Terrorist probe hobbles Ptech

The White House has given Ptech Inc.'s software a clean bill of health, and most of its customers and strategic business partners remain committed to its technology. But the company, investigated for having an al-Qaeda connection, has still become a casualty of the war on terrorism.

In an exclusive series of interviews with Computerworld, Ptech CEO Oussama Ziade and several former employees said the government's investigation of a former investor who is alleged to have ties to terrorism has dealt a nearly fatal blow to the Quincy, Mass., software company (see story). And they fear that the same thing could happen to other companies.

Ptech's crisis stems from a Dec. 5 consensual search by federal agents, which was broadly characterized by the media as an early-morning "raid" (see story). The search was part of an investigation of the company's relationship with Yassin al-Qadi, a wealthy Saudi businessman and one of two "angel" investors who helped get Ptech on its feet in 1994. Al-Qadi, who was never a shareholder of record in Ptech and who later twice turned down Ptech requests for additional funding, is believed by the U.S. intelligence community to have financial ties to international terrorism.

Since that search, Ptech, once a 65-employee company that rarely lost a competitive contract bid, has been reduced to 10 people and has almost no new business on the horizon.

"Almost immediately we lost our revenue for December and January," said Ziade. "Customers who know us and know our product have not walked away. They know there is nothing here related to terrorism."

But soon after the investigation broke, Ziade said, some large customers turned their backs on Ptech, refusing to comment publicly on their trust and confidence in the company and its enterprise software, which enables its customers in the Fortune 1,000 and government ranks to visualize and analyze their technology infrastructure and build models to conduct strategic business planning. That situation was confirmed by Computerworld in interviews with those companies.

"When you sell to the Fortune 1,000, you are in the business of trust," said Ziade. "But there were directives coming out of the legal departments in those companies that said Ptech is a risk company."

For example, a systems architect at a major forestry products firm that relies on Ptech software to conduct strategic data mining and business planning confirmed the existence of a corporate gag order. Yet nothing has changed in the company's relationship with Ptech, said the source, who requested anonymity. "The company is fine, and the software is wonderful," the source said. "There was never any concern about the integrity of the software."

The same holds true for IBM Global Services, which counts Ptech among its strategic business partners. Although Ziade said IBM initially tried to distance itself from what looked like a major scandal in the making, Jeff Gluck, a spokesman for IBM, said the relationship between the two companies is "unchanged."

IBM placed Ptech's flagship enterprise modeling product, called FrameWork, at the center of its Enterprise Architecture Methodology. In a white paper obtained by Computerworld, IBM called the Ptech product "a powerful tool to rapidly collect, analyze, organize and present" information. "Client acceptance of the dynamic live deliverable has been outstanding," the white paper concluded.

"The fact that they're a partner of ours speaks for itself as far as the quality of the technology is concerned," said Gluck.

The CIO at a large energy company, who also requested that he and his company not be named, said there was strong concern among senior management when the story first broke. His IT team was charged with documenting the company's relationship with Ptech, including when and where Ptech employees may have been on-site.

"I polled several [user] contacts, including government users, to assess their reactions and plans [and] also obtained the government position on the software," the CIO added. "This information led us to decide to continue leveraging our investment in the Ptech product."

The CIO added that Ptech's service and support have remained "timely and thorough."

Yet none of that seems to matter now, current and former Ptech employees said. They and security experts warn that what happened to Ptech can happen to any company with an employee or investor whose name shows up on a terrorist watch list.

"Any company doing business in the classified arena must take steps to ensure its employees are fully vetted and monitored over time," said Larry Johnson, a security consultant and former CIA officer.

For Ziade and company, the future is anything but certain. Ptech's technology is mature enough to remain unchanged for about a year, he said. The company has an unreleased product that will also help buy Ziade, now one of Ptech's principal coders as well as the CEO, additional time.

Hayden Shulz, a former principal engineer at Ptech, said the company will likely face unprecedented pressure to keep the software updated in a reasonable time frame. "If the remaining 10 people sat down and coded for a year, they could do it," said Shulz. "But there's going to be a constant give and pull between who's going to go out to customers and who's going to write code."

Ziade said he's still assessing whether it makes sense to continue releasing products under the Ptech name. "We would love to keep it Ptech, but we don't know what it will be a year from now," he said.

"I visited Ptech and Oussama Ziade three weeks before this story unfolded," said Tim Sloane, an analyst at Aberdeen Group Inc. in Boston. "It is a crying shame that xenophobia induced by a war on America's economic might results in bringing down a high-tech business that was contributing to both our economy and our technological prowess."

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Copyright © 2003 IDG Communications, Inc.

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