Novell's CEO sees a new world of software

Competing » Ron Hovsepian says old ways of doing things are crumbling
This is an archived article that was published on in 2008, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

It's evolution according to Ron Hovsepian.

When the CEO and president of Novell Inc. surveys the computer software industry, he sees old molds breaking, big companies getting bigger, customers demanding that barriers between different software be busted down and demands that all thing high-tech be made simpler to use.

For Utah's information technology sector, the Novell chief says this means new ways of doing business are coming to the fore, and opportunities exist. They will be based on collaborations, delivery of software and services online, and huge "clouds" of computers, all made simple. Oh, and don't forget the growing importance of social networking.

"There's an evolution right now in the IT industry," Hovsepian recently told a gathering of honchos from the high-tech industry and government sponsored by the Utah Technology Council.

The question for Utah companies is how to evolve to meet the changes in this challenging new environment.

Hovsepian has 25 years experience in the high-tech industry, including `17 years with IBM before joining Novell in 2003. He became CEO of the Massachusetts-based company in June 2006 and has helped make it a leading provider of open source software for businesses. Its operations in Provo are the company's largest.

In surveying the software landscape, he sees large companies such as Hewlett-Packard and IBM buying up smaller companies in order to offer more products for sale.

" They're really not innovating technology," Hovespian said. "It's actually become more of a distribution model."

That leaves smaller companies to figure out how they can achieve higher sales in relation to their own cost structures.

For Novell, that has meant strengthening an "ecosystem" of partners. One example is Novell's once-unthinkable alliance with Microsoft announced in 2006 in which the 800-pound gorilla of the software world agreed to peddle Novell's version of the open source Linux server software, the programs that run businesses' computer systems.

Open source is a way to create freely available software through a collaboration among many users, the most well-known being Linux. Companies such as Novell make money by selling services such as adapting Linux to meet the needs of different businesses. Microsoft, on the other hand, has traditionally sold proprietary software, meaning it created the programs, owns all rights to them and sells the products to individuals or companies.

Hovsepian also points to two other related phenomena -- what's known as software as a service and the availability of huge "clouds" of computers.

The clouds, facilities owned by various companies at locations around the world, can provide huge amounts of computing power to companies that no longer need to have their own computer systems. This enables the latter to access software through the clouds rather than having to buy various copies for each employee's computer, or what's called software as a service. It's a pay-as-go system that lowers the upfront investment and costs of maintenance.

"This is a model that I suggest we should be thinking about using to grow Utah and Utah technology," said the Novell CEO.

One Utah company is already there.

CentralPointe Inc. gives away its Linux-based server and networking software through a download off its Web site.

It offers for sale software applications to business-owned computers and services delivered from outside as a way to lower costs and make everything easier to manage than the traditional model of a business buying and installing software and running its own computers.

"A simple way to talk about it is, right now you have a rack full of gear or a closet full of gear, and they all have their own cases, motherboards, CPU, memory and wires, and you need professionals to actually connect them all," said Michael Proper, CentralPointe's president and CEO. "And that professional has to learn all the different interfaces and how they work."

CentralPointe's Linux-based system combines all those services into one server and networking device with a simple Web-based management system that anyone who can read can operate, said Proper. In addition, other services such as maintenance or identity verification can be delivered remotely.

The company, which already has 115,000 customers for its server and networking software, has its own ecosystem of partners, including Novell, with whom it hopes to expand its sales. And it's offering are an amalgamation of software from various sources.

"We've already integrated hundreds of open source technologies and cloud-enabled services, including Google Apps and Microsoft Hosted Exchange," Proper said.

Putting together Google's free online applications with a Microsoft product for online management of e-mail might have seemed counter intuitive in the past, given the two companies are locked in fierce combat over the future of computing. But, Proper said, such a pairing is market-driven.

"We have listened to customers, and the market -- whether that's service providers or business owners -- is really asking for," he said.

What they want, Proper said, is hardware, software and services that are partially located at their place of business with portions of its delivered online.

"And you automate the ability for you to manage it with a simple interface," he said. "The simple reason behind it is that's what's asked for."

Microsoft, long seen as clinging to an outdated business model as the old proprietary world gives way to open source and Google's approaches, is not sitting still in this brave new world.

With the landscape changing -- Linux gaining momentum, Google offering free applications, cloud computing taking away some of the need for copies of software installed on inhouse computers -- Microsoft is bending more and more.

It is reshaping itself in the software-as-a-service model, but with a twist. It calls its approach "software plus service."

Keith Otis, general manager for Microsoft's southwest area (which includes Utah), described it as a "hybrid approach" for connecting computers and devices such as cell phones and personal digital assistants.

"The uniqueness of that strategy is we are starting from a position [where] we have an incredible footprint, market share and installed base around technology such as Windows, Office and our developer tools."

Users' familiarity with Microsoft's programs, plus its ability to deliver computing capacity from huge clouds and deliver programs and management of systems remotely, provide the company an edge, Otis argues.

There also are opportunities for its rivals.

Hovespian says Google is just one of the models for using cloud computing, with others such as offering computing power for sale. Facebook uses it for a specific purpose, as a social networking site.

"The game is early and young," he said, adding, "there's a bunch of companies that will be born from all three of those get-to-market models."

Besides cloud computing and software-as-a-service, Hovsepian said the opportunities for Utah companies also include making single-use, plug-and-play appliances -- he compared them to toasters. He also urged an open source model of development for almost any product.

To compete in this environment, he said, Utah will need more collaboration with venture capital providers. It also needs more highly skilled workers versed in Web. 2.0, which includes social networking and the inclusion of video and interactive features.

Finally, Hovsepian reminded his audience that Utah-based businesses also compete against overseas operations that have lower costs. He sees simplification of computer software as an answer to that challenge.

"I think we can do things (better) by getting more productivity through new technology and interfaces, because that's the game," said Hovsepian. "It's all a productivity grove, a global productivity grove. The question is how do you compete? Do you try to lower your prices to compete with the offshore guys or do you try to do the business model in such a way to outmaneuver them?"

Ron Hovsepian's guide to Utah's high-tech future

1. Collaboration/open source as model

2. Software as a service, "clouds" of computers

3. Simplicity, including production of single-purpose software or hardware

4. Consumer-driven social networking