CRN Interview: Jack Messman and Christopher Stone, Novell

Messman, Novell's chairman and CEO, and Stone, Novell's vice chairman, shed light on the software vendor's management and business transformation since the July 2001 acquisition of Cambridge Technology Partners in an interview with CRN Senior Writer Paula Rooney.

CRN: Novell seems to have a new attitude under your management. Are you changing Novell's image?

MESSMAN: We want to change back to where we were. We started our channel in 1991, we helped create the channel and we had a very symbiotic relationship at that time. We controlled 70 percent of the market and a larger percentage of resellers were our customers. We're trying to get back to where we used to be, or at least head in that direction.

CRN: Is that possible, considering that NetWare has lost market share?

STONE: The channel is all about small business and branch offices. There are a number of opportunities for us, and the products and solutions we've been building reflect that.

CRN: Is the traditional channel equipped to sell Novell's directory products and enabled applications?

MESSMAN: We have to be cognizant of the skill level of the channel and what they want to be. I wouldn't expect normal-size channel partners to go into a larger enterprise and do directory installations. It's our problem to package solutions so they don't have to do too much with it. That's how we'll get the channel back--to come up with solutions that are finished and package product that they can implement quickly. They want to be solution providers, not just resellers.

STONE: We did that in 1997 and 1998 with the small-business product, and it was a success. They're asking for it again.

CRN: What's the breakdown of Novell's large enterprise accounts vs. small-business accounts, and what will that be over time? How will Novell's channel develop under new management?

MESSMAN: It's one-third [enterprise and two-thirds [small business. For the enterprise accounts we'll sell directly, and two-thirds [of our accounts the channel will sell. [Channel relations have changed significantly in the last few years since Y2K, when the channel business dropped off significantly. We made a mistake when we went to a direct-sales model and allowed Novell direct-sales to call on customers. We'll push more business to the channel and get our sales forces to sell more deeply [to the enterprise.

STONE: It means a named accounts model, where we don't run into channel conflicts. I look at new services like access control, identity management, provisioning--services that cross organizations as large-account enterprise business. The channel will be focusing more on turnkey-like solutions for small business.

CRN: One solution provider recently said Novell's directory was more important than its application server but that Novell needs more platform alignment. Can you address that?

MESSMAN: We do have a couple of things missing. We don't have a GUI for the directory, and we don't have a policy engine for the directory that makes it easy for VARs to help customers implement policy and authentication.

CRN: Will you try to acquire those assets?

MESSMAN: We'll build them.

STONE: We'll have to provide [partners with better tools--a policy engine, app server, some areas we're missing.

CRN: Some industry observers say that Novell must become a services company or a technology company and that it can't be both. What's your response to that?

MESSMAN: It is possible to be both. IBM is the role model. Products and services are converging into solutions. This was caused by the dot-com boom, where everyday we read in The Wall Street Journal that the dot-coms will take all the brick-and-mortar stores out. Well, that didn't occur, but it did heighten CEOs' awareness that technology has a place in their lives that it didn't have before. You have to provide a solution to a business problem, and it has to have a high return on investment. They could care less about what products are in there. It's another way for us to gain back market share.

CRN: How is Novell re-engaging with partners?

MESSMAN: The rules of engagement include many things, like how partners can escalate their grievances, what happens if [Novell sales staff call on their accounts, and other rules that address when we sell with them and when we sell through them. The first draft of the rules of engagement is done and has been given to partner accounts. Now we are going back and taking their feedback into account for the second draft.

CRN: What did partners say about the first draft?

MESSMAN: They wanted more detail about our relationship with them.

CRN: Will the handbook be for named partners exclusively?

MESSMAN: No, it addresses whether we'll sell with them, through them or through CSIs [consulting and systems integrators. It will be used by all partners.

CRN: When will it be published?

MESSMAN: We're shooting for the end of May.

CRN: What is Novell's current relationship with CSIs?

STONE: It's building. We had partners and alliances all over the place. We realigned under one [partner organization with a renewed focus and one of few, not many [partners--quality, not quantity. We have a very good relationship with Deloitte and Touche, we have a good relationship with Cap Gemini and we're starting relationships with PWC [PricewaterhouseCoopers, EDS and others.

CRN: But Cambridge Technology Partners competes with systems integrators. How does it work with competitors?

MESSMAN: It's a level playing field. It has to be. We have to protect their intellectual property. On the other hand, if [Cambridge Technology Partners can develop solutions, we think that has broad applicability. And we can't reach all customers. We'll give them [to all partners. I think the channel is going to like sharing our solutions with them.

CRN: How far along is Novell in terms of effecting its integration strategy, that is products and services rolled up into a solution?

STONE: The formula is software plus consulting equals solution. We have Net services coupled with our consulting, and we have five very good solutions, including provisioning and business process [management for government. We are working on specific things with PeopleSoft for identity management.

MESSMAN: You make money in consulting by replicating things. One of the problems in developing new solutions is that the services market is slow and there are not many engagements from which you can [develop new solutions.

CRN: Some industry analysts believe Microsoft will eventually buy a big consulting firm. What do you think?

MESSMAN: I don't think they'll do it. I'm not concerned. They have Avanade and supposedly were going to have 3,000 consultants. They have only 1,000.

CRN: Over the past year, what's the breakdown of Novell's revenue in terms of products and services? What will it be eventually?

MESSMAN: From the Novell side, it's 60 percent product and 40 percent services. Over time, we'll go to a 40-60 model.

CRN: What is Novell's relationship with IBM?

MESSMAN: Over time, if you look at who your friends are, they are ones we'd be closest to. IBM is key for us going forward.

STONE: IBM is the epitome of taking products and consulting and creating solutions.

CRN: How hard is IBM pushing Novell on using open-source technology for its directory?

STONE: IBM is very supportive of open-source, and we're having lots of discussions.

MESSMAN: I don't know that we're there yet. We may open-source parts of it.

CRN: Since there's no standard directory being used for Linux, isn't there a need for it? Wouldn't it make sense for Novell to open-source eDirectory and try to establish it as the directory for Linux?

STONE: I agree.

MESSMAN: Web services are made for directories, so we'll be there.

CRN: What is Novell doing to promote its vision of Web services?

STONE: We're going to take a more active role in standards organizations and embracing standards. We're going to participate more in W3C and re-establish Novell in the Web services market around UDDI, XML and Web services integration. Those are key areas for us going forward. The emphasis is on participating in that world--open-source and Internet standards. Open-source is winning. Customers are moving that way because they want to get out from under the thumb of Microsoft. So if we can move closer to open-source, we can be more responsive to customers.

CRN: What is Novell's relationship with Microsoft these days?

MESSMAN: The [Cambridge Technology Partners relationship with Microsoft was very good. When it became known that [Cambridge Technology Partners was being acquired by Novell, Microsoft put the word out that [Cambridge Technology Partners wouldn't get any more business.

CRN: Is Cambridge Technology partners still technology-agnostic?

MESSMAN: It's OK not to be agnostic as long as the customer is getting the right solution. If we have a solution with Novell products, then we have no problem with it. Our products are being named No. 1. Our products are great. It's just a matter of getting them into solutions.

CRN: What ISV relationships is Novell nurturing?

MESSMAN: On the Cambridge side, we have good relationships with BEA, Siebel, PeopleSoft. We've had other relationships with Interwoven and BroadVision, and we have a strong relationship with SAP. We have dirXML for SAP.

STONE: We have good relationships with hardware vendors, [such as Dell and Compaq.

CRN: Novell's power base has shifted from Provo, Utah, to Cambridge, Mass. How are the employees in Utah handling that?

MESSMAN: The company headquarters is in Provo, Utah, and the executive offices are in Cambridge, Mass. And there's no problem with that. We have 1,200 of the best networking engineers in Provo, and we want them to be happy. But we'll grow other development centers in the world. We have some work going on in India and Ireland. It will get more global. The folks in Provo are fine with that.

CRN: Will there ultimately be one brand name for Novell? Will it be difficult to keep two brands going, Novell and Cambridge Technology Partners?

MESSMAN: No. IBM doesn't have one brand name--IBM and IBM Global Services. IBM also has Lotus and Tivoli. It's one company with several brand names. There will be times when we have to be Cambridge, and it's a great brand name that is strong in Europe and the Far East. And I don't see a reason to get rid of that value.

CRN: Is any further restructuring planned for Novell?

MESSMAN: We will always restructure, but I think we're through with that for a while. We've made a lot of changes because of the change in solutions, and Chris [Stone has restructured the engineering department around solutions. It's a major step for engineers who have been focused on products all their lives.

CRN: Are there any plans for acquisitions?

MESSMAN: We look at whether to make, partner or buy all the time. There's no particular acquisition on our mind. But with our solutions agenda, we know there are holes in the solutions.

CRN: Is there any niche opportunity or vertical market opportunity that solution providers can focus on?

MESSMAN: I think the stuff that will sell is short-term, high-ROI projects. People don't want to go into long-term, supply chain management projects that can take four years. They want short-term ROI stuff.

CRN: What do you see in terms of economic recovery?

MESSMAN: We've seen the funnel of opportunities grow, especially in provisioning. In the last two months, the dollar amount [for potential projects has gone from $40 million to $270 million. It doesn't mean we'll get all that business, but we're seeing those opportunities.

CRN: In Web services, how will Novell compete against Microsoft's .Net platform? Windows.Net will have further improvements to Active Directory. Does that concern Novell?

STONE: .Net is more strategy than products. There's not much there. There is VisualStudio.Net with a sticker on it saying '.Net' over an old product. They're still jelling a strategy. They're doing a great job of marketing it, but there's not much there.

CRN: How does Novell's Web services vision differ from those of Microsoft, Sun Microsystems and IBM?

STONE: We already have the services. We have basic Web services and extended Web services. [The other vendors are talking about standards such as XML and UDDI. We have already built many services, like distributed printing, iFolder and provisioning services.

CRN: How many of them are XML-enabled?

STONE: DirXML. We were the first ones with an XML product. All of our interfaces will be XML. We built an XML integration server in-house. Our directory will be UDDI-based. We will support UDDI and discovery services through UDDI, and all of our external interfaces will be exposed as XML and J2EE. It's a very different ball game for us.

CRN: How big will the XML services market be for service providers?

STONE: Right now, it's nascent. It has fallen back. The managed services companies have to figure out the value-add. Their margins are awful.

MESSMAN: That's the problem with ASPs. They thought they could just offer services, not content. And they've become commoditized. The concept behind Web services is to create a reusable module of software. If you don't have proprietary [value-add, then you're just a utility. And that has to shake out. You're selling time on a machine, and there's no value. It will never happen that way.

CRN: Do you think the ASP model will ultimately flop?

STONE: I don't think it will flop. It will be an alternative. But I don't think it's a larger market opportunity that we'll participate in.

MESSMAN: Where does the content physically reside? On the server of the company that owns it.

CRN: What would you like to see happen in terms of the antitrust remedies being imposed on Microsoft?

MESSMAN: I'd like a level playing field. I don't think a stripped-down version of Windows will cover the problems. It's opening up the APIs.

CRN: Microsoft is concerned that there will be too much cloning of its products.

MESSMAN: And it won't be theirs, and that's the problem. They're not great engineers. They're just great monopolists.

STONE: They're worried about people being able to copy what they do. We'd like to know what they've done to Kerberos [security system and Active Directory. We've been going through this for years and doing redirection and reverse engineering because Microsoft won't document these things on the desktop, server or Internet.

We can learn a lot from Microsoft as far as marketing. We don't have a $3 billion budget for marketing. As we shift to solutions, we won't get into a branding war with Microsoft. We'll shift [marketing to solutions and talk about provisioning, where Microsoft doesn't have anything. But we have to get smarter about marketing that to the CXO audience, and we haven't done that.

CRN: Novell recently appointed Nancy Reynolds as vice president for North American channels. What prompted that move?

MESSMAN: She has been with us for a while. We looked inside and outside [the company, and she came out at the top of the list. We have a lot of faith in Nancy. The channel really likes her. She has been with Novell for 14 years, and she has been with premier partners. There will be new programs we'll be rolling out to the channel shortly.

CRN: But, ultimately, will Novell be a services company?

MESSMAN: Good services are always built on great technology. You can't separate the two. We need the channel more than anyone in the business. Microsoft is going more direct with its licensing model. Novell can't reach all of its customers without a field-sales force, and we need other means to get to the customer.

STONE: When Novell focuses on the channel and provides the support, solutions and programs they need, it's dead-on proven that it works. When we walk away, it dies. We decided we want to do it.

CRN: What's the role of XML Web services?

STONE: The world is moving to an XML Web services framework, a set of services that comply to standard interfaces like SOAP, XML and UDDI. We don't need brand-new operating environments to do this. Whether it's NetWare, Linux, Windows or Solaris, we're getting away from the distinction of the OS. It's not about the OS but instead about providing services over the Internet.

MESSMAN: And that's a field where we know how to play better than everyone else.

CRN: What will happen to NetWare?

MESSMAN: It's a good platform for access to the Web. It's an OS, but it's also a platform for Web access.

STONE: We'll continue developing NetWare with support for Java and J2EE, and we've been adding support for Net services--including NIMS, in particular--for the channel and small businesses.

CRN: What's the breakdown of Novell's channel?

MESSMAN: We end up with 800 named accounts, 850 to 1,000 sell with [partners accounts and 45,000 sell through [partners accounts.

CRN: What big product releases are scheduled for 2003, and how far along is Novell in transforming itself to the type of company that it wants to be?

MESSMAN: The next-generation frontier is Web services. The question is if the market develops quickly enough. It's not a question of if, but when. We want to position ourselves to be players there. Core Net services we have. If we had been smart enough to call them Web services, our [profile would be higher. We'll migrate these to other standard protocols--including XML, SOAP, WSDL--and we'll migrate those to extended Web services. Today, they're basic Web services. That's where we'll be in a year. We have all of these Web services, and we'll provide a Web services infrastructure.

CRN: Which product areas does Novell need to fill?

MESSMAN: We have a hole in our security offerings and a few missing pieces. We have to build or buy them. We have 160 products, and they work together well. But they need to be integrated well. We'll take the 160 products and roll them out into five or six technical-solution areas.

CRN: Ultimately, what would you like Novell's image to be?

MESSMAN: We want to be a solutions company.

CRN: Is there any chance IBM might be interested in buying Novell, now that it includes Cambridge Technology Partners?

MESSMAN: They might. Maybe in the future. There are a lot of people who don't understand what we have yet. But there are no negotiations yet. Chris and I didn't come here to sell the company.