Novell Forges a Three-Pronged Plan

Focus turns to services, open source and adding value to any infrastructure.

Novell Inc.s management team is focusing on driving the companys future direction in three primary areas: expanding its solutions focus, adopting open standards across all of its solutions, and adding value to any infrastructure.

"What differentiates us from our competitors is that we offer customers a real choice," CEO Jack Messman told eWEEK in an interview on Monday. "Weve always been interoperable and have offered them a number of choices as to where the services we have can run. We are now also adding Linux to those.

"While Microsofts products are often described as just good enough, while we have the best operating system we have fallen short on the marketing front. We are now changing this by focusing on the customer, listening to what they have to say and working backwards from there," Messman said.

But this transformation will not be easy and comes at a significant financial cost to the company at a time when customers are scaling back on their use of consultants and their buying needs.

Over the past 18 to 24 months, Novells consultancy business has fallen between 50 percent and 60 percent as billing rates nosedived.

"Services … have been hurt the most as many IT departments have decided this is something they can postpone. But, ultimately, this will come back as customers need this type of help," Messman said.

While Novell is financially strong and has a solid balance sheet, it could have cut its expenses by not investing in initiatives like its new Linux strategy, first reported by eWEEK last October, which is impacting its income statement. But these are investments in the companys future and will meet the needs of its customers, he said.

Messman would not rule out the prospect of further cost cuts and potential layoffs down the line. "Business is down, and you always have to be optimizing your variable costs, which in this case is largely employees, with the level of backlog and business youre seeing," he said.

"Everybody has been holding off making cuts as the predictions were there would be a business upturn in six months, but that is continually being pushed out. Were continually looking at staffing to see whether or not we have the right balance."

Novell saw a good third and fourth quarter last year, which gave the company a "false impression" of how the first half of this year was going to turn out. "We had a weak first quarter with regard to product sales and are a little gun shy at this point and have stopped making forecasts," Messman said.