Concord Communications on a roll

CEO Jack Blaeser to go to acquistion route to keep momentum going

By Bob Brown
Network World, 12/10/98

It's looking like Concord Communications employees can start packing their bathing suits and suntan lotion again.

For each of the past two years, the maker of network analysis and reporting software has rewarded all employees for meeting sales goals by flying them (and a guest for each) to a sunny vacation spot during the dead of winter. The Marlborough, Mass. company says the fourth quarter outlook is good, so that means a trip to Puerto Rico in February is pretty much a lock.

The company continues to dominate the growing market for performance analysis and reporting software, which Meta Group says will be close to a $300 million business this year and more than a $600 million market in two years. Estimates of Concord's share range from about 20% to almost half.

Concord has a big blue chip customer base (75% enterprise customers, the rest ISPs and carriers); lots of repeat sales of its LAN and WAN management products and financials to die for. The company's stock price has roughly tripled since Concord went public in October 1997 at $14 a share. Concord didn't hurt its stock price this past October when the company posted revenue of $10.6 million, double that of the previous year's third quarter.

While CEO and President Jack Blaeser knows Wall Street will only love his company as long as it keeps meeting or beating financial expectations, he's not complaining.

During a wide-ranging discussion with Network World last week, Blaeser said he is focusing on a busy 1999. He says 1999 will include the rollout of the next major version of the company's flagship Network Health software as well as the company's first acquisitions.

To date, Concord has not made any acquisitions, though Blaeser and others on his management team have "had a chance to mess a few up and learn from them" in past jobs. Although Blaeser declined to get really specific, he did say that Concord will target makers of software that could help the company branch into other areas, such as management of voice-over-IP, cable modem, desktop and applications management.

Blaeser says that at one time venture capitalists and other investors strongly discouraged entrepreneurs from starting up new management software firms, noting that "no one makes money in network management," but now lots of management software start-ups are popping up. The problem Concord faces now is that some of these companies are figuring they can be the next Concord and should go it alone rather than submit to a buyout.

In addition to acquisitions, Concord will continue to forge alliances. The company December 14 will announce an expanded relationship with Cisco that will include integration of Concord and Cisco management wares for enterprise and carrier nets. Concord's plan is to provide software that will let customers better monitor and analyze any Cisco-related technology, Blaeser says. Don't be surprised if Concord winds up doing something similar with Lucent, he adds.

To date, Concord has not had to fight the higher profile management platform vendors for business. Rather, Concord has partnered with the likes of Cabletron, which sells the Spectrum management platform. Blaeser says he's just as happy not to be in the platform camp, where he says vendors have raised expectations so high that customers often wind up feeling let down.

Concord differs from these other management firms because it doesn't flood the market with new products. This year, for instance, the company has only introduced a few offerings, which include versions of Network Health for ATM and remote access nets. Observers, such as brokerage firm Bear Stearns, expect the company to add applications and firewall management tools in the not too distant future.

Of course if Blaeser wants to keep sending the whole company off for a fun-in-the-sun vacation again in the year 2000, Concord could use some new revenue generators. After all, Blaeser is expecting the number of employees at the firm to jump from the current 165 to well over 200 by the year-end.