Chief Executive Jack Messman intends to resurrect the company by featuring a combination of its still-vaunted technology and an army of consultants. But does he have enough time to realize his vision?
The recently installed chief of Novell comes to the struggling software provider at a time when the company is faltering after an aborted renaissance under the guidance of Eric Schmidt (now Google.com's chief) and is unsure about what strategy to adopt. Sales remain stagnant, and Novell was recently forced to cut staff amid a climate of uncertainty in the technology industry.
But after five months on the job, Messman has started to articulate a vision that features a combination of Novell's technology and an army of consultants that came over with the chief when Novell acquired Cambridge Technology Partners in a $266 million deal originally announced in March and finalized in July.
Messman believes that Novell is better served by selling its wide variety of software as a bundle that solves a particular problem, such as network administration, therefore calling for the company to add consultants who can articulate this approach to potential customers.
Still, with Novell's stock hovering below $5 and new questions being raised about the company's future, Messman's rehabilitation project could prove daunting. The company is shackled with older businesses, such as its NetWare operating system that continues to lose market share to Microsoft and Linux. It also has had a hard time convincing companies that its technology crown jewel--a yellow pages-like directory-services software product called eDirectory--should be tied to the Web so it can manage both internal and external data.
Messman recently discussed his approach to the Novell job with News.com, touching on how an army of consultants can fit into a software company, where the company's opportunities lie, and the long shadow cast by Microsoft.
Q: As the year comes to a close, how has the Cambridge technology consulting business fit in with Novell's software business?
A: The broader trend, of course, is there is a convergence of products and services into solutions. A lot of people don't understand how that all occurred, and my view of that is products are becoming commodities. It started with the dot-com era, when CEOs were told--by what they read in the paper--that the dot-coms were going to put the brick-and-mortar companies out of business. And you can't be a CEO of a company, have that kind of stuff being said, and not pay attention to it. I think CEOs really did pay attention to it and tried to figure out what this new thing called the Internet was all about.
Did CEOs really understand about the technology?
As a result of all that, though, CEOs don't really care about technology. They don't care about the bits and bytes, how fast one (piece of technology) is versus the other. All they really care about is what's the solution and what am I going to get for what amount of dollars--what's the ROI (return on investment)? That helped to commoditize the products that underlie the solutions and got people focused on what the business return was.
Of course, now that the dot-com era is basically over with and everybody is aware of what happened, there's no longer the threat. And people are being much more studious about whether or not they want to make changes, but we're finding they're all aware of technology and the impact on their business models. They are going at a slower pace, but they still haven't focused on the underlying products. They don't care if it's Microsoft or Novell; they don't care whether it's Accenture or Cambridge. All they care about is: What is the solution, and what does it do for my business?
This approach seems to feed into the historical perception of Novell--that it has had a hard time explaining to people how its technology can change a business for the better.
Yes. We have some very, very good engineers--I think we probably have the best collection of networking engineers in the world located right here in Provo, (Utah), and they've been working on this stuff forever, it seems. They're product engineers, and the way we were characterized in the past was: salesman would walk in with a box of products, dump them on the CIO's table and say, "Hey these things are really neat. You'll have fun with them," rather than calling on the divisional president or the chief marketing officer or the head of HR and saying, "You know, we've got this people provisioning thing that'll help the administration of all your people or we have this CRM (customer relationship management) solution that'll help you get better contact with your customers," or whatever the model happened to be.
Is there something that you can offer those customers?
Novell has never called on those types of people and never had reason to because they never had a solution to offer them. The beauty of all this, from our point of view, is that--to be frank--I think people are of the opinion that Microsoft has sort of positioned us in the marketplace being a legacy product. The beauty of it, from our point of view, is the focus is no longer on the product; it's on a solution that can be enabled by any product. We believe by focusing on solutions we can generate more revenue for the Novell product line.
Now, that brings in the whole issue of agnosticism on the part of consultants, but I believe if you look at most of the Novell products in benchmark tests versus the competitive products, we're right there with them. Where we're not, we're going to use competitive products to provide the best solution for the client.
So Cambridge, serving as the consulting arm of Novell, could put together something that includes Microsoft technology?
Sure. They've done it in the past. They'll do it again. It's up to us, though, to find out why they put that Microsoft product in that solution and determine whether or not we can build the product that fits that spot that we didn't have filled or whether we ought to partner with somebody who fills that slot. But we have to remain agnostic from the point of view of the customer.
Do you have a for-instance?
If we can come up with a better way of making PeopleSoft work better in a corporation and tying not only the PeopleSoft database to all the other databases in the company by using our directory--and we have a very tightly integrated set of products that allows that to happen--and we go to one of the firms like KPMG, which as a good PeopleSoft practice, we've given a tool for them to go back into all their PeopleSoft clients and make another sale.
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What trends in the industry lend themselves to Novell's expertise in networking and administration of computer users?
Those areas where directories are important and enable functions to take place that other products can't. Our directory is a world-class directory in terms of scalability, reliability and robustness. We've scaled it to 1 billion; we can probably scale it bigger than that. Our selling proposition is: Don't do that, it's too costly. Take our directory, and we'll write you the (software) connector to SAP, to PeopleSoft, to Siebel, and any number of leading applications, and connect them, and you never have to rewrite the underlying databases and applications that you currently use.
The other one is our whole OneNet strategy. When you're a CIO or even a marketing person in a part of the company, this stuff is getting very complex. You're trying to figure out which system to get on and how do you get your data and all that stuff. It's very, very difficult. We have some very unusual capabilities in that area, again, using the directory. The directory allows you to build policy into the system, which says, as an example: If this customer calls in and they're a very big customer, which was identified in the directory, let them have access to our inventory and products, totally. Or if there's a medium-sized customer who calls in, let them have access to our inventory of products, but only half of them. Or say, here's a cold-call customer coming in; only let them have access to this amount of information. You can actually have policies built into the directory to interface with customers and suppliers. That's a very powerful technology.
But can Novell really play a role in what seems like a huge opportunity to personalize a consumer's experience on the Web? And also to develop Web services for those consumers and companies?
Many of the services that we now offer on top of NetWare, which helps create OneNet--those services can easily be changed over to Web services when the market develops for those kinds of things. We used to do file and print services on a network; now we do file and print on the Internet.
How do you get Novell's business growing again?
I think we need to get the solutions written that customers need that pull the products with them. There's a couple of things we've done already. First of all, we've had some cost reductions. We've had a consulting firm give us a study of 150 companies that were in a similar situation to Novell and what they did to create success going forward. And most of them went through a cost-cutting reduction of 20 to 28 percent, and then they stabilized their core products, and then reinvested in new areas. And they did that over a 3- to 4-year period. So I think we've taken the first step of getting our cost structure in line. The second step is to reinvigorate the core, and we think products like NetWare; particularly NetWare 6, ZenWorks and GroupWise--which are legacy products for us--still have a lot of legs. We can still enhance them, still make them useful, and they're still relevant solutions today. The third thing, or course, is to look for the new areas of growth.
There are probably two areas that are of most interest to us. One is security, and we have a lot of security products in our company, the directory being one of the leading security products due to the way it authenticates people, and we're developing a lot of solutions around that. We do have some holes in our architecture, and those holes can either be filled by new product development or making a couple of acquisitions.
What's your view of the potential for Web services?
Obviously it's a hot area. There are a number of companies pursuing it. (Microsoft's) ".Net" is not around the corner--it's a few years away. We believe many of the capabilities that are going to be in Microsoft's .Net when it arrives are in NetWare today with our Net services, so we believe our Net services and our network architecture supports all those technologies that will be in the future.
We haven't done a very good job of marketing all that; we'd probably be the first to admit it. We've basically been a bunch of engineers creating products and hoping somebody would buy them. With the Cambridge folks, we're going to be closer to the customer; we're going to be calling at a different level in the customer's hierarchy, and we're going to be providing better information back to the product people to develop products that our customers want, rather than things that are just gee-whiz, nice to have.
Is it still fair to say Microsoft is still your biggest competitor?
I think many of the battles were client-to-server architecture oriented. Obviously, Microsoft has won that battle; now that we're moving into the Web services area, they are a big competitor, but there's lots of competitors. That's not to diminish the impact that Microsoft has in the marketplace, because anything they see that's good, they copy it and then tie it to their monopoly desktop position.