In the volatile world of IT, sharp swings of fortune are part of the game. But while many executives may be feeling paranoid as stock market valuations plummet and demand sinks, Bill Coleman exudes cheer and optimism.

The former Sun Microsystems manager who broke away with two colleagues five years ago to form BEA Systems - now a fast-growing e-commerce software provider - is not indifferent to the gloom which has swept through the IT and internet scene.

But he does not expect the malaise to affect California-based BEA's own performance too much. "Right in the teeth of the slowdown, we're accelerating," he says. Even so, BEA's shares have felt the impact of the stock market's high-tech shudders, sliding below $30 in March after approaching $90 last October.

Companies which buy BEA's infrastructure software, designed to ease the complexities of doing business over the web, need it quickly, Mr Coleman says. "If companies can get this stuff online faster, they can make money. And if you can make money now and not a year from now, you accelerate that in tough times.

"Our business is with companies trying to get systems online to help their sales or profits right now." He says those software companies running into difficulties are either using older technology or have become reliant on a few big deals, signed at the end of each quarter.

Many hard-pressed concerns are slowing down their IT investments. They want to keep profits firm and support their share prices, says Mr Coleman, a keen skier and runner who devotes much of his free time to developing computer systems for people with learning difficulties.

"This slowdown is being driven both by some sense of reality and by a lot of paranoia." Thus it is feeding on itself, a process amplified by changes in the structure of the IT industry.

One big change he foresees is the decline of the PC. "The dramatic growth of PCs in the last decade was driven by PCs having a role in business, both through client server computing and e-mail.

"I think both those will go away in this decade as client server computing is replaced by internet e-commerce and e-mail is increasingly done on wireless devices that are based on browsers not PC technology."

These trends will also hit the semiconductor industry, he adds. As a confirmed believer in the value of networks since his days with Sun, Mr Coleman, 53, is convinced that business models based on the PC, traditional mainframes and client servers will be gradually replaced with new systems that run on the net.

So far, that conviction has served BEA well, though heavyweight rivals, such as IBM and Oracle, are moving rapidly to block its progress. In the fourth quarter of its financial year to January 31, BEA's revenues rose by 72 per cent to $256m, making the 21st consecutive quarterly increase. Net income was 154 per cent higher than in the same quarter of 1999 at $44m.

Mr Coleman - who forecasts further strong revenue growth this year of at least 50 per cent - is fond of throwing jibes at big IT companies such as IBM, SAP and Microsoft. He thinks the current economic slowdown will hamper BEA's big and small rivals alike.

"The little guys who aren't viable yet, [could] run into a brick wall. The big guys don't get as much time to catch up. If people have to do something now, they can't afford to wait for IBM or Microsoft to get there some day."

However, IBM - whose WebSphere product competes with BEA's WebLogic - has a big client base and plenty of financial muscle. It has been catching up in the web application software market and will not let BEA continue without a fight.

But BEA remains in the lead, according to Giga, the IT market analysis group. It puts BEA's share of the application server market at 26-28 per cent against 20-22 per cent for IBM and 9 per cent for iPlanet; in the market segment based on Sun's Java software, which enables programmes to be written for different types of computer systems, BEA has more than 50 per cent.

Mr Coleman believes BEA can stay ahead in the market. He points to the number of leading banks and other financial companies that have adopted BEA's software, the latest including the Visa credit card company and stockbroker Charles Schwab.

Peter Mulcahy, an analyst with San Francisco-based Pacific Growth Equities, also expects BEA to hold its own against IBM and other rivals. "Business appears to be booming," he says of BEA's performance. Despite the slowdown in IT spending, "they're continuing to accelerate the momentum."

Merrill Lynch is also confident of BEA's resilience. "We believe BEA is well insulated from the effects of a spending slowdown in IT," the investment bank said in a recent note. BEA is joining "an exclusive group of 'core' enterprise software providers" which includes SAP, Microsoft, Sun and IBM.

BEA's client base has been growing rapidly over the past year and now numbers some 9,500. Outside the financial sector, they include British Telecommunications, United Airlines, Amazon and Nokia.

To encourage potential clients to familiarise themselves with its products, BEA makes it easy for them to download software from its website.

"We made a decision almost two years ago that all of our products were not considered generally available until they were downloadable on the net in less than 15 minutes," he says. He likens it to "a virus which just keeps spreading - and before you know it, you're the standard in the company".

When company employees start using BEA products, they spread the word within the organisation and outside. Companies can use the software free for 30 days, after which they have to sign a contract.

"It just builds that way and the market tells us where to sell - rather than having to spend huge amounts of money in the hopes of winning one big deal."

Now, he adds: "We're in an enviable situation in that the market is really going through its rapid adoption phase and we can grow our business as fast as we can grow the [sales] channel."

Mr Coleman admits that much of BEA's present success stems from the assertive, innovative culture which he and his colleagues imbibed from their days at Sun. "We've taken a lot of the philosophy in our technology and our business - this philosophy of moving fast, owning all the intellectual property.

"We wanted to have the lean aggressiveness and agility of a Sun, but with the customer value culture that Hewlett-Packard exhibited in the 1970s and 1980s."

Customers come first, he insists. "Basically, we're asking our customers to bet their business on our software and if it doesn't work, they're not going to be there very long."

Rapid switch

But despite its continued focus on network-based computing and applications, BEA had to make a rapid switch halfway through its short life. The company realised online business models were changing under the influence of e-commerce, Java software and web browser technology.

BEA thus widened its focus to include small companies as well as big corporations. "We had to change our sales model, reorganise the company and bring in a different set of executives who had experience in direct and indirect sales and in building products that were not just for very large businesses."

If BEA had not taken this route, "we'd have a very good legacy product that could be a cash cow but with declining sales for the rest of the decade".

It is a challenge now facing big software companies, Mr Coleman says. "If you don't reinvent yourself, it's going to be harder and harder to find the growth opportunities."

BEA has found them. Now, it has to hang onto them as competitors strive to push it aside. He believes most of the software that has run business over the past 30 or 40 years will gradually be replaced by software which can operate on the net at high speed.

"That's the market BEA is after. I want to be for this world what Microsoft was for the PC - the place the applications are programmed and run." It is a powerful - and, some rivals might say, over-ambitious - battle cry, but one which is also likely to prove a rallying call for BEA's rivals.