May 13, 2003
(Computerworld)
The week before he announced his new role as a managing partner at a private equity firm, former Sun President Ed Zander spoke with Computerworld Editor in Chief Maryfran Johnson about the troubled IT industry and its still-murky future. Zander ended his 15-year career at Sun last July (see story), leaving to pursue possible CEO positions but opting instead to join Silver Lake, a firm that specializes in consolidations and restructuring deals for troubled technology companies.
From your perspective, what's gone wrong in the technology industry? Our industry is undergoing some sizable structural changes, and some people think it's just a natural economic downturn. Obviously these things run in cycles, and we've got a depressed situation right now. But if it's more than that, the bigger companies will be facing some interesting strategy alternatives. I think we'll be seeing more structural changes along the lines of the HP/Compaq merger. Every day you see major corporations cutting back on IT. The whole industry is oversaturated, with too many people, too much technology, too many companies. We haven't provided end-users with a measurable ROI or a return on assets. We've saturated them with equipment and software and made it all too complex.
Former Sun President Ed Zander
We've got to figure out new ways to help customers get competitive and to drive their companies to win in the marketplace. When you get back to the business side of the house, they're all tired of hearing about all this technology. The company that gives them an IT advantage to design cars more quickly, or reduce supply chain costs, that's what matters. They're not interested in hearing about 48-way servers.
What was really behind your decision to leave Sun? With the No. 2 position, with any CEO and president, you do those jobs for three or four years and then you either get the CEO job -- like Sanjay Kumar at CA -- or you exit. Sometimes on good terms, sometimes not. With me, it was friendly. Scott wants to run the company for another 10 years. But if you do the president's job, eventually you want to make the CEO decisions. You're so close to that office, and you're running the company from day to day, but the CEO still gets to make the big strategy calls.
What do you think were the best decisions you made at Sun? One of my best was branding Solaris, which was very controversial inside Sun at the time. That was a first in the mainstream computer market, taking an OS and making it a brand. It basically made Solaris what it is today. Another great decision was around the whole Internet and dot-com era, seizing that opportunity and driving the company around it. I think we did a better job than IBM. We were the dot in dot-com, and any new start-up was using Sun. The market caps were phenomenal. That was a great effort around marketing, vision, focus and execution.
On the flip side, what were your worst decisions? In 1992, we introduced a version of Solaris that was not ready for prime time. I rushed it to the market too soon and that was a disaster. More recently, I think we didn't push enough on the whole Linux question. We should have done more to understand how to embrace it within [Sun's] strategy, to 'own' the Linux developer and that whole developer community. The third thing was not moving to [downsize] the company properly once the market started coming apart, in the fall of 2000.
There are equal parts of interest and angst around outsourcing these days, especially with so much software development moving offshore. How do you expect this trend to play out? The smart CIOs, who want to keep and run their own infrastructures, have to prove they can run a cost-effective, on-demand utility model in their own companies. They have to reduce costs considerably and develop measurable ROI applications only. On the other side, with companies like J.P. Morgan or Amex, they're saying that running their own infrastructure is ridiculous, way too complex. They'd rather have IBM or EDS or HP run their data center for them, and pay as they go. They focus their technology people on really developing the applications that allow them to compete.
Speaking of competition, what do you think the 'next big thing' will be? There's no big 'next thing' on the horizon. There's nothing like the Net or PCs coming in the near future. It's going to be more about rationalization, consolidation and making sense of what people already have. But my long-term outlook is still very bullish -- on the Internet and IT and our industry. I believe in innovation. It will drive new economies, and companies will improve efficiencies and reduce their costs through IT. People say the industry is maturing, but I tend to argue that it's not, because innovation is still happening out there.
So you're not as pessimistic as you sound? Not at all! I still see a future where appliances and thermostats and everything we do is connected to the Web. The Net will be as pervasive as electricity. Today, when I think about our industry, I think about consumers and content a lot. Look at what [Steve] Jobs did [recently] with the online music purchase deal. We're beginning to see companies like Apple and Dell and potentially IBM and Microsoft doing these kinds of industry crossovers. So in addition to new companies in the future, we'll see the established guard thinking out of the box.