Novell bets future on consulting, shuffles management

Financially troubled Novell today announces a major restructuring of the company focused around a new sales channel that emphasizes consulting, according to internal Novell documents received by Network World.

The documents also detail changes to Novell's executive management designed to facilitate that new strategy.

The company, whose merger with Cambridge Technology Group was approved yesterday, will institute a new channel strategy focused around providing e-business consulting and services to small, midsize and large businesses.

Novell, which used to call itself the "Leading Provider of Net Services Software," is now touting itself as the "Networked Business Solutions Expert." The company's new mission statement reads: "To solve our customers' business problems in a networked environment by leveraging our distinctive understanding of end-to-end business processes and superior understanding of networking technologies that enable business processes."

The merged company will focus on e-business processes, consulting, services and networking products that let enterprise customers manage, store and transport information reliably, securely and economically. According to the documents, Novell will develop a multipronged channel strategy that includes:

• Selling directly to large enterprises.
• Working with systems integration partners where it makes sense.
• Selling through value-added resellers to small and midsized businesses.

In addition, Novell plans to target large enterprise customers with its products in vertical markets such as government, transportation, utilities and healthcare.

None of the documents indicate Novell's future development plans or support for its legacy products. Cited in the documents, however, are several emerging growth areas for Novell, including directory, caching, storage, and in particular, Novell's iFolder Internet file collaboration, clustering, back-up services and data replication.

The company, which reported losses for the last two quarters, expects to be profitable in the second half of fiscal year 2002, which starts Nov. 1. According to the documents, Novell will derive 30% of its business from IT solutions consulting, 60% from software licenses and support, and the remaining 10% from education and management consulting.

The company estimates that the additional revenue represented by Cambridge's business will give it a revenue base of $1.4 billion by fiscal 2002. In the first six months of 2001, Novell reported revenue of $486 million.

Jack Messman, CEO of Cambridge Technology Partners, will take over the top slot at Novell. Former Novell Chief Eric Schmidt, who will assume the position of chairman of the board, will also become CEO of Google, according to a Novell source. Schmidt declined to confirm the latter position, saying only "Google has not made any such announcements."

Stewart Nelson will remain as COO, while Dennis Raney, chief financial officer of Novell, will leave the company after a short transition period. Rich Nortz will remain as senior vice president of sales and services. Simon Khalaf, president of Novell's caching and content delivery subsidiary Volera, will report to Messmann.

A new sales structure will be put in place under Nortz, who will report to COO Nelson. This sales channel will be built around regional presidents, most of whom were appointed from Cambridge's ranks. The regions include the North Americas, Novell Asia Pacific, EMEA, Japan and Latin America. Darrin Richins will stay as senior vice president of marketing for Novell.

Novell says that it has 8,200 employees and does not anticipate any layoffs, although the documents indicate there might be some future real estate consolidation. Cambridge, which becomes a subsidiary of Novell, brings in 2,800 consultants and over 725 clients to Novell.

Contact Senior Editor Deni Connor

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