Progress Software Could Massively Expand Chef’s Reach Through OEM Relationships
Once it closes a $220 million acquisition, Progress can expose Chef’s popular open source DevOps tools to a distribution channel of 1,700 ISVs that already embed its app development technology.
One reason Progress Software isn’t as well-known as might be expected for a nearly 40-year-old publicly traded company valued at almost $1.7 billion is that its tools largely go to market as embedded components of some 1,700 other software developers.
That indirect distribution channel, which reaches about a 100,000 end-customers, could prove a major boon for Chef, the DevOps pioneer that Progress agreed to acquire Tuesday for $220 million.
“We like to say we’re the largest software vendor that derives the majority of revenue from other software companies,” Rob Lauer, Progress Software’s senior manager for developer relations, told CRN. “We will see some natural synergies in those ISVs with Chef.”
Progress, based in Bedford, Mass., said it expects to close the all-cash deal for Seattle-based Chef by October 2020, subject to regulatory approvals and other closing conditions.
Like Progress’ app development tools, DevOps tools like Chef Habitat are a good fit to be sold as OEM components through those 1,700 vendors, which include industry stalwarts like IBM and Microsoft, Chef CTO Corey Scobie told CRN.
“Definitely there are opportunities going forward to ramp up our ability to deliver products as a more indirect distribution,” Scobie said.
That go-to-market synergy with its soon-to-be parent will take Chef, a $70 million revenue company with 300 enterprises customers, and 1,000 total, to entirely new heights, he said.
Progress, founded in 1981, sells several popular app development tools that enable critical business applications, but the company’s portfolio is mostly bare on the operations side.
Progress has “the capability to power the AppDev side of the equation, but it’s becoming more important for their customers to enable the streamlined ways to power the ops side,” Scobie said.
With Chef, “we have this opportunity to add to our portfolio in a meaningful way, in a new segment that adds to an existing customer base,” Lauer added. Inorganic growth of that sort is consistent with Progress Software’s long history of strategic acquisitions to expand its product line and market reach.
Chef, founded in 2008, was among the first software companies to offer automated IT configuration management—often referred to as infrastructure-as-code—in the early days of the DevOps movement. More recently, the company has expanded into application automation and deployment, as well as security and compliance technologies that enable DevSecOps methodologies.
Those products are complementary to Progress’ portfolio of tooling to enable software development, testing and deployment, Lauer said.
And Chef’s approach to market also dovetails nicely with Progress’ open source story.
Progress is committed to embracing and supporting the open source community around Chef’s technology, which has seen more than 40 million downloads, Lauer said.
Earlier this year, Chef introduced its first channel program, and the synergies with Progress will substantially benefit those partners, said Dale Foster, CEO of Climb Channel Solutions, a channel distributor for both Progress Software and Chef headquartered in Eatontown, NJ.
The deal “marries great dev-focused technologies from Progress with market-leading ops capabilities and promises to really move our customers’ DevOps capabilities forward in ways that neither company could have done alone,” Foster told CRN.
Progress Software’s R&D and go-to-market machinery will give Chef a massive boost in its ability to innovate and expand into global markets, Foster said.
“We are longtime partners of both companies and are really excited for the possibilities introduced by the acquisition,” he said.