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CRN INTERVIEW: ANDREW `FLIP` FILIPOWSKI Divine Plan For The Enterprise `We want to end up being the Siebel of the extended-enterprise systems space.` By Amy Rogers, CRN 2:52 PM EST Thurs., Nov. 29, 2001 E-mail this article Print this article Breaking News Walter Hewlett Vows To Escalate Anti-Merger Proxy Fight Packard Foundation Vote Threatens HP-Compaq Merger VARs Say Merger Opposition Adds To Confusion Palm Gets $50 Million From Unnamed Investor HP, Compaq To Press Ahead With Merger Effort Analysts Mixed On Fate Of HP-Compaq Merger States Ask Judge For Unbundled Version Of Windows Ektron`s Latest Content Management Version Targets Hosters In 1999, when Computer Associates International bought Platinum Technology for $3.6 billion, the deal gave Platinum founder and CEO Andrew "Flip" Filipowski the financial freedom to never have to work again. But that same year, the restless Filipowski launched divine Inc., a Chicago-based vendor offering B2B software and services for the "extended enterprise." Divine has since become a white knight to dozens of companies in distress, including e-services firm marchFirst and hosting provider Intira. But divine`s stock also has taken its lumps, standing at press time at about 70 cents per share after a 52-week high of $2.84 and a low of 42 cents. Filipowski, however, said he`s determined to find the silver lining amid the current economic and political instability. He discussed his divine strategy in an interview with CRN E-commerce Editor Amy Rogers. CRN_ In two years, divine has acquired about 30 companies on their last legs. What`s the endgame? `What customers really want these days is to get a solution from a single vendor. They don`t want to have to worry about one vendor going in one direction and one going in another.` FILIPOWSKI_ When we formed divine, the objective was to create a technology company that was relevant in terms of the new concentric circle of opportunity in IT that was emerging. For the last 30 years, people had spent a lot of time and energy automating the core of the enterprise and then getting to the edges of the enterprise with things like accounting and back-office [applications]. In the latter part of the 1990s, CRM and sales-force automation sort of became the new concentric circle. There were a host of technology companies like IBM, which tried,in their ongoing attempt at relevance,to absorb as many of the concentric circles as they could. Sometimes it was successful. Sometimes,like with [IBM`s operating system] OS/2 trying to displace Microsoft`s role in the personal computing world,they failed. Each of the big monster companies, in order to stay relevant, has to [develop or acquire products] in a whole host of these areas. CRN_ But IBM found relevance in a lot of other ways, such as professional services and servers. FILIPOWSKI_ Yeah, but services are not distinguishable from any other concentric circle. You only provide services in the context of either automating the back office, supply chain or whatever it is you are doing. Having spent more than 30 years in the business, I thought the next concentric circle I had the opportunity for developing a very substantive technology enterprise was what analysts are calling the `extended enterprise`,the things that happen outside a single enterprise. In the extended enterprise, about 100 percent of the [people] that use it are outside the enterprise. In the last few years, that required a huge investment in the infrastructure of the Internet. I thought that a giant such as [CRM vendor] Siebel was certainly possible,and maybe much bigger,in the area of an extended enterprise and was certainly possible in the area of sales-force automation and CRM. Usually there is a lead vendor or two, and the rest are consolidated. We like to call it `the value chain.` There was a big opening there, and we spent a certain amount of time discussing it with prospective investors. There was a pretty big consensus among our biggest investors to have their technology be relevant again in the extended enterprise. That`s why we got Dell, Microsoft, Compaq, Hewlett-Packard and others to put in $100 million each. We concluded we would have to build this business ourselves. The ability to acquire components was slim, mostly because the best of the best were staunchly independent and extraordinarily expensive. If I had wanted to buy marchFirst, it would have cost me $14 billion back then. CRN_ What a difference a couple of quarters makes. FILIPOWSKI_ Sometimes. That`s just life. The approach we used from the beginning was to grow the three spheres we thought were relevant for this concentric circle. CRN_ And those spheres are? FILIPOWSKI_ Professional services that are attuned to that opportunity, software as a service, and managed services, in order to be able to turn on that service and get access to that profit-expanding opportunity. We built companies like Host Divine in the managed services space and OpinionWare in the software services area. We put together [business units] that handle strategy, like Experience Divine and Buzz Divine for the creative and branding end of the equation. Shortly after we squeezed through the IPO window [in July 2000], the marketplace dramatically turned to the point where it was very obvious that organic growth was going to cost more money than acquisitions would. That accelerated to the point where not even a healthy debate could be generated. So we staked out the exact same territory we`ve always been in but identified the acquisition targets with a laser focus on this extended-enterprise opportunity. We decided we wanted to [aid] companies that want to exploit the value chain and extend their enterprise system, not necessarily approach it the way [management consulting firm] A.T. Kearney would, but really deal with only the extended-enterprise issues. About 5 percent of our ongoing effort in professional services around the world is helping companies develop a strategy for profits and extending businesses into the value chain. CRN_ Before the marchFirst acquisition, what sort of professional-services staff did divine have? FILIPOWSKI_ We had about 300 people. We were looking for opportunities to acquire several thousand people, which we`ve continued to do with numerous other acquisitions. We were looking for folks that had the strategy component and folks that had the advanced branding capabilities, because when you go to extend your business system into the value chain, you expose your brand. If your system sucks, you suck. If you do a great job, you can enhance your brand. About 80 percent of our effort there is in systems integration. Some of the more appealing parts of marchFirst, the jewels that we hand-picked through, were those who had experience in how to integrate these kinds of systems into the base of SAP, Oracle, J.D. Edwards and applications like that. That`s why the new concentric circle is called the extended enterprise, as opposed to something else, because you are really tapping into the fabric of these systems to get the value out of it. CRN_ How many employees did the marchFirst acquisition involve? FILIPOWSKI_ I think we added about 1,800 individuals. CRN_ So you`ve almost met your goal of adding several thousand people. FILIPOWSKI_ There is no endgame goal. There`s a desire to profitably meet the demands that our customers have, and that may [involve hiring] 20,000 or 30,000 professional-services people. To grow 1,800 people`s worth of business, to recruit them all,that`s a pretty expensive proposition, compared with the $10 million we paid for marchFirst. The other thing we did was define the software end of the equation. That became interaction, collaboration, content management and the infrastructure to deliver [applications]. We targeted companies specifically in those areas,like eshare, RoweCom and others,and felt that those were the most relevant areas. We are still looking for the piece that will complete the puzzle. We`ve got a good professional-services business in the $200 million to $300 million range [in projected 2002 revenue]. In the software area, we are in the $800 million range, and in managed services we`re just above $100 million with the acquisition of Data Return. We`ve added [Data Return`s assets] to Intira, HostOne and Host Divine. Together, they provide the 365x24 secure, reliable delivery of what can be very complicated in an extended-enterprise system. There are a lot of things you want in life and don`t get, but we want to end up being the Siebel of the extended-enterprise systems space. The only competitors we will have to deal with over the next couple of years,until the liquidity returns to the marketplace,are organizations that are very well-established, like IBM trying to stretch into this area. More often than not, they will be our partners, but sometimes they will be our competitors. CRN_ When you look at the list of companies divine has acquired, it`s not a simple task to get all of these assets, technologies and people working as a whole. Do you have a fleet of engineers, for example, trying to make Eprise, eshare and Open Market products work together? FILIPOWSKI_ Well, you don`t really have to do that. Today, more than any other period of IT history, you have to describe a standard platform that you are going for. We are Java 2 Enterprise Edition bigots. We are very portal-oriented toward our own technology to provide the infrastructure. We support [standard] platforms including [Microsoft] .Net. For the most part, the products we bought are already built on standards and, therefore, work together. More important are the people issues. We have about 100 acquisitions` worth of experience within our management team. That`s where the real issues are; they`re really not in the technology area. What customers really want these days is to get a solution from a single vendor. They don`t want to have to worry about one vendor going in one direction and one going in another. As in every down cycle, they are looking for a limited number of vendors to do business with. CRN_ Hosting figures prominently in divine`s strategy. What balance do you seek between selling enterprise licenses and selling hosted access to the applications that people subscribe for? FILIPOWSKI_ We internally deal with everything as a subscription. But in terms of dealing directly with customers, we still forecast the ability to let the customer choose how they want to relate to the product. No matter how they choose, in our internal systems it`s a subscription. I don`t care if they buy a license to a product. We book it over five years. CRN_ How do you decide which companies to acquire? FILIPOWSKI_ I`d give you an example, but I don`t disclose what our strategy is because it then makes it impossible to get the bargains you want to get. The best I can tell you is we have an [online content] opening we wanted to fill with NewsEdge. We lost out to Thomson, and we are still looking for that specific kind of offering. We have mapped out what parts we needed, and we continue to refine that. We`ve got very specific slots, and we have a list of five or six alternatives for each,including how we would build it from spare parts if we couldn`t get a precise acquisition. We feel that in this kind of environment, there is almost no chance that we can`t get one of the top players that we would like to fill those holes. Our mergers-and-acquisitions department is very good at it. We look to see what kind of customers the target has and the breadth of their customer base. We certainly believe that the customers we have to approach today are less likely to add a brand-new vendor to the list. When we can find a company like Rowecom that has 10,000 customers, that is a pretty big asset we add to the cross-selling experience. We end up with a situation where there is virtually no customer we can`t approach and say, `This is not a cold call. We are already one of your key suppliers.` CRN_ What`s the role for solution providers in divine`s business plan? FILIPOWSKI_ We have an extraordinarily big emphasis on partners and systems integrators. We work with systems integration firms very hard, and we compensate our sales force identically,whether a systems integrator gets the work or our own [direct-sales] folks get the work. We have plans and processes in place that are very partner-sensitive. They are the difference between our success and our failure. CRN_ What percentage of your sales now goes through partners and what percentage goes through your direct-sales staff? FILIPOWSKI_ I would say 10 percent to 20 percent of sales go through our [direct-sales] guys. CRN_ Being in Chicago, as opposed to San Francisco or New York, lets divine be a big fish in a small pond. Is that why you have made Chicago your base of operations? FILIPOWSKI_ Actually, it has far more to do with the fact that this is home than anything else. I did live in Boston for a while in the 1970s. Now I have several residences, so I get to play nomad. |
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| aus der Diskussion: | Divine ! Die Aktie der Zukunft. |
| Autor (Datum des Eintrages): | Die Aktie (08.12.01 20:59:03) |
| Beitrag: | 12 von 74 (ID:5074647) |
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