Peregrine looks to rebuild after setbacks

Asset management firm focuses on government market

Peregrine Systems officials are trying to re-establish the company, 18 months after emerging from bankruptcy. Historically strong in the federal market, the firm has been bruised by the indictments of some former executives and the need to restate almost three years’ worth of financial results.

With the February release of AssetCenter 4.4, the latest iteration of the company’s flagship product, officials hope they can finally reclaim the company’s high profile as a specialist in asset and service management systems.

The new vision is based on “optimal IT,” the concept of managing information technology assets to allow users to model the likely effects of possible changes. Asset management becomes a proactive planning tool in that approach, said James Zierick, Peregrine’s senior vice president of strategy, marketing and corporate development.

Zierick said the company has successfully retained existing customers. Even during its worst period, he said, 85 percent of its customers renewed licenses. That rate has climbed to 89 percent more recently, he said.

“Optimal IT, we think, is going to be a big differentiator for us,” he said. As part of the new strategy, Peregrine officials plan to renew their focus on the current customer base, helping them get the full value of Peregrine’s technology, he said. Developers have repackaged the company’s software into solution sets that combine products and services targeted to customers at varying levels of asset management maturity, Zierick said.

Most customers use about one-third of the capabilities of their products, he said. “The best way to get people to get the full value out of Peregrine products is to show them what the next step is,” he said.

Company officials are expanding their federal team to about 12 people and have added a dedicated federal area to their Web site. Peregrine is also rolling state and local government operations into regional commercial offices, said Shannon Erman, Peregrine’s general manager of the federal market.

However, Peregrine faces competition from rivals such as Remedy and MRO Software.

MRO officials announced Version 6 of their Maximo Enterprise Suite on the same day that Peregrine officials released the new AssetCenter version. The new Maximo combines enterprise-level asset management with new service management features.

MRO officials believe the government’s primary needs involve public/private competition under Office of Management and Budget Circular A-76, the consolidation of applications and good service-desk support, said Mark Gruzin, director of MRO’s federal division.

MRO’s suite is based on Java 2 Platform Enterprise Edition, which turns it into more than “an application that you put in and let it go,” said Pete Karns, industry marketing manager at MRO.

That standardized platform sets MRO apart from competitors, Gruzin said. “Everyone will catch up eventually, but right now it’s a huge differentiator,” he said.

Analysts say Peregrine may be disadvantaged as it recovers from past scandals, but they add that company officials have not lost ground to competitors such as MRO and others.

“They did an excellent job of retaining customers,” said Michele Hudnall, a senior research analyst at the META Group. “They jumped right on it to make sure they would have customer satisfaction and maintain their revenue stream. What we haven’t seen are new licensees. The new licenses they have had have come from current customers adding on,” rather than new business.

When Peregrine officials define their new vision and deliver on its promise, “that’s when they will see an upturn,” she said. “They’re on the cusp of that.”

The company’s decision to expand inside its current customer base is typical of all the players in asset management right now, said Kris Brittain, vice president and research director at Gartner.

“The thing that I’m concerned about is an aggressive movement by some vendors to drop their pricing to just grab share,” she said. “Somebody like Peregrine trying to get back into the business is not in a position to have that much elasticity.”

Optimal IT drives Peregrine

Officials in government agencies could use Peregrine Systems’ asset and service management tools to predict the results of proposed changes, an approach that Peregrine officials hope will become popular.

“This notion of going from reactive to proactive is really critical,” said James Zierick, Peregrine’s senior vice president of strategy, marketing and corporate development.

The company’s vision is called “optimal IT.” A group of federal employees facing an A-76 competition, for example, could analyze how their ideas would cut costs and use that information to hone their proposal and compete more effectively against private-sector companies.

Peregrine employees hired from HNC Software and Fair Isaac are creating decision models for an early-stage product that will be ready for testing

soon, Zierick said. Their expertise places Peregrine in a good position to deliver on the promise, he added.

“I don’t see any companies bringing in that deep skill set,” he said.

— Michael Hardy

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