McKay Named Verticalnet CEO

Former SAP America chief Kevin McKay looks to steer Verticalnet, an early B2B star whose light has dimmed, away from the e-marketplace arena and into the supply chain management software business.

In what officials call the finalization of a restructuring plan put in place more than a year ago by co-founder Mike Hagan, Verticalnet Inc. announced a new president and CEO this week. Kevin McKay took over the top spot from Hagan, who was named chairman of the board at the Horsham, Pa., company. A former CEO of SAP America, a unit of ERP (Enterprise Resource Planning) software giant SAP AG, McKay served on Verticalnets board of directors for the past nine months. Most recently he was CEO of technology services provider Capita Technologies Inc. His charter for the moment will be to continue Verticalnets metamorphosis from a provider of public e-marketplaces to a collaborative software maker. The next step in that process is to make good on Hagans pledge last week to sell Verticalnets 59 e-marketplaces, which the company calls its SMB unit. McKay would not say who would purchase the business unit, or what companies have expressed interest. He spoke with eWeek Senior Writer Renee Boucher Ferguson about his plans for the company.

eWEEK: Whats your first priority for Verticalnet?

McKay: The first priority is to continue to ramp up the existing sales effort. This is really a new company with a core focus and core business is our supply chain offering. My efforts will be devoted to making industry analysts aware [of our offering], meeting new prospects and formalizing our strategy around that.

eWEEK: How has the uptake on Verticalnets software business been? Can you point to any big wins?

McKay: Verticalnet, over the period of the last few years, has been quite acquisitive, where weve acquired quite a lot of software. Now, the focus is on the best of technology coupled with the best of our staff – developers and sales – and the software will really drive the company forward. The acquisition of Atlas Commerce played a key role in bringing functionality with strategic sourcing [now we want to] make it work for us.

eWEEK: How has the landscape for B2B e-marketplaces changed in the last two years or so and how is Verticalnet capitalizing on that?

McKay: E-marketplaces are the genesis of the creation of Verticalnet. As the company has gone through this transition strategy, all of the companys focus is in collaborative supply chain area. When you focus as successfully as we are, you need to look at other investments. The decision was to put the SMB business up for sale. Were proud of it – its part of our heritage, but its not aligned with where we want to go. We believe it has viability. There have been a number of inquiries – we have just engaged banking resources to find the right partner. Fundamentally were looking for the right home. Our goal is to sell the SMB business as a whole. Were very pleased with the level of interest.

eWEEK: How will your knowledge of SAPs e-business software play into your new role at Verticalnet?

McKay: Every ERP vendor has a focus in e-business because its such a huge area. Whats really different [with Verticalnet] is its absolutely designed to work across multiple ERP systems – its agnostic. A company can have multiple partners on different systems [and use our software] without disrupting their system. Traditional ERP has a solution based on its own model. The knowledge and experience I have is a result of cumulative experience over 26 years. I understand the mechanics [of software] inside and out, deployment techniques, quality, the whole day-to-day operation [of a software company]. In terms of intellectual property, its not an issue because of coding. Its not the same – SAPs is completely different.

eWEEK: How much will collaborative sourcing remain the focus for Verticalnet?

McKay: We have four main areas of focus. The supply chain marketplace is where were focused. Within that, we have a compelling suite of applications including collaborative supply chain, strategic sourcing, planning, spend analysis and open market.

eWEEK: How is the integration of Atlas Commerce going?

McKay: What we have is a number of those apps resident within the Atlas product, and certain others resident in Verticalnets product. By bringing those two together, we have a whole migration plan. We have a comprehensive product release scheduled for March or April.

eWEEK: Are there any new directions for the company?

McKay: [Collaborative supply chain] is new enough. To be very honest, part of the planning that Mike [Hagan] and the management team put in place in 2001 was to migrate the company. We are aggressively and singly focused on the collaborative supply chain area. We know we can be leaders.

eWEEK: That is a pretty hotly contested space, not just by the big ERP vendors, but by pure-play vendors as well. How will Verticalnet stand out?

McKay: Against the Manugistics and i2s, the real differentiation comes as follows: the creation of our product was designed with a full understanding of multiple and diverse ERP systems and multiple and diverse homegrown systems. Our development staff understands that thinking is not going to change overnight – that companies are not going to rip out what they already have. We need to function using the Internet, and to sit on top of those other systems. A lot of pure-play offerings came off of older technology and view themselves as a component versus a whole solution.

eWEEK: Do you anticipate any additional changes in staffing?

McKay: When you remove the SMB business youre left with about 130 to 140 employees focused solely on collaboration and the supply chain area. The growth of that is solely contingent on us continuing to close deals. Hopefully, well be adding to that as our business grows. We will not be building infrastructure and overhead. We have enough of that already. We will build on consulting, development and sales – the revenue generating areas.