Directory-enabled networking will define computing in the 21st century, and Novell has once again staked out a position in the forefront of a major technology movement. This time, the company appears poised to seize the day instead of giving ground.
Novell Directory Services (NDS) has been evolving for 10 years into a mature, robust cross-platform system that many argue is the only enterprise-capable directory game in town. It is certainly the only global directory that boasts an installed base closing in on 50 million seats.
But the history of technology is littered with the corpses of great products that lost out to inferior ones. Companies often fail to get the word out to the right people, can't garner enough third-party backing, or have trouble convincing potential customers that they will be around to provide support and upgrades.
Novell stumbled badly earlier in the decade, blowing a near-monopoly of the LAN server market with an ill-conceived attempt to challenge Microsoft on the desktop. This two-front war alienated independent software vendors (ISV), confused users and diverted resources and attention away from Novell's core network-services business.
The fast-moving world of high tech is usually unforgiving of such missteps. However, the growing need for an industrial-strength enterprise directory is providing Novell with a second chance, and the company is taking full advantage. After losing money in 1997, Novell shifted its focus to NDS and directory-enabled applications, and has now posted five strong quarters in a row. All indications are that the reborn, refocused Novell will make a go of its directory strategy, provided it has learned from the mistakes of its past.
The gravy train
It's not NDS that will produce a steady revenue stream for Novell, at least initially. Rather, that job will fall to the applications that take advantage of the directory. These products -- ZENworks, Border-Manager, ManageWise and GroupWise -- now account for 28 per cent of Novell's product revenue and generate a big chunk of its service revenue as well, although the company doesn't break out that percentage. At any rate, the directory-related products comprise the fastest growing segment of the company's business, says Michael Simpson, Novell's director of marketing.
The applications are also driving sales of Novell's flagship NetWare product. According to market researcher IDC, the company shipped more than one million new servers in 1998, up from 927,000 in 1997. NetWare 5.0, released in September, is winning performance tests and exceeding sales expectations.
"This is not about abandoning one business and replacing it with another," Simpson says. "They are perfectly complementary." Still, NDS is clearly the strategic technology going forward, and the industry seems to be paying attention.
Novell is licensing NDS to all comers, the idea being to seed the market and make NDS a de facto standard that will increase demand for Novell's directory-enabled applications. While these licensing deals don't produce much revenue at this point, that may change down the road if third parties start including NDS in products instead of building their own directories.
The potential size of the directory services market is anyone's guess. Novell CEO Eric Schmidt has likened it to the SQL market, which he put at $US80 billion. Other estimates range to "virtually infinite" if you consider all the various applications that may eventually be tied into a directory.
John Gantz, a senior vice president at IDC, says the Internet economy is fuelling a huge need for directory services. "The environment will change so fast that network administrators won't know what hit them," Gantz told the attendees at the Novell Global Partner Summit last month in Snowbird, Utah. "Novell is manoeuvering into the right place at the right time."
A directory service is strictly an enabling technology, so its value is measured largely by the number, scope and quality of the applications that use it. Third-party support, therefore, is critical. Historically, Microsoft has been king of the ISV game, but Novell is making strides of its own.
Novell last year set up a $50 million venture capital fund to dole out cash to companies building NDS applications; so far it has given out at least $20 million. Additionally, the company's "Get Off Your Apps" program provides development grants to start-ups building NDS applications. Officials say this program and other efforts increased Novell's ISV ranks five-fold in the past 18 months. More than 400 third-party applications that support NDS are now available, some from big name vendors such as PeopleSoft.
"The phone has been ringing off the hook with calls from companies wanting to integrate their products with NDS," Simpson says. "These are companies that wouldn't do it a year ago." They showed up in force at last month's sold-out Partner Summit.
However, getting ISVs signed up and applications developed is just the beginning.
"Novell's support of development has improved quite a bit, but marketing support of developed applications is still nonexistent," says Robert Harbison, chief technology officer of voice-over-IP start-up StarVox, a Novell and Microsoft ISV based in San Jose. "That's where Microsoft is really great. Microsoft shipped NT 4.0 with a sampler CD full of third-party applications from its ISVs. Novell has to do a lot more to help promote NDS applications."
The type of application is important, too. Utilities that enhance NDS' ability to manage user account information in NetWare shops are fine as far as they go, but they won't help to sell NDS as an enterprise directory. Offerings that showcase NDS as a much broader directory service are imperative, and recent announcements from leading switch vendors as well as enterprise management specialist Tivoli Systems represent a big step in this direction.
As part of an agreement announced in December, Tivoli -- a division of IBM based Austin, Texas -- is working with Novell to use NDS as a central data store for network and user information collected or used by Tivoli's Inventory, Software Distribution and User Administration tools. The companies are also working on Tivoli agents for NetWare 4.X and 5.0 servers that will enable the servers to be managed from the Tivoli console.
NDS' unparalleled cross-platform support is particularly appealing to Tivoli. "Microsoft has traditionally misunderstood the importance of certain middleware technologies and how important it is for them to be cross-platform in nature," says Tom Bishop, Tivoli's chief technology officer. "Active Directory is fine for pure NT shops, but Novell's NDS strategy has some real appeal in the more heterogeneous environments that we target."
NDS is now available on Hewlett-Packard's HP-UX, IBM's AIX, Caldera's Linux and The Santa Cruz Operation's Unix. Novell is releasing NDS for Sun Solaris and IBM's S/390 this quarter. NT is already supported by NDS, but only in environments with at least one NetWare server. A version of NDS that runs directly on NT without NetWare is due out this summer; it will enable users to build pure NT networks but still employ NDS.
Switch vendors embrace NDS
Another part of Novell's strategy for boosting NDS' role in enterprise nets is getting switch vendors on board.The company has been scoring big with the likes of Lucent, Nortel Networks and Cisco announcing varying degrees of support for NDS.
At the switch level, directories provide an additional layer of security, and they ease administrative burdens by allowing for centralised device reconfiguration. Directories can also be used to automate the process of applying quality-of-service (QoS) and user-access policies to network devices.
Nortel, which last year acquired Bay Networks, is using a directory to build QoS capabilities across its entire product line, from the lowliest LAN devices to carrier-grade switches.
"Novell's collaboration with Bay will have NDS managing our backbone and doing Layer 4 routing when it is available," says Barry McGreer, a network administrator for Enesco in Itasca, Illinois.
Some switch vendors have been working on their own directories, but they tend to be specific to their product lines. A neutral entity such as Novell is in a better position to provide an enterprise directory for a multivendor network.
"Novell already has a production-grade, scalable directory, and extending it to incorporate additional network elements such as switches and routers is very appealing," says Paul Parker-Johnson, product line manager for ATM network management and policy networking at Lucent's LAN systems group in Concord, Mass. "In terms of what's available for sale today, nothing compares to it."
Microsoft's forthcoming Active Directory for Windows 2000 is viewed by many as NDS' primary competition. However, Active Directory's ship date continues to slip, and it won't emerge as an enterprise-level offering in its first iteration.
"From what I have seen so far of the Windows 2000 beta, calling Active Directory a directory in the same sense that NDS is a directory is ludicrous," says Chris Miller, a network manager for a large chemical company. Windows 2000, he says, doesn't have the cross-platform support or scalability. Some doubt it ever will.
"I wouldn't be surprised if at some point Microsoft has to license NDS," says Jim Gagan, president of ThinkTank Network Technology Group, a reseller in Merrillville, Indiana, that sells and installs Novell and Microsoft network products.
Similarly, the Lightweight Directory Access Protocol (LDAP) is no threat to proprietary directories such as NDS and Active Directory.
"LDAP has been oversold as a solution," says Bob Sakakeeny, an industry analyst with Aberdeen Group, a Boston-based market research firm that is starting a new practice dedicated to directory services. According to Sakakeeny,LDAP is merely a protocol that allows various applications to access a directory; it's not a directory in its own right. "As people begin to realize that, they will start looking at real products like NDS. NDS can act as a central repository with LDAP links to other vendors' directories."
Netscape has been providing directory technology to service providers, a market in which Novell is showing increasing interest. However, Netscape views the information, not the directory, as the real asset, so the two companies' efforts are actually quite complementary. And the pending merger with America Online calls Netscape's directory business into question.
"Other ISPs are not going to want to use software that AOL owns," says Joel Achramowicz, a securities analyst for investment banker Preferred Capital in San Francisco. "And [Netscape's directory] can't compare to NDS in any case. AOL needs NDS to help manage its far-flung network."
The big ISPs, and telecommunications companies in general, appear to be ripe for Novell's plucking. They operate networks with tens of millions of users, and "NDS is the most powerful, scalable, replicable, robust and flexible directory in the world," Achramowicz says.
Winning back corporate mind share
Few people question NDS from a technology standpoint, and its huge installed base is a matter of record. However, Novell has been dismissed as an enterprise-level provider by many business executives in the Fortune 500.
"Novell was on top and got dethroned," says high-tech marketing guru Geoffrey Moore, chairman of The Chasm Group in San Mateo, California, and author of Inside the Tornado and The Gorilla Game. "When that happens, the market is extremely reluctant to re-enfranchise such a company, even if it has the best product.
"And the number of ISVs is meaningless," Moore adds. "The issue is what the power players are doing. Cisco and Microsoft have the strongest positions, so a solution that doesn't have their endorsement isn't likely to get very far."
Novell officials acknowledge that corporate minds tend to be set against them, but say they are chipping away at this resistance. Novell already does business with 83 per cent of Fortune 1000 companies, and its sales to big customers are growing faster than its business as a whole.
"What we are encountering is the anxiety of breaking a trusted habit - populating desktops with as many applications as possible," says John Slitz, senior vice president of global marketing for Novell. "People need to start thinking instead in terms of populating networks and having robust, controllable, reliable connections to applications that exist out in a heterogeneous network. That's the dominant market for the next 30 years, and we can lead in that market."
Novell has always done well with network engineers and other technical types in user organisations, but the decision to go with something as strategic as an enterprise directory is made at a much higher level. Analysts credit CEO Schmidt with doing an outstanding job of getting the message to key decision makers, and they expect his efforts to start reaping significant dividends before year-end.
"Give it another six months," says Stephen Dube, director of technology research for investment banker Wasserstein Perella in New York. "Cisco's support was not driven by anything Cisco wanted to do, but rather by a groundswell of requests for NDS support from customers."
A compelling argument to sway top management is the impact of NDS on the cost of IT ownership.
"Now that products like NAL are out, people can really see how they cut the total cost of ownership dramatically," says Brian Legare, NT administrator for Lutherans Capital Management in Appleton, Wis. Before NAL, it took him 30 to 40 minutes to assign rights to a new application. NAL now lets Legare accomplish the task with the click of a button.
Miller, the chemical company's network manager, had the opposite experience during the past year when two job changes took him progressively further away from an enterprise directory. In the first job, he was dealing with a pure NetWare/NDS network that delivered 24-7 availability more than 99 per cent of the time and required one administrator for every 200 users. The second job was with a company migrating to NT.
"In the middle of the process, it became clear that NT couldn't provide NDS functionality," Miller says. "But NDS for NT was just coming out, so we kept NetWare for file, print and directory services and used NT for applications servers." It took one administrator for every 150 users to manage this mixed environment.
Miller's current company is a pure NT environment using a multiple-master domain model. The network takes twice the number of servers per user, needs at least one administrator for every 100 users, and so far stays up only about 85 per cent of the time.
"What have I learned? That a directory is critical to the network," he says. "Flexibility, reliability and security went down with each move I made, and it took more support staff and time to get the same things done."
The bottom line
An enterprise directory is imperative as companies increasingly embrace network-centric computing. Companies that have been the most aggressive in pursuing e-commerce and extranets are hitting the wall hard. They need a powerful directory service to enable continued, manageable expansion into this new computing and business model. Networks can't be secured without a good directory, and trying to keep track of all the network objects and users without one is an administrative nightmare.
"NDS is the only thing that will truly help you with the skyrocketing administrative costs that most companies face," says ThinkTank's Gagan. It isn't unusual for NDS installations to have user-to-administrator ratios of 250 to 1, and Novell officials think 500 to 1 could become commonplace.
The advent of the World Wide Web and Java have created a network computing architecture that liberates front ends from back ends and clients from servers. This gives specialized operating systems and infrastructure technologies a new lease on life and enables users to select the optimal platform for the job.
"NDS allows you to get away from the NT vs NetWare vs Unix argument and select the operating system that is best suited to each need," Miller says.
To exploit the directory services opportunity, Novell has to assemble a compelling array of third-party applications that use NDS and extend well beyond the network-utility category. The company is well on its way with such victories as the Tivoli deal, but more is in store. Novell is reportedly negotiating NDS deals with enterprise resource planning (ERP) software vendors, including SAP and BAAN. These deals would enable administrators to authenticate ERP clients through NDS, so users don't have to log on to NDS and the ERP systems individually.
But the biggest challenge is to reach beyond the technology implementers and convince the business managers that NDS can reduce the total cost of ownership and provide their companies with a significant competitive advantage in the new millennium. Anecdotal evidence of such investment returns abounds, but it has to be backed up by systematic independent studies that quantify the savings across a broad user base.
The delay of Windows 2000 and Active Directory and the limitations of Active Directory as an enterprise directory service are providing Novell with a window of opportunity for NDS. The window won't remain open forever, and some experts think the market will wait it out and delay directory services deployment until the "right" company has a workable product. Novell disagrees, and for good reason.
"Two years is 10 lifetimes in Internet time," says Novell's Slitz. "Businesses can't wait. They need it now, because if they don't do it, their competitors will. The penalties for waiting right now are higher than they've ever been in history."
This year is critical for directory services players as companies develop enterprise directory strategies and evaluate various approaches. Novell is on the right track toward position-ing NDS as the one global directory that can get the job done now. There's no need to wait for Microsoft any longer. In fact, NDS is the technology that could make NT an enterprise platform.
Susan Breidenbach is a consultant and freelance writer in San Mateo, California. She can be reached at SBreide@aol. com.