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Network General, after coming out of a self-described seven-year hiatus under Network Associates, was spun out of the renamed McAfee and taken private by a pair of venture capital firms two years ago. The aim was to take a still-loyal customer base and solid technology out of the trenches and build a business that would reap a nice return beyond the $235 million that Silver Lake Partners and Texas Pacific Group put into it.
Two years later with its second CEO at the helm, good returns on its renewal rate and an increase in the size of its deals, Network General placed its biggest bet yet to become a sizable network and applications performance provider with the launch of a new suite of network intelligence tools, its NetDNA architecture and Performance Management Database.
On the eve of Network Generals anniversary celebration, Jim Davidson, co-founder and managing director of Silver Lake Partners, spoke with eWEEK Senior Editor Paula Musich about the ventures prospects for success.
Why did Silverlake Partners decide to invest in Network General and take it private?
If you had a problem on your network and you needed to know for sure what the problem was, Sniffer was the Kleenex of protocol analysis. As more business applications run on the network, understanding the truth on your network will become an even more interesting value proposition.
The historical business is a valuable business, but we looked at the potential of moving the company into real-time and predictive analysis. Because they have been viewed as the verifier of the truth of whats happening on the net and because there are more mission-critical applications and voice on the network, the tolerance of network managers, CIOs and CEOs gets less and less and demands get more and more. We felt there was an opportunity for Network General to improve its value proposition if we were willing to improve and expand the product set.
This is a pretty mature market, with well-established players as well as innovative startups. Theres a lot of competition here in a market thats not easy to make money in. How can they successfully grow the business in such a climate?
Weve made a lot of investments in sustaining what weve always done well and moving up the value chain to address what the needs of the network operators are and of those who put applications on the network. You can say there are people out there, but in that bigger market, beyond protocol analysis, some of the people out there are looking at a top-down view of network management with very complex software.
Network General has all of the data—every packet that gets sent across the network, because we dont do statistical sampling. If youre able to look at everything, you have an advantage over people doing modeling to approximate the performance of the network. If you want to truly optimize the performance of your network and understand where the bottlenecks are and whats causing them, I think we have an advantage … [a way] to provide the truth as people try to optimize not just the network but the business processes that run on the network.
Thats a compelling opportunity. There is no tool that addresses that with that level of data in existence today, and theres no software with any level of data that does it very easily. We want to build on our competitive advantage to provide more information about whats going on in the network in as easily accessible a format as possible. This is not your fathers Network General.
Network General has always been a tool for the guy in the trenches. Theres product loyalty there, but those arent the people who control the budgets. How can Network General transition to appeal more the IT executives who do control the budgets?
I think first you have to have a value proposition that appeals to the guys higher up in the organization. When youre looking at predicting the performance of the network or have a tool that can optimize the performance of a mission-critical application on the network, youre valuable to anybody in the organization that relies on IT to improve the performance of the company. If you deploy voice on the network, there are not good tools today that can guarantee the deployment of a VOIP [voice over IP] system on a network. Even though networks are more reliable, the predictability of overlaying such an application thats intolerant of any [kind of latency] raises your visibility.
Weve re-architected the products, were launching things building on our core capabilities, we have a road map that extends to entire platforms for third parties to use our database and build applications on it, and so we need to make sure our sales, service and support [are] reoriented to address the needs of those customers too. Were not done, but thats the direction were pointed in.
There is a fair amount of interest in the direction were moving in and a fair [number] of people hoping the product road map can be realized as quickly as possible. There isnt a software deployment of scale two years from now thats not going to be SOA (service-oriented archictecture)-based, yet are there tools that can manage the network at a packet level to understand what the real performance issues are? To my knowledge, there is no competitor that can go to a customer and say with 100 percent certainty they can drill down to individual packets to [manage] whats happening on the network.
For 20 years you used Network General to look at problems retroactively. In real time we can model based on our total database for a better prediction about the performance as you roll out mission-critical applications on your network. There isnt anybody else who can say that.
The risk of being wrong in technology deployments is higher than its ever been. Wouldnt you spend money on an attractively priced tool so that you know with better predictability how the network will perform, or how interoperable it will be if [you combine different vendors networks in a merger]? Say you have a Cisco [Systems] network and you buy a company thats a 3Com customer. Ciscos tools would say the best way to fix a problem is to rip out the 3Com gear. How does that work for a CIO, [chief financial officer] or CEO to throw out usable equipment if theres an independent software vendor who can manage and ensure at the packet level you have compatibility? Thats a powerful value proposition.
Network General has already had some upheaval since its spinout from Network Associates, with two CEOs in its short life. Is it now on a steady path?
I think so. The thing is, companies go through phases. Carving a business out of another business is not an easy job. You need to attract people back to the company and populate it with talented people. You need to go through a time to stabilize the business, set up financial and reporting systems and get the culture set to execute, and then you have to go through the next phase—where were going to place our bets, what technology we will we take to customers. Once you get that, then you have to execute—make sure the productivity of the sales force is on track for your objectives. You have to have a team that knows how to scale for the growth we expect. Some people are suited for the carve-out, for getting systems in place. Now were looking at sales execution and delivering the products.
Were pretty excited about the team. We cant say as we execute that were done. Well do what it takes to make sure the business is successful. I expect well add more senior talent to add complementary skills to the business. If we can create this platform so people can write applications to it, then it makes sense to add business development capabilities to the business, to get partners who can do the specific application development where they have more specific expertise than what we have. That requires focus on business development and we havent had that need before we had this opportunity.