SoftLanding Systems Acquired By CICS Specialist Unicom Systems

Another cornerstone company in the i5/OS and OS/400 ecosystem has been bought by an outsider. Late last week, SoftLanding Systems, the Peterborough, New Hampshire, provider of software change management and related development tools for the System i platform, announced that it has been acquired by Unicom Systems, a company based in Mission Hills, California, that has carved out a strong niche for itself in the mainframe market and is looking for new markets in which to grow.

Both SoftLanding and Unicom are privately held companies, so the financial details of the transaction were not announced. With the exception of three of the company’s retiring founders–Paul and Joan Schlieben and Ed Phippard–all of SoftLanding’s 60 employees have been retained as part of the acquisition, but it is logical to assume that there may be some redundancies, as is often the case with mergers and acquisitions. The deal was actually done on September 28, but the two companies decided to hold off on announcing it until they were done with other projects.

Paul Schlieben started SoftLanding in 1989, and if there was a soft landing, it was into a new job as he and some colleagues were losing theirs. (That is not where the company name comes from, and it would take a PhD in psychology and about 1,000 words to dissect Schlieben’s humorous explanation for the name he chose for the company.)

Schlieben had been an MIS director at a number of large organizations, including CBS broadcasting in New York and Boston University, and he went north to New Hampshire to become MIS director at Yankee Publishing, which is famous as the company that puts out The Old Farmer’s Almanac as well as Yankee magazine. Schlieben was MIS director there for a number of years, and Phippard was fulfillment director, and like many other large publishers at the time, Yankee was a mainframe shop. In the wake of the System/38 announcement from IBM, Schlieben called around to various System/38 shops, and found that they typically had two or three programmers creating and maintaining their systems, many mainframe-based companies of equal size–in terms of revenue and data processing needs–had 20 to 25 programmers.

“The System/38 seemed to be a much more efficient platform, and it matched Yankee’s needs perfectly,” Schlieben says. Yankee bought third-party applications and developed some of its own, and eventually the company even outsourced data processing capacity to other publishers as it grew. But, like many companies, Yankee grew too fast, and eventually it decided to outsource its data processing operations to cut costs. By that time, Schlieben had already been at work on what would become SoftLanding.

“I didn’t feel at the time that I was an expert on anything but managing software,” Schlieben explains. “And so I thought I would provide this expertise. And recognizing the opportunity of the AS/400 [which was announced in June 1988], I saw that customers would need to apply the discipline of managing software–a discipline that they might not have thought they needed at the time.”

SoftLanding’s first product, which was launched in October 1989, was called SoftMenu, and it allowed MIS managers to customize individual menus on AS/400 applications so users could see only the options they were supposed to see. (This product is still sold and supported today, incidentally.) But it was the TurnOver software change management system that has been the foundation of SoftLanding. TurnOver launched in March 1990, and within a few years it was picked up by some of the biggest AS/400 shops in the world. Schlieben says that the company was not profitable its first year, but it has been profitable every year since then, and it has never had any debts.

About five years ago, Schlieben and Phippard started laying the groundwork for their retirement by instituting an employee stock option program, and began giving employees stock in the company as a retirement benefit at the end of each year. And four years ago, SoftLanding brought in an outsider to run the company, Steve Gapp, who is the company’s president and chief executive officer. So, as Gapp explained in an interview last week, when Unicom bought SoftLanding last month, every employee who had been at the company for more than two years got a piece of the action.

This is a remarkably generous thing for SoftLanding’s owners, the Schliebens and Phippard, to have done. Such generosity is, unfortunately, rare. They set a good example, which is why it is important to tell people.

Unicom is probably not a company that many in the i5/OS and OS/400 community are familiar with, but the company certainly is known in mainframe circles. Unicom was founded in 1981, and it has created a set of tools for automating the operations of the CICS transaction monitoring software that is woven into COBOL-based mainframe applications. Today, Unicom Group has four different companies, all of which are owned by Corry Hong, who is the group’s president and chief executive officer. The company’s Unicom Systems unit includes these CICS tools and now SoftLanding, which will continue to operate out of New Hampshire. Over the years, Unicom Systems has acquired various mainframe tools, including the August 2000 acquisition of nine MVS and OS/390 tools from Technologic Software Concepts for $12 million, as well as tools from SofTouch Systems and CICS/RDO. Prior to making its SoftLanding acquisition, Unicom Group said it was looking for merger and acquisition opportunities in the software area and that it was in a position to do deals in the $10 million to $50 million range.

Unicom Group also includes Unicom Enterprises, which invests in commercial real estate and manages properties–notably, in April 2005, this real estate investment unit bought PickFair, the Beverly Hills estate that actor Douglas Fairbanks, Sr built for his wife, actress Mary Pickford. The Unicom Global unit makes capital investments into other companies, while Unicom International, the fourth unit, is an international operations and events organizer.

Unicom is working out its plans for SoftLanding in particular and in the System i market in general right now. And while not at liberty to say much, Gapp did give a few hints. “This is the early days of a bigger picture where Unicom is looking at a number of acquisitions,” Gapp explained. “They are looking to grow, and I suspect that this is a starting point.” In addition to running SoftLanding, this is what Gapp is spending his days doing: trying to figure out what opportunities there are to build out SoftLanding’s products and to build out Unicom’s presence in the System i market.

Obvious things for Unicom and SoftLanding to do are to further extend the application lifecycle management product line to Unix, Windows, and Linux platforms–and maybe even to mainframes, considering Unicom’s heavy mainframe background. Bringing new technology to the System i space or adding existing complementary products, thereby giving Unicom a bigger piece of the budget at these shops, is also a strong possibility. “SoftLanding is very technology-oriented, and not just with the iSeries,” says Gapp. “We give Unicom a strong view on future trends. We know Java and .NET and Eclipse, and we bring another dimension to Unicom.”

Incidentally, over the years SoftLanding has been approached by a number of different suitors, but Gapp says that these acquisitions or mergers were turned down. To put it bluntly, SoftLanding’s owners could afford to be picky.

“We have had solid performance in recent years, and we have grown on an organic basis,” says Gapp. “And they wanted a deal that would give longevity to the staff, and we were looking for a partner that wanted to do M&A for future growth. We don’t want to stop at the boundaries of the iSeries space, and over time we expect to supply a broader set of IT solutions.”