Q&A: Novell's CEO speaks out on workforce overhaul, Microsoft relationship

Microsoft deal was the 'proper thing' for the company, Hovsepian says

SALT LAKE CITY -- At Novell Inc.'s BrainShare 2008 user and partner conference here earlier this week, CEO Ron Hovsepian spoke with Computerworld about a range of issues, including a skills realignment in his company that resulted in 1,000 of his 4,000 employees being replaced in the past year. Excerpts from the interview follow:

In your opening keynote, you answered questions from an attendee questionnaire that your public relations team helped select. What's a question your customers typically ask that your PR team probably wouldn't choose for you to answer on stage? The most common one that we get asked is, "How are you spending the $1.8 billion you have in gross cash? You have $1.8 billion in gunpowder. Where are you shooting it?"

Novell CEO Ron Hovsepian

The way I would answer it is: Inside of the Linux space, the systems [management] space and the identity [management] space is where we're going to deploy that money. I'm not going to go take us into another business. I'm not going to drag us into any dark hallways. I've seen how that movie plays out for the company, and it's not the right thing. Plus, those customers really need to know we're not going to move our strategy around on them. So my view is those markets are big enough. I can double the company by staying focused in that space and really differentiating ourselves.

This is your second BrainShare. What do you know now that you wish you'd known when you took over as CEO two years ago? How important it is to move fast. If I could have done one or two things differently, one would be when we rolled out the Microsoft relationship. I was too slow in getting our community message out. Once we explained what we were doing, that alleviated a lot [of confusion]. Boy, if I could play that one over again, I'd love to.

The second one is just having the courage of your convictions to execute on your strategy. My model is very simple: You process what the customer is saying, you translate it, and you just go. Don't overthink and overanalyze things. But when you're new, you're kind of scared, you know? And you don't want to mess up the lives of 4,000 employees who are depending on you, and shareholders, and all that stuff. If I fail personally, that's a unit of one. When you let 4,000 people down, you've really screwed up. You hurt a company. You hurt a lot of people for a lot of time.

So moving faster is something I would have done in a couple of areas. It's just a maturity issue, getting confidence in the job.

On a scale of 1 to 10, where 5 is "meets expectations," how would you rate your satisfaction with your interoperability agreement with Microsoft? To date, I would put it at an 8 or a 9. The logic would be, it's worked out for our customers, it's worked out technically. The interoperability differentiation has resonated incredibly in the market. And it's been the proper thing for the company financially as well.

And it helped redirect our culture, which is something I don't spend a lot of time talking about. But for 23 and a half of its 25 years, the company fought Microsoft tooth and nail. Now to be working with them -- competing and cooperating -- is a different spot. It's good for the health of the company in the long run. It's been boringly methodical in its execution, which is a good thing. And I also see Microsoft talking and listening in a different manner than even at the beginning of the relationship.

In your keynote, you said one of the things that keeps you up at night is thinking about whether the company has people with the skills to listen to your customers and deliver what they need. How difficult is it to recruit and retain people with those skills? I'll give you a little statistic. This past year, I turned over 24% of the workforce. One thousand of our 4,000 employees are new to Novell. So the change we're going through is pretty significant. Candidly, among all the good revenue stories and the profit improving, people don't realize how much we've really gone in and changed our workforce to get the right skills here.

What I hear from IT pros is that companies aren't doing enough retraining. Rather than retrain their loyal employees, the "suits" find it a lot easier to get rid of them and bring in new people. What's your response to that? Like all of these things, there's a potential for truth in those kinds of statements. What we have to look at is deploying the right skills in the right markets. As we push into the data center market, as an example, those are skills that we did not naturally have in our body. Those are skills that we had to go out and get, in my opinion.

The good news is open source draws people to us. That's a great drawing card for the young kids as well. But data center skills, as an example, don't grow on trees. They are very unique, experience-demanding skills.

Why not retrain your people? We absolutely retrained the ones that we felt had the right aptitude and the right capabilities. And it also takes two. A lot of people don't want to be retrained as part of that transition.

Investing in training our people is a big piece of what we're doing, including at an executive level, because I didn't have enough of a pipeline of people. So we're taking some of our youngest, best and brightest talent and investing in them further, around business management and other skills, so they grow.

It's done with great thought and care, while balancing it against the financial demands of what we've got to get done. And the cycle time is the biggest issue. The brutality of the pressure the company has to operate under in 90 days is what drives us.

I'd be happy as a company to contribute towards more unification of training of people across the industry, by an industry body, because all of us individually probably don't have the money or the time to get in and do that. But if there was an industry body, I'd be all ears. Other industries do it. Go look at banking, go look at retail. The National Retail Federation does training.

How important is the H-1B visa program in supplying your talent needs? It definitely plays a role. We have a mixture of skills; it's a global workforce that's diversified here in the U.S., in Europe, and in places like Bangalore and Prague. So we're trying to manage that, plus trying to manage the rotation of our skills, which is where some of these visas come into play. We took some of our team in Provo, [Utah,] and put them in Germany, and vice versa, so we get that cross-pollination. So it definitely plays a role, and will continue to play a role.

What's your response to U.S. IT workers whose jobs have been lost to holders of H-1B visas? I think all markets are efficient, and I think we're way past being a national market anymore. We are a global market, we live in that global world, and we're staying in that global world. There's no going back now, especially in IT, of all the market segments.

I recently spoke with executive Steve Schuckenbrock of Dell about his plans to roll out a hosted remote-management service. Since Novell is all about enterprise IT management, what are your thoughts on software as a service in general, and providing a hosted service like Dell's in particular? We have to identify the companies that are going to be offering software as a service. For example, SAP is using us to run their hosted environment now. We're an enabler there; we're not in that business in and of itself. We don't have the scale, nor is it our role. We think an SAP or a Dell or others are much better positioned with their commerce engines to go get that market. So we've got to play an ecosystem role as a provider to them, in support of, versus trying to be one ourselves.

Rather than users buying a ZENworks license, why can't it be a hosted service? It absolutely could be, but what we would probably do is partner with one of the other services companies to deliver that. That's definitely something we could do.

Copyright © 2008 IDG Communications, Inc.

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