Papows Out at Lotus; IBM Vet to Take Control

The sudden resignation of Lotus Development Corp. CEO Jeff Papows this week is setting some enterprise customers on edge, while others say the move will bring a renewed focus to the company.

Papows' resignation, effective Feb. 1, comes within a year of a host of scathing press reports about his character and the filing of a sexual-discrimination lawsuit by a former employee. Papows, 45, will be replaced by 23-year IBM Corp. veteran Al Zollar, who was general manager of the company's now-defunct Network Computing Software Division.

Reaction from customers and business partners ranged from gloom about the future of Lotus to relief that Papows' present troubles are now behind the software maker.

"I am not optimistic. IBM is sending a suit to the top of Lotus, and that will be the end of that," says Scott Wenzel, who maintains a number of unofficial Lotus-related Web sites and is a Notes administrator for a large federal agency. "The Lotus culture has been grinding against IBM, and Papows was the friction point."

Papows alluded to this in his internal memo to staff announcing his resignation, saying: "I would like to once again lead an independent organization."

Bad Press a Factor?

IBM and Lotus officials publicly insisted that Papows' resignation was unrelated to the negative press reports and harassment allegations. The resignation comes just a week before the Lotusphere 2000 customer conference, which Papows will attend.

"The powerhouse of Lotus is at Iris [a software development subsidiary], and IBM has been driving the overall company for years now," says Paul Meredith, a network administrator at Steelox Systems in Mason, Ohio. "I'm not sure the resignation makes that much of a difference."

But one former employee says Papows' resignation means Lotus "has lost its identity, and IBM is pulling together [the different components of] its software division." Lotus' identity was that of an innovative software company marked by intelligent, quirky employees. But the ex-employee, who asked not to be identified, concedes that the resignation will give Lotus a better opportunity to focus and will make it a more tenacious competitor.

"There has been a level of frustration in the developer community because Papows has been a lame duck," says David Shimberg, executive vice president of IT Factory, one of Lotus' top business partners. "The organization was at a standstill, and this takes away a distraction."

Lotus was nowhere near a standstill for most of Papows' term at the helm. In 1996, he took over a company that was suffering. IBM was facing harsh criticism for acquiring Lotus, which critics said would be made obsolete by the Web. But Papows helped turn Lotus around, driving the installed base of Notes/Domino to a purported 50 million seats and returning profitability to the company.

But last April, a scathing article in The Wall Street Journal rocked Lotus and Papows. The story contended that Papows had lied about and exaggerated his personal history, military experience and educational records. And less than a month later, Papows was named in a sexual-discrimination complaint brought by a former Lotus employee.

Not a Stuffed Shirt

Taking Papows' place will be the soft-spoken and introspective Zollar, who has held a number of management positions at IBM, including vice president of development for Tivoli.

"He has a very good reputation," says Nick Francis, CEO of Tavve Software and a former IBM executive who worked with Zollar in Research Triangle Park, North Carolina. Francis notes that Zollar is not a stuffed blue shirt from IBM's old days. "He's always been out of the box and gone away from the traditional approach. He will fit in well at Lotus."

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