Novell's proposed US$240 million takeover of Cambridge Technology Partners (CTP) and its new focus on providing business solutions rather than products may cause concern among IT managers who run their networks on NetWare, NDS, GroupWare or other Novell software.
CTP, like many consulting companies, is struggling to generate profits. Novell has also been losing money through falling software sales, while struggling to build a reputation beyond NetWare. But the alliance does have considerable potential.
With CTP on its arm, Novell hopes to emulate companies such as Oracle, which generates more than 60 percent of its revenue from consulting services. A meagre five percent of Novell's revenue currently comes from consulting. The CTP deal will pump that figure up closer to 30 percent.
However, unlike Oracle Ã, which often competes with its allies Ã, Novell intends to include partners in its business dealings wherever possible. "The best way to screw this whole thing up is to tell our partners that we don't need them anymore because we're going to do everything through CTP," said Novell chairman Eric Schmidt. "All consulting companies are not the same. We have to determine what solutions [consultancy firm] Deloitte & Touche offers, for example, and figure out whether it competes with CTP. That process is under way."
If Novell's software sales continue to fall, however, sources say it could end up resembling Banyan Systems. Banyan, now known as ePresence, was a server software specialist in the early 1990s, but fell on hard times in the mid-1990s. EPresence ultimately exited the software arena to focus on services. "The CTP deal gives Novell a similar exit strategy, if needed," said one former Novell executive. "If NetWare sales continue to fall, Novell can go into maintenance mode on its own software and start servicing more complicated installations involving customer relationship management [CRM] or supply-chain management."
Novell's attempt to break out of its file-and-print services mould by plugging its One.Net strategy does not appear to have proved popular with IT managers so far. "Our One.Net vision has not resonated as well as we would have liked," said a Novell insider. "So we said we will grow our consulting services to make that happen."
One.Net is billed as a way of connecting local area networks (LANs) over the Internet. It could create a single secure corporate network environment or virtual private network (VPN) based on Novell's NDS and interoperable DirXML, HTML, and LDAP standards, which will run on a variety of multi-vendor operating system platforms. Security is provided through Secure Sockets Layer (SSL) and 128-bit encryption, with users accessing central NDS services and enterprise applications through portal services and a single secure login. Novell executives call NDS "the glue that binds the One.Net vision together" and say that NDS could prove as vital to the evolution of open Internet software platforms as MS-DOS was to the compatibility of PCs.
The firm believes it can save US$50 million by consolidating its staff and infrastructure following the CTP acquisition. CTP adds 3,800 staff Ã, 2,800 of whom are consultants Ã,Âto the 4,800 people Novell already employs.
Schmidt, Novell's current chief executive, is to step aside in favour of CTP's Jack Messman. Schmidt will focus on defining Novell's strategy, and said that he suggested Messman's appointment. "The board has been patient and understands the One.Net vision. Nobody put any pressure on me."
