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Informatics General

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Informatics General Corporation
Company typePublic
IndustrySoftware
FoundedMarch 19, 1962; 64 years ago (1962-03-19) in Los Angeles, California, United States
FounderWalter F. Bauer, Werner L. Frank, Richard H. Hill
Defunct1985 (1985)
FateAcquired by Sterling Software in 1985
Headquarters
Los Angeles
,
United States
Area served
Corporate market, defense-related projects, industry-specific turnkey systems
Key people
Walter F. Bauer (primary founder)
ProductsMark IV system (file management and report generation software)
Number of employees
2500+ (mid-1980s)

Informatics General Corporation, initially known as Informatics, Inc., was a software enterprise based in Los Angeles that operated from 1962 until 1985. The company produced a range of software solutions, with its most prominent product being the Mark IV system for file management and report generation on IBM mainframes, which became the top-selling packaged software in the corporate market during its time. Additionally, Informatics managed computer service bureaus and delivered turnkey systems tailored to particular industries. By the mid-1980s, the company achieved revenues approaching $200 million and employed a workforce exceeding 2,500 individuals.

Martin Campbell-Kelly, a historian specializing in computing, identifies Informatics as a prime example of an independent mid-sized software firm during that era. Both the Computer History Museum and the Charles Babbage Institute have preserved oral histories documenting its principal contributors. Jeff Yost, another historian, acknowledged Informatics as an early innovator in system integration, placing it alongside companies like System Development Corporation. The Chicago Tribune referred to Informatics as “long a legend in software circles.”

In 1985, Sterling Software acquired Informatics General through what was recognized as the software industry's first hostile takeover. This acquisition immediately elevated Sterling Software into the ranks of the largest software companies, with combined revenues of $200 million.

Background and founding

Walter F. Bauer (1924–2015), regarded as the primary founder of Informatics, hailed from Michigan and earned his doctorate in mathematics from the University of Michigan in 1951. His initial professional experience involved programming the early digital SEAC computer at the National Bureau of Standards and contributing to Boeing’s BOMARC interceptor missile project. Subsequently, he managed a division of 400 employees at Ramo-Wooldridge Corporation, where he oversaw computer systems such as the IBM 704 and UNIVAC 1103A, before joining the merged entity Thompson Ramo Wooldridge in 1958. Bauer described his expertise as centered on systems management rather than pure technology, providing him with valuable insight into computer operations.

Werner L. Frank (born 1929) was another founding member who gained programming experience on the ILLIAC I at the University of Illinois at Urbana–Champaign before joining Ramo-Wooldridge in 1955. His focus was on numerical analysis and programming using assembly language and FORTRAN. Frank authored significant papers on numerical methods and worked extensively with defense-related computing systems such as the AN/UYK-1, spending considerable time in Washington, D.C.

The third co-founder was Richard H. Hill, formerly a professor at UCLA and assistant director of a collaborative data center operated by UCLA and IBM.

In January 1962, Bauer invited Frank and Hill to establish an independent software services firm aimed initially at creating systems for large-scale computing tasks, likely within military domains. Although lacking formal business education, Bauer developed a business plan and demonstrated notable entrepreneurial skills.

Given the limited availability of venture capital for software startups at that time, Bauer and his partners formed a partnership with Data Products Corporation, a manufacturer specializing in computer peripherals. Erwin Tomash (1921–2012), co-founder of Data Products with a background at Engineering Research Associates, supported this collaboration as a strategic measure to mitigate startup risks. Informatics was incorporated as a wholly owned subsidiary of Data Products with initial capitalization of $40,000—$20,000 contributed by Data Products, $10,000 from Bauer, and $5,000 each from Frank and Hill.

The name

The company's designation stemmed from the founders' desire to incorporate "-atics," a Greek-derived suffix signifying "the science of." They initially contemplated the name "Datamatics," but since it was already in use, they opted for "Informatics," which translates to "the science of information processing."

At the same time, in 1962, French innovator Philippe Dreyfus co-established a company called "Société pour l'informatique appliquée," which introduced the French term "informatique." This word became widely adopted in France and other European nations and received official recognition from the Académie française.

In contrast, Informatics in the United States took strong measures to safeguard its name against becoming generic and to protect its brand identity. This protective approach delayed the broader acceptance of the term until international generic use led the company to rename itself Informatics General in 1982.

Early history

Informatics, Inc. was established on March 19, 1962, within Frank's unoccupied residence located in Woodland Hills, Los Angeles. Alongside the three founders worked secretary Marie Kirchner and an early significant recruit, Frank Wagner, an executive well-connected with IBM user groups. The company's back-office operations were handled by Data Products, situated nearby in Culver City.

After encountering initial difficulties in securing contracts, Informatics secured a critical $150,000 agreement with the Rome Air Defense Center in early 1963, which opened doors to additional defense-related projects. By its second year, Informatics had achieved profitability, employing 37 people and maintaining steady growth. The company positioned itself as a leader in software contracting by providing analysis, design, and consulting services tailored for digital processing users.

Marketing efforts were relatively limited and primarily leveraged personal contacts. Among approximately fifty software startups during the early 1960s, Informatics distinguished itself alongside Applied Data Research (ADR) and Advanced Computer Techniques (ACT), largely due to Walter Bauer’s combined technical expertise and entrepreneurial vision.

Meanwhile, Data Products—renamed Dataproducts in 1964—fell behind IBM in disk drive technology development; its printer division had yet to reach maturity. To satisfy Dataproducts' management interests, Informatics' founders acquired a 7.5% ownership stake in that company in 1965. This arrangement hinted at their eventual separation.

In May 1966, Informatics conducted an initial public offering at $7.50 per share, raising $3.5 million and becoming only the third software company to go public. Although shares were traded over-the-counter in New York, Dataproducts still held about 60% ownership at that time. Revenues stood at $4.5 million with net profits of $171,000 and roughly 300 employees on staff. By 1967, Informatics commanded approximately 3–4% of the custom software market.

During the mid-1960s surge known as the "go-go market," computer stocks experienced significant increases; Informatics’ price-to-earnings ratio escalated from 25 at IPO to over 600 by early 1969 despite modest earnings performance. Additional share offerings funded development of its flagship Mark IV software and expansion into data services.

In 1969, Dataproducts sold off its remaining shares in Informatics, allowing Informatics to become fully independent. Dataproducts’ initial $20,000 investment ultimately returned nearly $20 million. At this point, Informatics reported revenues exceeding $11 million with net income of $561,000.

Origins of Mark IV and the software product industry

Mark IV’s beginnings can be traced to 1960 with the creation of GIRLS (Generalized Information Retrieval and Listing System), designed for the IBM 704 by John A. Postley (1923–2004), an engineer with a background in aerospace. The initial client for this system was Douglas Aircraft Company. Postley was employed at Advanced Information Systems, a branch of Electrada Corporation, collaborating with Robert M. Hayes and others.

In April 1963, Advanced Information Systems was purchased by Hughes Dynamics, a subsidiary of Hughes Tool Company that specialized in computerized management services. GIRLS evolved through versions Mark I and Mark II on the IBM 1401, enhancing its functionality, while Hughes simultaneously developed Mark III, focusing on significant performance upgrades.

When Hughes Dynamics decided to withdraw from software development, Informatics acquired Advanced Information Systems in May 1964 essentially at no cost—Hughes paid Informatics $38,000 to assume ownership along with corresponding customer commitments. Postley advocated for creating Mark IV tailored for the new IBM 360 series. Although earlier comparable software like SHARE's 9PAC existed, Postley aimed to establish a genuine software product. Despite Informatics’ hesitation to invest the projected $500,000 needed for development, Postley secured $100,000 contributions each from five companies: Sun Oil, National Dairy Industries, Allen-Bradley, Getty Oil, and Prudential. The official launch occurred in 1967.

Mark IV rapidly gained traction; during its inaugural year in 1968, it achieved 117 installations and generated nearly $2 million in revenue. IBM’s 1969 move to separate software sales from hardware further propelled the commercial software market, significantly exceeding Informatics’ sales projections for Mark IV.

Computing Technology Company subsidiary

Informatics revealed plans in 1968 to acquire Computing Technology Inc., based in New Jersey, with the acquisition completed in 1969. This entity was renamed Informatics Inc.’s Computing Technology Company, operating as a fully owned division situated in River Edge, New Jersey. Its Communication Systems Division developed a communications solution for the Federal Reserve Bank of New York and secured contracts with major Wall Street firms such as Dun & Bradstreet and Dean Witter.

Beginning in 1968, the Federal Reserve initiative utilized advanced store-and-forward-based message switching technology. The system centered on the SDS Sigma 5 computer from Scientific Data Systems, which had been acquired by Xerox Corporation. The Sigma 5 featured a Communication Input/Output Processor capable of supporting up to 128 communication lines with data rates ranging between 110 and 9600 baud. The project’s success led Informatics and Xerox to enter a joint marketing agreement, promoting the product under the name ICS IV/500.

Informatics positioned ICS IV as a key offering, securing clients like General Foods and Japanese National Railways. However, its high price constrained widespread adoption, leading to attempts at developing a more cost-effective alternative. Informatics received a contract from Bankers Trust to create a PDP-11 minicomputer version with Sigma 5 emulation on the DEC PDP-11, but this effort did not succeed. By the mid-1970s, Informatics withdrew from this segment of the communications market.

Subsequently, the Computing Technology Company developed Accounting IV, an integrated suite of financial applications aimed at corporate users.

Relationship with Equitable Life Assurance Society

The downturn in the computer industry beginning in 1970 posed significant challenges for numerous software companies, including Informatics, which faced unprofitable contracts and dwindling market demand. Informatics' establishment of a Data Services Division, which incorporated the acquisition of several computer service bureaus to provide utility computing, did not perform as expected. In May 1970, the company reported a loss of $4.2 million, marking its first deficit since 1963. Nevertheless, its prudent management approach enabled Informatics to endure while many rivals failed.

In 1971, Informatics partnered with The Equitable Life Assurance Society of the United States to create a joint venture named Equimatics, Inc., under the leadership of Werner Frank. The venture focused on developing and marketing computer solutions tailored for the insurance sector. Equimatics sought to deliver data services both for Equitable and other insurance companies.

Although revenues expanded to $33 million by 1974, Informatics encountered difficulties attracting investment capital during the economic downturn of the early 1970s. As a result, in September 1973, Equitable Life announced its intention to acquire Informatics at $7 per share in cash; this acquisition was finalized in March 1974. Following the transaction, Informatics operated as a subsidiary of Equitable with plans for organic growth and further acquisitions.

From the mid-1970s through 1985, Informatics maintained its corporate headquarters on Ventura Boulevard in Woodland Hills. By 1976, the company's revenues had grown to $58 million, supported by a global workforce of roughly 1,800 employees.

Capitalizing on its brand strength, Informatics branded several products with an "IV" suffix—examples include "Production IV" for manufacturing planning and "Accounting IV" for financial management. Other products comprised Life-Comm and Issue-Comm designed for insurance applications; Minicomm and Intercomm addressing teleprocessing and communications; and CSS targeting corporate shareholder services. Alongside these packaged software offerings, Informatics continued to provide custom software development and professional services engagements.

Ultimately, the collaboration with Equitable deteriorated; by the late 1970s, Informatics pursued independence once more. It launched a second initial public offering (IPO), trading over-the-counter under the symbol IMAT beginning in 1979. On June 7, 1982, after rebranding as Informatics General Corporation, it commenced trading on the New York Stock Exchange under the ticker IG—becoming only the second software company listed on the NYSE.

Products and divisions

During the late 1970s and early 1980s, Informatics’ revenue streams were fairly evenly distributed across software products, professional services, and information processing services, each accounting for approximately 26 to 39 percent of total income. By 1982, revenue reporting was adjusted to separate cross-industry clients from vertical market sectors such as legal, accounting, and insurance; by 1983, vertical markets had overtaken cross-industry revenues, reflecting internal organizational changes.

Mark IV and Mark V

Mark IV represented an early fourth-generation programming language designed for batch processing that combined file management with report generation capabilities.[1] Characterized as a "Generalized file-management system and sophisticated report writer," it was created to be accessible to non-programmers through straightforward interfaces using paper forms that were keypunched for batch execution.[2] Although initially intended for users without programming skills, its increasing complexity necessitated expertise in data processing.[3]

Together with Applied Data Research's Autoflow, Mark IV is acknowledged as one of the most impactful early software products.[4] It dominated IBM mainframe environments where IBM did not control database or file management functions. To support sales efforts, Informatics built an extensive sales organization modeled after IBM’s approach involving lengthy sales cycles.[5]

An independent users’ association called the IV League was established in 1969 and expanded internationally by 1972, attracting up to 750 participants per meeting.[6] This community of programmers influenced Mark IV’s development toward more advanced features beyond its original non-programmer orientation.[3]

Between 1968 and 1976, approximately 1,100 installations of Mark IV were deployed worldwide generating $50 million in sales. The initial price point began at $30,000 but later exceeded $100,000 depending on mainframe configuration and added features.[7] By 1977, Informatics formed a dedicated Software Products Group focused on Mark IV.[8] As of 1984, Mark IV remained the leading corporate software product globally with around 3,000 installations and annual revenues near $30 million.[9][7]

Mark IV achieved several pioneering sales milestones as the first software product to reach cumulative sales of $1 million, $10 million, and $100 million,[1] maintaining its status as the best-selling independent software product for fifteen years.[10] Competition remained limited for over ten years.[11]

However, by 1980 technological constraints caused sales growth to stagnate at roughly 60 percent of projections.[12]

The successor product Mark V was introduced between 1981 and 1982 with a focus on supporting online application development beyond batch processing.[13] Marketed as an "Application Development System," it incorporated screen dialogue features compatible with IBM IMS/DC and later CICS environments.[14] Despite these improvements, Mark V encountered intense competition from Applied Data Research, IBM, Cincom Systems, DMW Europe, and Pansophic Systems,[15] never achieving the market dominance held by Mark IV.

Following Sterling Software’s acquisition of Informatics General Corporation, Mark IV was rebranded as VISION:Builder in 1994,[16] continuing to generate nearly $20 million annually throughout the late 1990s.[7] After Sterling Software was acquired by Computer Associates in 2000,[17] the product remained available under the VISION:Builder brand.

Government services and online search

Throughout the 1960s and 1970s, Informatics was instrumental in advancing online information systems, notably developing RADCOL at the Rome Air Development Center, one of its initial engagements.

Beginning in 1966, Informatics secured multiple contracts with NASA, providing support to the Jet Propulsion Laboratory and Ames Research Center. The company established a Glendale, California branch dedicated to software development for the Surveyor, Mariner, and Apollo missions. Its projects spanned satellite tracking to redesigning the antenna at the Goldstone Observatory through a hill climbing algorithm—an innovation that earned NASA both recognition and a financial award. Additionally, Informatics developed a database to monitor primates involved in space experiments.

From 1968 through 1980, Informatics operated NASA’s Scientific and Technical Information Facility located in College Park, Maryland, securing contracts exceeding $4 million. The company managed NASA’s online bibliographic systems, including the groundbreaking RECON system, which processed abstracts and indexes sourced from microfilm and other document types. Ongoing enhancements reduced search response times to under three seconds.

Utilizing NASA technologies such as the public domain DIALOG system, Informatics broadened its online search offerings during the 1970s with products like TOXLINE and CHEMLINE for the United States National Library of Medicine. Although there was consideration to enter the commercial online service arena by recruiting DIALOG’s founder, Roger K. Summit, Informatics ultimately maintained its focus on government and private contract information services.

In the late 1970s and continuing into the 1980s, Geno P. Tolari directed Informatics' government and military divisions from San Francisco, California. Following Sterling Software’s acquisition of Informatics, Tolari retained his role as head of the Federal Systems Group.

Data Services Division

Although primarily known as a software firm, Informatics’ Data Services Division consistently generated approximately one-quarter of total revenue through service processing and facilities management.

Supported by stock offerings in the late 1960s, Informatics invested $3.6 million to acquire several computer service bureaus aimed at providing utility computing services. However, a subsequent market decline caused the division to incur losses of $100,000 per month during 1970.

Despite these challenges, the division endured. By the mid-1970s, operating out of Fairfield, New Jersey, it offered a virtualized VM/370 environment using IBM System/370 mainframes alongside Itel’s IBM-compatible AS/5 and AS/6 systems. The network incorporated multiplexers across various U.S. cities, enabling users to work in OS/VS batch or VM/CMS interactive modes with access to programming tools and IMS databases. The division also supplied software solutions designed to optimize telecommunications efficiency and reduce costs.

Notable clients throughout the 1970s included the General Services Administration for teleprocessing support, the National Highway Traffic Safety Administration for reporting systems, and Simplan Systems for macroeconomic modeling applications.

Informatics continued providing time-sharing services into the early 1980s before divesting its Fairfield-based Data Services Operation to Mellonics Systems Development—a subsidiary of Litton Industries—in 1984.

Answer Division

Between 1979 and 1980, Informatics aimed to broaden its IBM mainframe offerings beyond the Mark IV product.[18] Instead of creating an independent database management system, the company concentrated on developing products that complemented IBM's IMS and CICS systems.[18] To execute this approach, the Answer Division was formed, eventually incorporating the Mark IV product line.[19] This division operated out of Canoga Park in Los Angeles.[20]

In 1979, Answer/2 was introduced as a cost-effective report writer designed for IBM mainframe files.[21] Two years later, in 1981, Answer/DB was released, allowing end users to perform queries on multiple files and IMS databases hosted on IBM mainframes.Cite error: Invalid <ref> tag; refs with no name must have content

Following this, Informatics developed interfaces connecting widely used PC applications to Answer/DB on mainframes, reflecting a popular trend of that era.[22] These products included Visi/Answer (1983), dBASE/Answer (1984), and Lotus/Answer (1984), which integrated with VisiCalc, dBASE, and Lotus 1-2-3 respectively.Cite error: Invalid <ref> tag; refs with no name must have content[23] Communication with mainframes was facilitated via IRMA boards or the FORTE software package.[23] Early in 1985, Micro/Answer was launched for the IBM 3270 PC platform.Cite error: Invalid <ref> tag; refs with no name must have content

Despite these efforts, sales of Visi/Answer did not meet projections.[24] Unlike typical PC software products that benefit from rapid sales cycles, these integrations were viewed as strategic investments and consequently experienced extended sales periods akin to mainframe products.[24] By 1985, the Answer product line was burdened by high expenses and underwhelming revenue results.[25] In general, Informatics was among several companies specializing in mainframe software that found it challenging to adapt to the microcomputer market’s emphasis on high volume and low pricing—a stark contrast to their traditional business model.[26]

Management Services Division and Ordernet

William D. Plumb, a trailblazer in electronic data interchange, developed his concepts through Columbus-based Management Horizons. Its data processing division, Management Horizons Data Systems (MHDS), catered primarily to wholesale distributors and was eventually acquired by Citibank. Informatics purchased MHDS from Citibank around 1974 or 1975 for $3.4 million.[27][28] Plumb’s vision took shape with the launch of Ordernet in 1978.

Ordernet represented one of the earliest e-commerce platforms designed to enable electronic transmission of purchase orders and associated documents between manufacturers and distributors. It functioned as a service bureau focused on business-to-business transactions.[27] In 1975, Informatics collaborated with the National Wholesale Druggists' Association to create a centralized clearinghouse for electronic purchase orders; this group officially endorsed Ordernet in 1978, leading to the establishment of an Ordernet Services Division within Informatics.[28] Initially, this division operated on a relatively small scale.

The electronic data interchange market expanded as standards gained wider acceptance and additional endorsements for Ordernet emerged; by 1982, support came from four trade associations including the National Association of Service Merchandising.[29]

Informatics’ Management Services Division based in Columbus and led by Warner Blow encompassed more than just Ordernet initiatives.[30] When Sterling Software acquired Informatics in 1985, Ordernet was a key target.[31]

Under Sterling Software’s ownership, Ordernet grew into a comprehensive portfolio of e-commerce solutions before being spun off as an independent entity named Sterling Commerce in 1996, with Warner Blow appointed as CEO.[32][33]

Frank later described Ordernet’s development as a significant achievement that positioned its owners at the forefront of the emerging e-commerce sector and Internet economy.[27]

TAPS Division

The Terminal Application Processing System (TAPS) was created by Decision Strategy Corporation, a firm based in Midtown Manhattan and founded by Michael J. Parrella. Introduced in 1974, TAPS was designed to shorten the development cycle for online applications using CRT terminals, initially operating on IBM mainframes with the CICS teleprocessing monitor and TCAM access method.

TAPS allowed users to develop complete online application functionality through the use of tables and detailed specifications, eliminating the need for traditional programming. It functioned both as a development platform and a runtime environment, providing features such as network security, screen layout management, data validation, menu handling, database upkeep, concurrency control, and recovery mechanisms.

During the late 1970s, TAPS was adapted for a variety of minicomputer systems including Digital Equipment Corporation’s PDP-11, Hewlett-Packard’s HP 3000, Perkin Elmer Interdata machines, IBM Series/1, Harris Computer systems, and Tandem Computers. Approximately 70% of sales were directed at software developers like McCormack & Dodge and On-Line Systems, Inc., leveraging these demanding clients to validate the product’s capabilities.

After encountering financial challenges, Decision Strategy Corporation was acquired by Informatics in October 1980. Seeking to establish a presence in the minicomputer domain, Informatics formed a dedicated TAPS Division in New York under Parrella’s guidance. The company highlighted TAPS’s adaptability across different hardware platforms, operating systems, and terminal types—an essential feature for application generators—supporting systems such as Prime Computer and NCR 9300 via ITX.

Subsequent development efforts broadened TAPS’s IBM compatibility beyond System/370 OS-based environments to include DOS-based SSX/VSE on IBM 4300 models and the IBM 8100 distributed processing system. The objective was to create a flexible product capable of spanning mainframe, minicomputer, and microcomputer architectures so that applications could be developed on one platform and executed on another.

The primary customer base for TAPS was the U.S. government, notably the Army and Navy, which valued its portability given the variety of computer systems used due to lowest-bid procurement practices. By the early 1980s, TAPS had secured a $1 million contract with the Army aimed at upgrading administrative and logistics software and played a key role in Navy inventory management systems.

In the early to mid-1980s, TAPS evolved from its original version (TAPS I) into a more portable iteration (TAPS II), rewritten using a Pascal dialect. In 1984 Informatics made a strategic decision to concentrate TAPS efforts solely on government customers. Despite these initiatives, TAPS failed to achieve financial sustainability and was eventually discontinued.

An Informatics restructuring plan in early 1985 proposed moving the TAPS Division to Rockville, Maryland; however, most staff opted to leave instead. Responsibility for TAPS transferred to SOFT, Inc., a woman-owned consulting firm based in New York City. SOFT continued support for TAPS on Tandem and IBM platforms; the system remained operational within Army and Navy environments for functions such as accounting, personnel management, distribution, and supply well into the 2000s. Renewals of licenses from the Defense Information Systems Agency generated roughly $800,000 annually through at least 2009. Ultimately, TAPS was retired from U.S. military use in 2015.

Equimatics Division / Life Insurance Systems Division

United Systems International, headquartered in Dallas, created an automated back-office platform tailored for life insurance companies. In 1971, Informatics acquired this technology through the Equimatics, Inc. initiative, which resulted in the development of the Life-Comm product. The Life-Comm III iteration achieved notable success during the mid-1970s, generating over $1 million in revenue and attracting several dozen insurance clients. This product emerged as a prominent solution within the life insurance software sector. Additionally, the Equimatics project delivered other financial software offerings, such as the Mortgage Loan System.

The Equimatics Division name remained in use at Informatics despite shifts in ownership and separation from Equitable Life Assurance. It launched companion products like GROUP-COMM, designed for managing group insurance plans, before eventually rebranding as the Life Insurance Systems Division.

By approximately 1984, this division encountered difficulties that negatively impacted Informatics’ overall financial health. As a result, it was divested to The Continuum Company toward the end of 1984.

Legal software divisions

Informatics maintained two distinct divisions dedicated to serving legal industry clients. The Legal Information Services Division, established around 1974 in Rockville, Maryland, specialized in litigation support services with an emphasis on handling large-scale document management and retrieval for complex legal matters. This division evolved from Informatics’ earlier government-focused online legal research operations and was also referred to as Legal Information Services Operations.

The second division originated from Professional Software Systems, Inc., a Phoenix-based company founded circa 1976 that developed law practice management software targeting U.S. law firms. Their turnkey Legal Time Management System operated on Wang VS minicomputers and addressed client billing requirements. By 1980, Professional Software Systems supported 75 prominent law firms and generated roughly $5 million annually.

Informatics acquired Professional Software Systems in May 1981, establishing the Professional Software Systems Division. This unit continued marketing the Wang-based turnkey product and expanded its revenues to about $30 million annually by the mid-1980s. It counted 30 of the largest 100 U.S. law firms among its clientele and positioned itself as a leading provider of integrated legal word processing and data management solutions.

Following Sterling Software’s acquisition of Informatics, the Rockville branch was sold to ATLIS in 1987 and remained operational into the early 1990s. Meanwhile, the Phoenix division underwent several ownership changes beginning in 1986 and continued functioning under Wang Laboratories into the early 1990s.

Professional services

Although Mark IV was a successful product, contract programming services constituted Informatics’ main revenue stream throughout much of its existence. The company remained engaged in professional services as late as 1984. Bauer later reflected that while Informatics had established a solid foundation in this sector, it failed to significantly grow it, thereby missing out on a substantial market opportunity.

Other Developments

In 1965, Informatics expanded by acquiring CPM Systems, Inc., a trailblazer in Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). This led to the establishment of the CPM Systems Division, headed by Russell D. Archibald in Sherman Oaks, Los Angeles. The division concentrated on optimizing the planning and construction of tract housing; however, it faced decline during the housing market slump of the late 1960s.

During the 1970s, Informatics launched accounting software products but found it difficult to compete effectively against Management Science America. By early 1985, Business Management Systems had become a separate division headquartered in Atlanta.

Final Phase and Sterling Software Acquisition Battle

Throughout the early to mid-1980s, Informatics General expanded through more than thirty acquisitions, resulting in roughly seventeen divisions. Many of these were relatively small, reflecting a lack of strategic coherence. These divisions were grouped into clusters that sometimes operated with considerable autonomy.

Werner Frank departed from the company at the close of 1982 following disputes with senior management. In February 1983, Bruce T. Coleman was appointed president amid efforts to diminish Bauer’s operational control. Yet after a significant restructuring in August 1984, which included divesting loss-making units, Coleman exited and Bauer reassumed both chairman and president positions. Coleman later revealed that his dismissal stemmed from disagreements over divesting parts of the business.

Informatics saw revenue growth from $129 million in 1982 to $191 million in 1984. While profits increased steadily through 1983, they sharply declined to $4.7 million in 1984, with two divisions posting losses. The company’s stock price became unstable amid fluctuating earnings forecasts, dropping from a peak of $34 per share to approximately $17.

By 1985, Informatics employed around 2,600 staff across 30 cities in North America and nine overseas locations, ranking as the fourth-largest independent software company worldwide. The firm maintained strong liquidity and low long-term debt but was perceived by Wall Street as a "chronic underperformer" due to stagnant stock results. Analyst Stephen T. McClellan criticized management for excessive diversification and Bauer’s authoritarian leadership style, making Informatics an attractive takeover candidate.

Sterling Software, established in 1981 by Sterling Williams and investor Sam Wyly, pursued aggressive growth through acquisitions and went public in 1983. Wyly’s track record was mixed, including a notable loss on Datran, a failed digital network project. Werner Frank joined Sterling as executive vice president in October 1984 after serving as a consultant.

Sterling Software set its sights on acquiring Informatics, but Informatics’ leadership resisted these advances. On April 15, 1985, Sterling proposed $25 per share, increasing the offer to $26 per share on April 22 after rejection by Informatics’ board. The hostile takeover escalated into an intense battle fueled by financial motives and personal pride. Sterling initiated a proxy contest using full-page advertisements in major newspapers to elect Wyly and Williams to Informatics’ board—marking the first hostile takeover attempt in the software industry.

Wyly anticipated that employees would view new management as liberators rather than invaders. Financing for the bid was secured through Michael Milken and Drexel Burnham Lambert’s junk bond market. The conflict involved legal actions accusing Sterling of misusing confidential information—a charge denied by Frank. Bauer later remarked that lawyers and bankers were the primary financial beneficiaries of this struggle.

On May 9, 1985, Informatics’ management triumphed in the proxy contest with a decisive 70-30% vote margin reelecting Bauer’s candidates. Despite this victory, some anti-takeover defenses failed, and heavy trading activity suggested shareholders favored acquisition despite management opposition. Attempts to find a white knight buyer were unsuccessful; alternative offers including Bauer’s own leveraged buyout proposal were deemed inadequate.

On June 21, 1985, Informatics’ board accepted Sterling’s improved bid of $27 per share—amounting to $135 million. Shareholders approved the deal by August 13, bringing an end to Informatics as an independent company. As later noted by the Chicago Tribune, "the Informatics name, long revered within software circles, disappeared."

Aftermath and legacy

Following Sterling Software's acquisition, the company experienced a dramatic revenue increase, soaring from $20 million to $200 million, establishing itself as a significant contender in the software industry. A writer for Computerworld famously characterized the deal as "the guppy swallowing the whale."

The acquisition led to the closure of Informatics' entire corporate headquarters in Woodland Hills, including the departure of founder and CEO Walter Bauer, who had led the firm throughout its entire 23-year existence—a tenure considered exceptional at that time. Reflecting on the hostile nature of the takeover, Bauer later described it as an ordeal he "could have done without."

Sterling Software's leadership asserted that layoffs were limited primarily to corporate roles and that overall company performance improved after the merger. Nevertheless, some former Informatics employees recounted substantial workforce reductions, notably with approximately 40% of the Canoga Park personnel dismissed in September 1985, an event that became known as Black Thursday.

To fund the acquisition, Sterling divested several Informatics divisions while integrating others into its core operations. The Ordernet division notably expanded under Sterling’s stewardship through initiatives such as Electronic Document Interchange and Electronic Data Interchange, eventually evolving into Sterling Commerce when it spun off in 1996.

The Informatics name endured longest through its legal software branch. Sterling rebranded the Professional Software Systems Division as Informatics Legal Systems before selling it in 1986 to Baron Data Systems, a company specializing in legal and medical software. In 1987, Baron Data was acquired by Convergent Technologies, which retained the Informatics Legal Systems identity. Because this software operated on Wang platforms, Wang Laboratories purchased the Phoenix-based operation in 1988 and renamed it Wang Informatics Legal & Professional Systems, Inc. This subsidiary remained operational until Wang Laboratories filed for bankruptcy in 1992.

In 2000, Sterling Software itself was acquired by Computer Associates, while Sterling Commerce was sold to SBC Communications and subsequently became part of IBM.

Despite the initial acrimonious takeover, relations between Bauer and Frank improved over time; in 1999, Frank joined Bauer and other early executives for a private "Informatics Retrospective," reflecting on their shared history.

Bibliography

  • Interview completed May 2, 2013.
  • {{cite book| last=Sokol| first =Phyllis K.| title="From EDI to Electronic Commerce: A Business Initiative"| publisher =McGraw-Hill| location =New York|}


Further reading

  • Bauer, Walter F., Informatics: An Early Software Company, IEEE Annals of the History of Computing, vol. 18, no. 2, Summer 1996, pp. 70–76
  • Bauer, Walter F., Informatics Acquisition by Sterling Software: Unsolicited Offer, Takeover Attempt, and Merger, IEEE Annals of the History of Computing, vol. 28, no. 3, July–September 2006, pp. 32–40
  • Forman, Richard L., Fulfilling the Computer's Promise: The History of Informatics, 1962–1982, Informatics General Corp., 1985. An exhaustive internal corporate history now available at the Computer History Museum
  • Postley, John A., Mark IV: Evolution of the Software Product, a Memoir, IEEE Annals of the History of Computing, vol. 20, no. 1, January–March 1998, pp. 43–50

External links

  1. ↑ 1.0 1.1 Cite error: Invalid <ref> tag; no text was provided for refs named haigh-83
  2. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named card-graf
  3. ↑ 3.0 3.1 Cite error: Invalid <ref> tag; no text was provided for refs named haigh-84
  4. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ck-6
  5. ↑ Campbell-Kelly
  6. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ck-116
  7. ↑ 7.0 7.1 7.2 Cite error: Invalid <ref> tag; no text was provided for refs named frank-47
  8. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ck-8
  9. ↑ Campbell-Kelly
  10. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ck-58
  11. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named bauer-oh-2-10
  12. ↑ Campbell-Kelly
  13. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named elec-markv
  14. ↑ Lua error in Module:Citation/CS1/Configuration at line 2123: attempt to index field '?' (a nil value).
  15. ↑ Konsynski
  16. ↑ Lua error in Module:Citation/CS1/Configuration at line 2123: attempt to index field '?' (a nil value).
  17. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named Computer Associates
  18. ↑ 18.0 18.1 Cite error: Invalid <ref> tag; no text was provided for refs named cw-eggs
  19. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named oh-frank-24
  20. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ct-somuch
  21. ↑ Advertisement.
  22. ↑ Campbell-Kelly, From Airline Reservations to Sonic the Hedgehog, p. 214.
  23. ↑ 23.0 23.1 Cite error: Invalid <ref> tag; no text was provided for refs named pcmag-jan85
  24. ↑ 24.0 24.1 Cite error: Invalid <ref> tag; no text was provided for refs named cw-slowcycle
  25. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named lat-target
  26. ↑ Campbell-Kelly, From Airline Reservations to Sonic the Hedgehog, p. 221.
  27. ↑ 27.0 27.1 27.2 Cite error: Invalid <ref> tag; no text was provided for refs named frank-55
  28. ↑ 28.0 28.1 Cite error: Invalid <ref> tag; no text was provided for refs named sokol-208
  29. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named iw-ordernet
  30. ↑ Frank, "Achieving the American Dream", p. 24.
  31. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named oh-wyly-32
  32. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named sterling-spinoff
  33. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named Allison p. 33
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