The Man Behind the New Novell

VARBusiness

VB: What was the biggest problem you saw at Novell before coming in?
Nugent: My perspective was that Novell was a great technology company, but it didn't really understand how to market well enough to continue to extol the virtues of the alternatives and differentiators of the Novell products vs. some of the competitors in the market. That's one of the areas we are really focused on now: to remain engineering-focused and continue to innovate, but do so in the context of market-driven and customer-driven kinds of initiatives. It can't be about building the next cool thing; it's got to be about providing things the market wants and customers are asking for. That's probably one of the most fundamental shifts that's occurred in the company in the past few months. We have this complete passion about ensuring that we're doing the right thing for the customer. In the spirit of that, we've completely reorganized the company and established four strategic solution, or focus areas. As you may know, Novell's product suite was pretty broad,some 160-odd products of varying types. And we still have a good number of products, but we've gone through this strategic initiative to pull the products together into solution areas, and we are going to evolve them as an aggregate.

VB: Novell has been focusing on identity management for years. When will it be ready for prime time?
Nugent: The SIM [secure identity management space is just exploding right now. Identity is, if not No. 1, then No. 2 on just about every CIO's list who I talk to. Some of that comes simply from the fact that they're trying to extend their information assets outside their enterprises and they suddenly discover that there's too much,or too little,that can be exposed at any given moment. So they kind of step back and say, "How am I going to be able to personalize this kind of information to a specific partner or to a specific customer or to some sort of casual interactive-type of user?" So we're just seeing continued growth in this area. And it's an area we have core competencies in, so it's going to be a bigger focus going forward.

VB: How do you [Novell employees keep track of your own identity?
Nugent: We actually eat our own dog food in this space. Just to give you an example, the Holy Grail for a lot of these CIOs in large companies is when their user community comes in once, and then they have access to everything in the enterprise. Typically, employees at most companies I know have at least six passwords. We've essentially eliminated our VPN. We do everything over the public Internet,everything. We encrypt and send everything over the public Internet.

And all of our partners do the same. We proxy throughout the entire enterprise, based on role. The interesting dimension is it's not just about the person, it's about all the roles that we're assigned to. The credentials are stored in eDirectory. I have several different roles. I am a technical guy, so I have technology roles associated with me. I am an officer of the company, so I have a certain visibility associated with certain aspects of the systems based on the fact that I'm an officer. So when I come in, I can click on any of the particular items in this portal, and I'm just proxyed into the system.

VB: All you need is an SSL connection? There's no other security?
Nugent: We encrypt packets. The neat thing about this is you can say, that's fine, but you control all your systems. Well, we also do this with all the partner systems we deal with. We have this initiative within the company called Zero Day Start. The intent is when you come on board at Novell, your identity and roles are pre-established when you get there. So I showed up on a Monday morning and within 45 minutes of logging into the Web site, establishing my password, going to the HR portal and doing all of the forms online, I was a productive employee. That's something that's quite unusual. The neat thing about this is Zero Day Start is great, but Zero Day Stop is even better.

VB: For companies with a lot of legacy systems, won't that be difficult to implement?
Nugent: There are a lot of architectural things that need to go on here, but once a company figures out where they're going to draw the initial data and all of the reference data, they link eDirectory to that system. So if it's a PeopleSoft system and changes are made in PeopleSoft,like someone gets promoted and a new role is established,it happens in People-Soft and it's propagated into eDirectory, and then it's made available across the entire enterprise.

VB: How does a giant conglomerate implement this when we're talking scores of organizations and legacy

systems?
Nugent: We're working on one for a large financial institution where we are testing 100 million objects in the directory in one instance. It's not just individuals, but roles and resources. We have all kinds of stuff in the directory. It isn't just about me. My spouse, for example, is in the directory. She can log into the portal and check benefits. The neat thing about this is we look at some of the products, like eDirectory and dirXML, and the pricing models don't work if you price per CPU. We announced a new pricing model that has three tiers,employee, customer and citizen. The employee pricing is exactly what you would expect inside the firewall: lots of access, and you pay by the number of users who are interacting on a fairly frequent, high-percentage basis. A customer license is less expensive because the interaction is typically less. Or it could be the interaction is not limited technically but by the business process. And lastly, the citizen pricing is for someone who may hit a Web site once a month or once every six months. The point being that, unless you're pricing based on that kind of usage, people are paying a lot of money for things they may not be getting a lot of value from.

VB: How do you draw the line between a citizen and a customer?
Nugent: There are criteria in the terms of the license. It depends on the company. Most of the time we will see citizen-level pricing applicable mostly in the government model or in the education model. If the customer hosting the site was Fleet Bank in Boston, and I had an account at the bank, then I would be a customer. If I were someone who just logged into Fleet Bank to get information, then that would be a citizen price.

VB: So is the mix of technologies going to increase over time because of all [your acquisitions?
Nugent: The networking business has been declining a bit or staying stable, but we are seeing growth in other product areas. ZenWorks has been extremely strong for us. In fact, we had growth across all product areas, including NetWare and GroupWise. We had two profitable quarters in a row. Our [fiscal fourth quarter ends at the end of this month, so I'm not in a quiet period yet. We said last year we were expecting overall 10 percent growth, and it looks like we are pretty much on track for that.

VB: Novell has always been a Provo or Orem, Utah-centered company. Do I detect a shift to move it eastward?
Nugent: There's no physical migration, certainly. I think it's fair to say that Novell has to learn how to operate as a global company. That means some decisions will be made in the context of the central engineering teams, some in Provo, some in the central management team, some in the Web-app development teams. This management team is essentially new, with a couple of exceptions,the CFO has been there four-and-a- half years. [Chairman and CEO Jack [Messman took over when Novell bought Cambridge Technology Partners 16 months ago. Our management team can be distributed. We are very well-connected as a team. We are able to make decisions when necessary and where necessary. The notion of being big on centralized authority is a thing of the past for many companies.

VB: Novell in the past was very focused on Microsoft as a competitor. That certainly doesn't seem to be the case today. Who would you say is your No. 1 competitor?
Nugent: Since the industry has gotten so huge, I don't think anyone has one competitor. Certainly, Microsoft's mass makes them everyone's competitor in some respect. If I look at the way we've structured the next Novell, it's about these four areas [identity, networking, application development and services. I'd have to look at other companies that have similar strategies. I could pick out boutique competitors in all those areas and some large ones. I think our uniqueness comes from the fact that we've demonstrated ability in all four areas.

VB: Why did you acquire SilverStream?
Nugent: There were a lot of reasons SilverStream was sought after by Novell. It's really because, strategically, the exteNd product family fit in terms of completing out our OneNet strategic vision. We never had a good story to tell for developers. I mean Appware and NLMs? Give me a break! So as we look at the market going forward, we look at the emergence of Web services, and it's a nice fit with Novell. As Web services proliferate, we can offer the security piece, the ability to manage things on the network, and develop and connect the applications that move on the network.