its own team in Norway. The first Sysdeco product it has promoted in this connection is the Tellus geographical information system (GIS) for use in database marketing and other applications.

At the ANUG meeting, Miller said GIS would serve more than fleet operations. Its immediate graphical display offers a visual, more intuitive grasp of stored or manipulated information for areas like real estate advertising. Users at the meeting suggested possible applications for computer-assisted reporting and for enhancing an understanding of advertising in relation to circulation/subscriber data.

Sysdeco also uses its own Systemator software tool for product development, including site customizations, notably the Boston Globe's production-tracking software. The development tools will also be of value to publishers in the creation of new electronic media, according to Marlow Einelund, president and CEO of Atex Americas operations.

Miller said Systemator permits modeling that can be used to create "a very early iteration of the system" that can be modified as needed many times over. The tool makes development of custom systems like that at the Globe faster and easier than has been possible until now, according to Miller.

A benefit of the group's operation and organization, according to Miller, is its combination of Sysdeco's technical expertise and the market-specific knowledge of the individual business units. Segal said Sysdeco expects to have about a dozen staffers who can be shifted around within the group to lend their programming expertise as needed, where needed.

Development of ad products was to continue in Finland, where Sypress supplied the core technology in Atex's Enterprise. Development of editorial products appears split between Dewar and Atex in the U.S. and some QuarkXPress-based products in the U.K., where Atex Press2Go products were based on technology licensed from another systems vendor. Atex Hot Off The Press "shrink-wrapped" products appear to have been discontinued.

Clive Segal, a Sysdeco senior manager and Atex executive vice president and chief operating officer, will serve as Dewar chairman and CEO. Sysdeco said that C.E. Steuart Dewat "will remain as a consultant to the management team at Dewar for at least three years." Dewar takes a seat on the board of Sysdeco Inc. In both capacities, Segal reports to Einelund, who serves as president of both Atex Americas operations and Sysdeco Media in the U.S. Sysdeco Media chief operating officer is former Atex executive Graham Shaw. Based at Atex headquarters in the U.K., he reports to Sysdeco Group CEO Johs. Jamne. The three European-based top executives are joined on Sysdeco's executive board by Sypress managing director Markku Riipinen, who also heads the Media unit's development center in Trondheim, Norway.

The Dewar sale was in the wind for some months, and Segal said he and Steuart Dewar had talked on and off all year. Dewar now works part time for Sysdeco. Not limited to projects at his old company, he is to have groupwide involvement (see sidebar, p. 26)

President Larry justice is no longer with the company. With Segal occupying the two top posts at Dewar, Adrian Werner was named operations director. With a background in software, engineering and marketing, he joins Dewar from a medical instrument business in Milwaukee.

Segal said no other personnel changes in Dewar's organization are anticipated. As for its size, he said he would "probably" add staff "in the next 60 days." (After a stint with DEC, former Dewar staffer Brian Smith has returned to the fold under Sysdeco as an Atex marketing support manager.)

Within Sysdeco, the Dewar group will pursue other products its founder had in mind but hadn't the funding to develop, Segal added. He said Sysdeco will provide support and offer upgrades for Dewar's customer base.

Sysdeco informed ANUG that Atex will do the same for its customers, announcing the enhancements for the widely installed older J11 systems even as it curtailed work on new products begun before the Sysdeco acquisition.

Seeing a near-term migration of Atex J11 users to newer client-server systems, Segal predicted Dewar customers will make much the same change.
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Title Annotation:Sysdeco Group A/S
Author:Rosenberg, Jim
Publication:Editor & Publisher
Date:Sep 23, 1995
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