At Brainshare 2006 in Salt Lake City, Novell CEO Jack Messman discussed the Waltham, Mass.-based software company’s launch of Suse Linux Enterprise Server 10, its prospects against Microsoft Windows, and a number of related topics.
CRN: How will partners play in the enterprise Linux push going forward?
MESSMAN: Many channel partners are selling to our enterprise accounts. Just because we designate a named account doesn't mean there is no partner in it. When there is a conflict, we resolve it. I'd rather pay two commissions--one to our sales force and one to theirs--rather than lose the business.
CRN: Some channel partners think Novell’s consulting unit is competing against them or picking select partners to work with.
MESSMAN: Some channel partners have complained we are competing with them in our consulting. But you have to put the numbers in perspective. There's $400 million to $500 million worth of services business, and we're only capturing $150 million of it. We need the channel. The channel should not look at us as the enemy. We should collectively work together. We can't possibly serve all customers directly. We have to go through the channel, and we need to leverage the channel. We need to help the channel be a better partner to us, and we need to be a better channel for the partner.
CRN: Is Novell's primary focus on the enterprise and direct sales to large customers?
MESSMAN: In terms of the type of technology, it is enterprise, but it applies to the SMB market as well. And in terms of how we get to market, we're going direct and indirect and to the enterprise, and they're not mutually exclusive.
CRN: How much business is direct vs. indirect at Novell these days?
MESSMAN: That’s a tough one. We have many customers we sell direct to, but we get them to order and place fulfillment through our channel partner. More than half of our business is fulfilled through the channel.
CRN: Novell’s channel chief said the company will let customers buy how they want. How will that impact the channel?
MESSMAN: A couple of years ago, we differentiated functions we wanted the channel to perform. When Novell started the channel in the 1980s, we sold product in the box. And then the box went away, and there was no need for the channel to have inventory. So the model changed, but we didn't change how we rewarded the channel. Now we're segmenting functions into rewarding demand generation, rather than rewarding fulfillment, and they get a lot of dollars from us. We pay [channel partners] significantly bigger commission to create demand. They don’t have to deliver the business, but they have to influence and name the opportunity so they get credit for it.
CRN: Are Novell salespeople compensated more for getting services contracts?
MESSMAN: The Novell salesman should not feel competitive to eliminate a channel partner, and the channel partner shouldn’t be worrying. You can name your opportunities and get influence commissions. That’s the demand agent program.
CRN: What are your biggest goals over the next year?
MESSMAN: To secure our place in Linux and open-source business. Secondly, to grow our identity business, and thirdly, to stabilize our NetWare business. It was decreasing 12 percent to 15 percent per year, and we wanted to protect our customer base. We've done that, and even if we decline 10 percent each year, it is a very profitable product and helps us maintain a relationship with the customer so we can sell them other products.
CRN: What motivated Novell to support NetWare through 2015?
MESSMAN: It shows our customers they can stay on NetWare. We've always said we won't force them, and it's our way of proving it to them. But it's almost a moot point since NetWare will be virtualized on SLES and OES [Open Enterprise Server].
CRN: We hear SLES will support a fully para-virtualized guest operating system. Is that true?
MESSMAN: The only thing delivered in SLES 10 is a virtualization techcology called Xen. And they could run on Xen, but why don't we do it for everybody? We'll do that para-virtualized in SLES 11.
CRN: Is the Linux business growing more slowly than you thought?
MESSMAN: Certain segments are a little immature. It went through the small- and medium-business phase, and now we're moving into enterprise and data center. And the market is moving into the Novell sweet spot.
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