Candle Corporation

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Candle Corporation

100 North Sepulveda
El Segundo, California 90245
U.S.A.
Telephone: (301) 535-3600
Toll Free: (800) 328-1811
Fax: (301) 727-4287
Web site: http://www.candle.com

Private Company
Incorporated: 1976
Employees: 1,787
Sales: $382 million
NAIC: 334611 Software Reproducing; 511210 Software Publishers

As one of the world's largest independent software and services companies, El Segundo, California-based Candle Corporation specializes in helping end-users cost-effectively maximize the performance of complex computer systems and software applications. It accomplishes this via more than 250 software products for everything from mainframe systems to Web environments, as well as specialized consulting services. During the early 2000s Candle had more than 3,000 customers in 60 countries worldwide, with regional headquarters in Singapore and the United Kingdom. Encompassing 83 percent of the Fortune 100 and 73 percent of the Global 100, these clients included the likes of 3M, Bank of America, Coca-Cola, Ford Motor, Johnson & Johnson, McDonald's, Nestlé USA, Procter & Gamble, Prudential Financial, Sara Lee, and Sprint.

Two Lines of Good Code: 1975–78

Candle was founded in 1976 by Aubrey G. Chernick. Born in Los Angeles in 1949, Chernick was raised in the small Canadian farm town of Deloraine, Manitoba, where his parents operated a grocery store. He earned an undergraduate degree in chemistry from the University of Manitoba and found employment in an environmental analysis lab. Although the lab contained computers, Chernick did not know much about them. Along with a fellow employee, he learned the BASIC programming language.

Although Chernick considered a career in medicine, he continued to work with computers and began developing software in the Canadian province of Ontario. After spending three months in the Canadian division of Computer Science Corporation, Chernick was laid off. Despite his growing knowledge base, Chernick was still a relative computer neophyte, and he failed to land a job with Canada's Datacrown when they determined he had little experience. Ultimately, Chernick found work at Laurentian University, a rural Canadian college that was hard pressed to attract system programmers. There, he learned the ropes by installing operating systems on IBM Model 40 mainframes and reading everything he could about them.

After another failed attempt to find employment with Datacrown, Chernick went to work for the Government of Manitoba. There, his involvement with computers continued to grow, and he learned how to program the IBM MFT operating system and eventually the IBM MVS system. While attending meetings of the Central Ontario Users Organizations, Chernick saw that many IBM mainframe users had common needs that were not being met.

This observation was Chernick's inspiration for creating a new software application. In 1975, he convinced Canada Life of Ontario to let him use the company's computer for development purposes. In return, he offered them a copy of his finished product at a reduced price. It took Chernick about four or five months to complete his work, which he named OMEGAMON for MVS. Dubbed as the first-ever real-time application for monitoring IBM mainframe operating system performance, OMEGAMON's name was inspired by the last letter of the Greek alphabet and the first letters of the word "monitoring." The application literally was supposed to represent the "last word in monitoring." In later years, Chernick would often tell reporters how he started Candle with "two lines of good code."

Armed with a new product, the 26-year-old Chernick established Candle Services Corporation in October 1976 and began making the rounds at data centers to peddle OMEGAMON. Chernick called his new enterprise Candle because of his intent to shed light on how mainframe operating systems worked. Candle operated in Toronto, Ontario, for about six months. Ironically, Chernick sold the third copy of OMEGAMON to Datacrown, where he had unsuccessfully sought employment. In 1977, Candle relocated to Los Angeles and shortened its name to Candle Corporation. Clients at this time included the likes of Warner Brothers, Southern California Edison, and U.S. defense contractors such as Hughes, Northrop, and TRW Aerospace. That year, Chernick focused on improving OMEGAMON and increased the application's functionality by 400 percent.

Candle's earliest days were humble ones, and Chernick ran the company from his apartment for about 18 months. In a somewhat pioneering move, Chernick sold his software over the telephone before that practice was widely used by software firms.

In the May 22, 2000, issue of the Los Angeles Business Journal, Chernick stated: "You want a war story? I had just come down here and was working out of an apartment in Marina del Rey, and I got a call from someone at Hughes. It was kind of a strange call. They asked, 'How do you sell your product?' I said, 'You get a 30-day trial.' They asked, 'What's involved in the trial?' and I said, 'You get the software and a tape with instructions.'" Chernick went on to describe how Hughes offered to send someone to his apartment to pick up the application, which he then sold for $100.

In 1978, Chernick began publishing a newsletter called the Candle Computer Report. According to some industry observers, this technical newsletter did much to give the company credibility among computer users and elevate its image. Candle also developed a strong reputation for providing quality technical support. As the years unfolded, Chernick remained committed to keeping Candle a private company, refusing to be pressured by a focus on quarterly profits. In addition, he did not accept money from venture capitalists and built Candle from the ground up by investing a sizable share of the profits back into the firm.

Rise to Prominence: 1979–94

Candle embarked on national tours in 1979 with the goal of providing user education regarding availability and performance issues. The following year, the company recorded its first million-dollar sales month in December and ended the year with $4.5 million in revenues. With the release of OMEGAMON for CICS, Candle's application evolved to meet the growing needs of transaction processing within the financial sector and other industries. The company also released EPILOG for MVS, which enabled system administrators to perform long-term analysis.

In 1981, sales spiked more than 200 percent from 1981 levels, reaching $10.4 million. During the same time frame, the company's employee base grew from 52 to 108. As he found success, Chernick formalized a way to share it with the world by establishing the Candle Foundation in 1982 to support humanitarian, cultural, and social projects. According to the company, these include "community investment and redevelopment initiatives, education and information dissemination programs, medical research, and drives to combat hunger and homelessness."

Heading toward the mid-1980s, Candle strengthened its reputation as a leader by providing more education to the industry than ever before. CCR 's readership reached 50,000 subscribers in 1984, and the company held its first user conference the following year. It also was in 1985 that Candle released its CL family of software.

Revenues reached $100 million in 1988, at which time Candle held about 32 percent of the performance measurement software market, according to a report issued by Computer Intelligence and reported in the October 1988 issue of Software Magazine. IBM held 33 percent of the market, followed by Boole & Babbage (13 percent), Landmark Systems (6 percent), Goal Systems (5 percent), Applied Data Research (4 percent), and Morino Associates (3 percent).

A spate of new product offerings was released in the late 1980s. In 1988, Candle released one of the industry's first console automation programs when it rolled out AF/OPERATOR, along with a related automation management tool called AF/REMOTE. These were followed by a new version of OMEGAMON designed for monitoring the performance of IBM's DB2 relational databases. OMEGAMON for DB2 was adopted quickly by leading companies worldwide.

In 1989, Candle's employee ranks grew to approximately 700. That year, the company unveiled OMEGACENTER, which it dubbed "one of the first applications designed to integrate performance management, data center automation, remote control, and communications technologies within one solution." OMEGACENTER pioneered the use of graphics to display system performance via Candle's Status Monitor tool.

Candle kicked off the 1990s with the next evolution of its flagship product. OMEGAMON II offered users a truly comprehensive performance management package, as it incorporated many of the company's existing solutions. In addition, it allowed users to view system facts via a graphic interface. A suite of DB2 tools followed in 1991, along with the OMEGAVIEW status management tool.

Company Perspectives:

Since 1976, Candle Corp. has delivered technology, innovation, and leadership to more than 3,000 companies around the world. We've helped them perfect their mission-critical applications: from the infrastructures where they develop them to the data centers where they manage them to the quality of service they deliver to their customers. We call it managing what matters most and we're proud of delivering service and success for so many years.

It was not until the early 1990s that Candle employed the services of a public relations agency. At that time, Marina del Ray, California-based Miller Shandwick was chosen to handle media relations and promotional efforts. In late 1992, Candle moved it headquarters and 900 workers from West Los Angeles to Santa Monica, California. Most employees moved into cubicles, and executives also had open offices to facilitate communication. In addition, Candle's data center relocated to a site outside Los Angeles in an effort to save money on real estate costs. Sales grew rapidly during this time period, climbing from $151 million in 1990 to $210 million in 1993.

Candle unveiled other new performance management product introductions during the first half of the 1990s. These included the OMEGACENTER Gateway for MVS in 1993 and OMEGAMON II for SMS in 1994. At this time, Candle's annual revenues totaled $213 million.

Moving Beyond the Mainframe: 1995–98

In 1995, Candle introduced its CCC product family to address the industry's use of PCs and UNIX workstations. That year, the company was in the process of carrying out a $500 million research and development initiative to change its focus from mainframes to PC and desktop systems. Candle relied upon its very first trade advertising campaign to promote this transition.

It also was in 1995 that Chernick was given the Albert Abraham Michelson Award. According to a December 7, 1995 release from Business Wire, he received the award at the Computer Measurement Group annual conference for "technical excellence and professional contributions to the field of computer management."

In the September 25, 1995, issue of the Los Angeles Business Journal, Software Council of Southern California Executive Director Bill Manassero credited Candle for its longevity in the industry, remarking: "It has survived very well in a high-tech world that is changing all the time. As it has turned away from mainframe technologies to PCs, Candle has been able to handle the change and continued to thrive. It is really a testament to Chernick's management skills."

As of 1995, Candle employed 1,100 workers, approximately 550 of who worked at its Santa Monica, California headquarters. Many of the remaining employees worked at one of the company's 29 regional offices, most of which were located in North American cities.

Candle celebrated its 20th anniversary in 1996, when years of steady growth culminated in annual revenues of $230 million. The company employed 1,200 workers in 42 offices throughout the world and devoted about 30 percent of its revenues to research-and-development initiatives. Much of this work was carried out at Candle's Westlake Village, California, research and operations center. It also was in 1996 that Robert J. LaBant was named president and chief operating officer of Candle.

During that same year, a major shift took place at the company that emphasized the growing importance of networked systems. This included the development of middleware, or software that allows different software applications to communicate with one another, and an emphasis on professional services. Candle dubbed its product and service offerings in this area as Solutions for Networked Applications.

In a September 24, 1996, news release, Chernick said: "We are entering a new era in business and technology. To remain competitive, businesses must break through traditional boundaries and forge new relationships internally and externally with other companies and new processes. We call it the era of Networked Businesses, which we think best reflects the new realities of commerce, competitiveness, and information technologies.… This is a new business dimension for Candle," he continued. "For 20 years we have focused on the back-end, managing large, deployed applications and systems. With our new initiatives, we are addressing new problems at the very beginning of the new business process and application life cycle."

Candle's push into the networked solutions arena involved alliances with other companies, as well as the acquisition of other technologies and firms. In addition to acquiring Lotus Notes management solutions developer CleverSoft Inc. in July 1996, Candle agreed to acquire MQSeries services provider AMSYS North America. The latter acquisition bolstered Candle's capabilities in the middleware arena. To connect its customers with leading middleware experts, Candle also formed the Worldwide Design Network at this time.

By 1996, Candle's software was used in 5,000 data centers, and its clients included 75 percent of Fortune 500 companies. According to the April 1996 issue of Technical Support, Candle was "the only software company to deliver systems, network, and console management solutions that span desktops, UNIX systems, and MVS-based mainframes."

Key Dates:

1975:
Aubrey G. Chernick develops OMEGAMON for MVS, the first real-time application for monitoring IBM mainframe operating system performance.: 1976:
Chernick founds Candle Services Corporation in Toronto, Ontario.: 1977:
Candle relocates to Los Angeles and shortens its name to Candle Corporation: 1978:
Chernick begins publishing the Candle Computer Report newsletter.: 1982:
The Candle Foundation is formed to support humanitarian, cultural, and social projects.: 1992:
Candle moves it headquarters and 900 workers from West Los Angeles to Santa Monica, California.: 1996:
Candle celebrates its 20th anniversary; Robert J. LaBant is named president and chief operating officer.: 1999:
Candle relocates from Santa Monica to El Segundo, California.: 2001:
Andy Mullins is named president and chief operating officer, while LaBant becomes vice-chairman.: 2004:
IBM announces that it will acquire Candle and that Chernick will leave the organization.

Heading toward the late 1990s, Candle capitalized on a business market that was characterized by a growing number of mergers and acquisitions. It accomplished this by developing Roma BSPTM to help organizations integrate applications quickly. This was followed by the release of other award-winning products, including an application response time monitor called ETEWatch in 1998, as well as the Candle Command Center (CCC) for UNIX System Services.

The Age of E–Business: 1999 and Beyond

By 1999, Candle's revenues were $382 million. That year the company relocated its headquarters from Santa Monica to El Segundo, California. It employed 1,800 people in 55 offices throughout the world, including about 700 at its headquarters. At this time, e-business became a major focus for Candle. The company released the eBA*ServiceMonitor in 1999, which it called "the first solution introduced to monitor the effectiveness of IT strategies, initiatives, and investments for Web sites from the visitor's perspective."

Candle's sales reached approximately $400 million in 2000, at which time the company employed about 2,000 people. This led to the development of OMEGAMON XE and DE in 2001, which were designed to meet the needs of companies engaging in e-business. In addition, Candle introduced its CandleNet eBusiness Platform Powered by Roma Technology, which was designed for e-business deployment.

Andy Mullins was named Candle's president and chief operating officer in January 2001, succeeding Bob LaBant, who became vice-chairman. At this time, Chernick was focusing more on the big picture and allowing Candle managers to handle day-to-day company operations. Candle now devoted some 60 percent of its resources to non-mainframe computing. Through its consulting arm, Candle began to help companies build bridges between the their mainframe applications and the Web. Known as application integration, this pursuit accounted for about 15 percent of the firm's revenues.

In the March 19, 2001, issue of Interactive Week, Chernick summed up Candle's development to date and his optimism regarding the company's future, remarking: "There's a whole ecosystem of infrastructure and transactions that needs to be managed. For the last 25 years, we have worked on scalable solutions. For the last five to seven years, we added a focus on ease of use. And in the last three to five years, we've focused on the business process. The Internet is where it all comes together."

In 2002, Candle introduced the PathWAI line of software and consulting packages aimed at simplifying and streamlining the design, development, and operation of middleware and Web server infrastructures. It also was in 2002 that Candle received a bronze award in the 2001 California Awards for Performance Excellence (CAPE) competition, based on the Malcolm Baldrige national standards for excellence and quality. According to Candle, the company was recognized for exhibiting "visionary leadership and a focus on customers."

In 2003, Chernick established the National Center for Crisis and Continuity Coordination (NC4), which the company described as "an organization focused on advancing crisis management and business-continuity readiness through public-private sector collaboration." That year, the Software Council of Southern California named Chernick Software CEO of the Year. By the end of 2003, Candle's sales stood at $382 million and the company's suite of PathWAI solutions had grown from seven to 17 packages.

After passing up on hundreds of offers to buy Candle over the years, in early 2004 Chernick agreed to sell his company to IBM. Although the terms of the deal were not disclosed, one industry analyst indicated that IBM would likely pay $350 million for Candle.

In the April 1, 2004 issue of Computerworld, IBM Software Group Senior Vice-President and Group Executive Steve Mills said that the two companies working together would be able to "provide customers with powerful capabilities for managing end-to-end infrastructure, processes, and applications, which are key requirements for the on-demand operating environment."

As part of the arrangement, Chernick would not remain with the company he founded with two lines of good code and a vision for making computer operators' lives easier. As Candle prepared for a new era in its history, President Andy Mullins said IBM would make decisions about the structure of the combined enterprises in the first year following the acquisition.