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Microcap & Penny Stocks : MIGRATEC (MIGR)

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To: dkgross who wrote (580)9/27/2001 5:58:44 AM
From: phileasfogg  Read Replies (1) of 650
 
IN THE PIPELINE: A Cure For Software Migration Headaches
By Marcelo Prince, Dow Jones Newswires

NEW YORK -(Dow Jones)- The same way stents revolutionized heart surgery, a tiny Texas software company thinks it has just the tool the computer industry needs to overcome its "software sclerosis." The term, coined by researchers at The Aberdeen Group, refers to the need for corporations to modify their existing software to take advantage of next-generation hardware, specifically server computers powered by Intel Corp.'s (INTC) new Itanium microprocessors.

It's a tedious and costly process that can require thousands of changes and has historically been done manually by software programmers. But MigraTEC Inc. (MIGR), Dallas, has developed software that automates the process of retrofitting existing applications. By all accounts, MigraTEC's product, 64Express, works well and drastically reduces the cost and time required for such tasks.The only trouble is most corporate technology executives aren't cognizant of the looming software problem, much less the need for a fix. By the time they realize the need to make changes, "they are not going to have time to get the job done," says T. Ulrich Brechb|hl, MigraTEC's president and finance chief.

After years of development and a number of delays, Intel introduced the first Itanium processor earlier this year. The high-end chip is intended for server computers and workstations. It differs from Intel's desktop Pentium chips because it processes data in 64 bits at a time rather than 32. Although Itanium machines are now available from vendors like Dell Computer Corp. (DELL) and Hewlett-Packard Co. (HWP), sales have been slow.

There's a host of excuses. Intel has modestly promoted the chip. Corporate technology spending has been slashed. Most customers are waiting for the second Itanium chip, code named McKinley, which isn't due out until next year. Also, Microsoft Corp. (MSFT) has yet to release a 64-bit Windows operating system.

Forging Ahead

But forecasts remain bullish as Intel forges ahead with new iterations of the chip. Some researchers predict Itanium will be in half of new hardware systems in four years. That leaves corporations and independent software vendors with little time to modify their existing 32-bit software so it functions properly on the new 64-bit architecture.

Migrating all the existing 32-bit software is a daunting task both in terms of time and cost. Aberdeen, a Boston market research firm, estimates there are tens of billions of lines of C/C++ code worldwide that would have to be updated or rewritten. Most of that code - about 70% - is custom code developed by corporations. The remainder belongs mostly to independent software companies.

It not clear just how much of that code will actually be modified for the new hardware. (When the "Wintel" world moved from 16-bit architecture to 32-bit a decade ago about 40% of the actively-maintained software was migrated.) Companies may elect to keep the existing software running on older machines. Also, they may choose to scrap their current systems and purchase Itanium-ready software or develop new 64-bit applications.

But most corporations will want to preserve previous software investments, experts say, especially those that are already proven and took years to develop. However, manual migration isn't an appealing option given the shortage of capable software engineers and the costs involved. Manually modifying an application with 100,000 lines of codewould take four to six months and cost about $821,000 on average,according to Aberdeen.

Therein lies the appeal of MigraTEC's software, which can complete a migration project between 70% and 80% faster than manual work alone and cuts the cost in about half, Brechb|hl says. Depending on the size of a project, MigraTEC licenses its software for between 10 cents and 15 cents per line of code to be migrated.

Ripple Effect

The software analyzes the source code, flags necessary changes, makes redundant fixes and generates reports. "The big thing it buys you is consistency," says Gordon Haff, research director for high-end architecture at Aberdeen. "You make a change once and it makes the same change multiple times; it ripples through multiple fields and documents."

It's simple to install, easy to learn and produces nearly glitch-free migrations, testers say. Engineers at an International Business Machines Corp. (IBM) lab in Austin, Texas, were able to install the software tool and successfully migrate tens of thousands of lines of code in a matter of days. "I was pretty impressed with it," says Gary Hook, a senior technical consultant for IBM who oversaw the tests.

"I think it's an extremely good tool," echoes Paul Cross, a migration manager at a lab in Salt Lake City for Unisys Corp. (UIS), which is using MigraTEC's tools to help its customers modify custom software. "It reduces the risk" by providing a systematic means for migration and remediation, he adds.

The initial support for MigraTEC's software has come from Intel and computer manufacturers, like IBM and H-P, which recognize that the availability of 64-bit ready software will drive demand for their 64-bit machines. Having tested MigraTEC's tools in their labs, these companies are now considering licensing the technology.

"You can't sell a box without software," explains Simon Mak, vice president of business development at MigraTEC. While many software vendors are developing Itanium versions of their products, it remains critical for Intel and computer makers to find simple, fast ways for Corporate America to migrate its legacy software.

"Intel knows there's a transition going on and we are trying to alleviate the process," says Barbara Hochgesang, a program manager at Intel that's helping software vendors migrate. The chip giant is initially targeting those high-end applications that stand to benefit most from the new hardware, particularly database and supply chain software.

Interest in migration from some end-users and software vendors has begun to mount. "Compared to three months ago, we are getting three to four times the number of inbound inquiries," says MigraTEC's president Although each call doesn't translate into a sale, "the market is starting to figure out there are issues they need to understand."

For example, a large U.S. telecommunications provider has already contacted Unisys for help with an application that has 1.5 million lines of code and was developed over 25 years. "To migrate something like that would just be horrendous" without a tool like MigraTEC's, says Cross.

MigraTEC has other products, including tools for switching between operating systems. However, its future rests squarely on the success of its Itanium migration software. The 32-person company has spent the past two years developing the software and received a U.S. patent protecting its core technology in July.

MigraTEC, whose shares are traded on the OTC Bulletin Board, is hoping sales of the migration tools will staunch its losses and strengthen its flimsy balance sheet. In its June-ended quarter, the upstart had a net loss of $1.8 million on revenue of just $35,650.

Brechb|hl predicts sales will cover operating expenses by the middle of next year. Nonetheless, MigraTEC secured in March a private equity line of credit for up to $20 million that, the executive contends, would sustain the company for several years.

Of course, neither the small software vendor nor its giant backers think they'll have to wait that long for Itanium to catch on.

9/25/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
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