ASK Group, Inc.

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ASK Group, Inc.

2440 W. El Camino Real
Mountain View, California 94039-7640
U.S.A.
(415) 969-4442
Fax: (415) 962-1974

Public Company
Incorporated: 1972 as ASK Computer Systems
Employees: 2,400
Sales: $432 million
Stock Exchanges: New York
SICs: 7372 Prepackaged Software

The ASK Group, Inc. is a producer of software for use in business settings, primarily manufacturing. With 91 offices in 15 countries around the world, ASK maintains a significant share of the market it pioneered and once dominated. Built on the strength of one program, the company expanded dramatically in the 1990s through two major acquisitions.

ASK was started in 1972 by Sandra and Ari Kurtzig, a couple living in California. Sandra Kurtzig had quit her job as a marketing specialist with a unit of the General Electric Company, and invested $2,000 of her and her husband’s savings in starting up a new company in the second bedroom of their home. The two formed the name of their fledgling venture by taking the initials of their names, Ari and Sandra Kurtzig, as their corporate moniker.

Initially the Kurtzig’s firm developed software for various business applications. In 1974 they incorporated their endeavor, but it was not until four years later, in 1978, that the Kurtzigs came up with a product that would allow their company to grow dramatically. This innovation was a program for use on a Hewlett-Packard mini-computer that permitted small manufacturing companies to control the operation of an entire factory. With ASK’s program, companies could plan such aspects of their business as the purchase of materials and production schedules. In the past, these tasks could only be performed on very large mainframe computers. ASK’s product, called “ManMan,” an abbreviation for manufacturing management, had a six-figure cost and was aimed at small and medium-sized manufacturers. To reduce the cost of its program to businesses with sales of less than $10 million a year, ASK also offered its software on a time-sharing basis. For a smaller, monthly fee, companies were able to rent a terminal to run the program on a central computer owned by ASK.

ManMan was an instant success, and with its take-off came a sharp rise in revenues and earnings for ASK. As a result of this hit program, ASK was able to sell stock to the public for the first time in 1981. Within two years, Sandra Kurtzig’s personal stake in the company was worth $67 million, as ASK had come to dominate the market for information systems geared toward manufacturers. In order to insure continued growth and maintain the company’s entrepreneurial spirit, ASK directed nearly half of its research and development budget toward the creation of new products.

In March of 1983 ASK made its first acquisition, purchasing a privately held software company called Software Dimensions, Inc., for $6 million. This company designed microcomputer based programs with business applications to be used with personal computers. Its best selling product was Accounting Plus, a phenomenally successful program that pulled in earnings of $250,000 on sales of $3 million in 1983 alone.

After taking over Software Dimensions, Kurtzig renamed it ASK Micro. To further increase sales of Accounting Plus and provide revenues for ASK to undertake a retooling of ManMan that would allow it to run on personal computers, the company launched an aggressive program to push Accounting Plus. ASK hired sales personnel to supplement the distributors who were already handling sales of the program, but this strategy backfired when previous sellers of Accounting Plus became insulted and hostile. In addition, the company’s overhead on the program soared as a result of its enlarged payroll. Finally in June of 1984, Kurtzig announced that she was shutting down ASK Micro, at a cost of $1 million, and auctioning off the rights to Accounting Plus. Regarding this fiasco, in which the company also failed to transform ManMan for use on the personal computer, Kurtzig told Business Week, “We have our fingerprints all over the murder weapon” that killed Software Dimensions.

Despite the failure of ASK Micro to move ASK into the smaller-computer market, the company continued to try to make its product available more cheaply, to a broader array of businesses. As technological advances made computing power less and less expensive, ASK struggled to keep its market share from being eroded by competitors offering similar services in less cumbersome formats.

By the fall of 1984, ASK planned to offer a version of its original product, ManMan, for about one-third of its previous price. This was possible as a result of the introduction of lower-priced minicomputers from Hewlett-Packard and the Digital Equipment Corporation (DEC), the two hardware manufacturers for whose products ASK had developed software. Because of the continuity between the old and new lines of machines, ASK was able to market its product less expensively, with very few adjustments or alterations necessary. In this way, the company hoped to protect its market share with smaller companies to which it had once offered time-share facilities. In addition, ASK planned to market its original product more aggressively to middle-range manufacturers. ASK estimated that almost four-fifths of these potential customers had yet to be tapped.

Despite these efforts, by 1985, ASK had started to see its fortunes falter, as an overall decline in spending by its customers hurt the company’s returns. In the midst of this dismaying financial news, in February Kurtzig and her family members also began selling off large blocks of their stock holdings in the company, a move that later resulted in a shareholder lawsuit. In August Kurtzig sold off additional shares of ASK.

This reduction in ownership of the company was indicative of a larger withdrawal on Kurtzig’s part from more and more of ASK’s day to day operations. Beginning in March of 1984, Kurtzig had gradually begun to relinquish her duties at ASK to a deputy. That year she named Ronald W. Branniff president of the company, and in 1985 he took over her post of chief executive officer as well. Kurtzig attributed her declining interest in the business to family pressures, along with other factors. Divorced from her husband, with whom she had founded ASK, Kurtzig was trying to raise her two sons, who were aged 12 and 9 at the time. She had grown tired of the constant pressure to spend time on her business, and the unending glare of publicity that resulted from her status as a leading woman in the high technology industry. “I felt guilty about all the attention I got, became tired of being the news,” Kurtzig later told the Wall Street Journal. “It all became very wearisome.”

In the wake of Kurtzig’s departure from active participation in the company, ASK hired managers with backgrounds in running large businesses, as the company passed out of its entrepreneurial stage and became a more solidly entrenched major player. Although the company remained profitable, its level of earnings and sales dipped in 1986, falling to $5.89 million on revenues of $76 million. These figures improved in the following year, and ASK acquired the NCA Corporation for $43 million in cash in August of 1987.

Despite these small advances, it gradually became clear that ASK was losing ground to its competitors. Slowly ASK’s business had grown stale. The company’s atmosphere changed, however, as a host of new managers were brought in to run its operations. ASK began to concentrate the bulk of its energy on designing products for the minicomputer, largely ignoring the growing workstation market.

In its research and development activities, ASK began to focus nearly all of its resources on upgrading and improving existing products. Work on new products virtually ground to a halt. This overall caution, described in a Wall Street Journal article as a “toe in the water approach,” made impossible any real breakthroughs that would result in continued market leadership. ASK had lost its entrepreneurial edge, and its primary position in its field, as its managers grew distant from their employees and lost contact with the actual nature of the business.

In the meantime, Kurtzig had spent her time traveling, writing her autobiography, and dabbling in investment in other technology companies. Eventually she found herself frustrated and bored. In mid-1989 the ASK managing board approached Kurtzig and asked her to resume an active role in the company, and she accepted their invitation, despite the fact that she had formally resigned as chairman of the company, severing all official ties just a few months earlier.

Among the first signs of Kurtzig’s return was ASK’s purchase of Data 3 Systems, a privately owned competitor that made manufacturing software. ASK paid $18.7 million for the company, whose products were designed for use on IBM hardware, a natural complement to ASK’s products for other computers. In addition to this complementary expansion, Kurtzig began to revamp the way her old company had been run. She reconfigured existing products, shifted personnel, and tried to alter the pervading spirit of the enterprise. She changed such minor but important details as the quality of the food and beer at the company’s Friday evening celebrations in an effort to reconnect upper level management with the company’s employees. She also began attending many meetings at all levels of ASK to keep her finger on the pulse of the company’s operations.

As part of this effort, Kurtzig had research and development workers rate their bosses, and those who scored low were dismissed, while those whose efforts won praise were given more responsibility. She abolished bonuses for upper-level management that left out low-level workers, convinced that they detracted from team spirit at the company. In addition, Kurtzig recruited managers with entrepreneurial experience.

In addressing ASK’s product line, Kurtzig moved to simplify the company’s programs and insure that they could be used with a broader array of computers and databases. In addition to its attempts to make inroads into the IBM market, the company also set its sights on products manufactured by Sun Microsystems. To market its products, ASK began exploring second party distribution channels, rather than the direct sales it had relied on in the past. In addition, ASK moved to tap the international market by opening offices in Europe and Asia. These efforts combined to give ASK a successful final year of the 1980s, as the company posted earnings of $13.5 million.

In 1990, ASK made another significant acquisition, purchasing the Ingres Corporation, a software manufacturer that had been suffering declining financial fortunes. In order to finance this move, ASK entered into an unusual four-way financing arrangement, taking on significant capitalization from the Hewlett-Packard Company and the Electronic Data Systems Corporation (EDS), a subsidiary of General Motors. This unorthodox arrangement elicited alarm from some of ASK’s stockholders, notably one man who held ten percent of the company’s shares and who announced that he would try to have the company’s managing board ousted at the next shareholders meeting. Despite this glitch, Kurtzig’s arrangement proceeded as planned. The deal called for 30 percent of ASK to be sold to Hewlett-Packard and EDS for a total of $60 million, which in turn enabled ASK to pay $110 million for Ingres.

In this way, Kurtzig was able to unite several components in partnership with ASK that were essential for the company’s success. ASK already made use of Ingres software in its own work, linking the accounting and manufacturing departments of its clients to its own database. Hewlett-Packard made the hardware upon which much of ASK’s software ran, and the company resold Hewlett-Packard products as part of its software packages. Both Hewlett-Packard and EDS had strong histories of involvement with manufacturing businesses, and this heritage promised to open up more potential markets for ASK.

Kurtzig told the Wall Street Journal at the time of the purchase of Ingres that she considered the deal “a home run.” This good news provided a counterpoint to ASK’s mediocre results over the past several quarters, indicative of a lull in business while the company tried to bring new products to market. With its new purchases, ASK had moved beyond its original scope, as a software company that catered to manufacturers, to become a much larger, global, diversified company. The unified ASK and Ingres group expected yearly revenues of $400 million. Upon beginning the merger of its acquisition into its operations, ASK announced that 270 jobs, or 12 percent of Ingres’ workforce, would be eliminated, because they overlapped with operations provided by ASK. The company ended 1990 with revenues of $206 million.

In the early 1990s, ASK concentrated on the development and introduction of new products, designed to provide communication between different computer systems and programs. In 1992 the company also introduced ManMan/X, an updated version of its original manufacturing management program, with 27 nodules.

In 1992 ASK was restructured to better reflect the nature of its operations. The company was renamed the ASK Group and was now comprised of three separate business groups—ASK Computer Systems, Data 3, and Ingres. In addition to this structural reshuffling, ASK underwent a significant shift in top management when Kurtzig appointed a new president and once again retired, retaining only the title of chairman.

The reconfigured ASK, again under new leadership, ended 1992 with an increase in revenue of more than 23 percent, which was offset by write-offs that caused an overall loss for the year of $44 million. With significant partnerships in place and a history of domination in its market for manufacturing-related software, ASK appeared to be on solid footing as the company faced the challenging environment of the computer industry in the 1990s.