Turning Over A New Leaf 

For Lotus, 1999 was a successful year. With the total number of Notes users reaching the 56 million mark and a clear leadership over Microsoft in the
messaging market, Lotus could not have begun the new year in a better way.

The mood at Lotusphere 2000–the seventh annual worldwide business and technical conference of Lotus, held recently at Orlando–seemed to reflect just that. To start with, according to Lotus officials, the registration for the
conference closed in less than two days since its commencement. Further, the fact that over ten thousand people attended, indicates tremendous interest in the user and partner communities in Lotus. The company ratified its serious thrust to knowledge management (KM), plans to extend the reach and power of collaborative solutions across the web and mobile environments and also to opening new frontiers in the area of client options for the Domino platform. 

Yet an incongruous note that prevailed over Lotusphere 2000 was the exit of Jeff Papows, President and CEO, Lotus. Papows had been at the helm for the past four years, which was a good period for Lotus. He guided Lotus through a period when its main product suites–Domino and Notes–were threatened by the internet phenomenon. Also, Papows solidly backed the independence of the Lotus brand and the fact that his replacement would be an IBM person.

Deflecting all of this incongruity, Papows remarked that he was leaving Lotus at the peak of its product and business growth. He said “I care so deeply about the company and the people, that if I had ever waited to a point where there was any uncertainty whatsoever about the business or the product momentum of the company, then it would have been impossible for me to leave.” But the uncertainty regarding whether he was asked to quit by IBM in the light of the accusations alleged against his character and a sexual harassment suit continues, despite his statements indicating denial of the same. “IBM and Lotus are merging their operations as set by design.

Someone with my breadth of experience will not be fully tested in running a company, not completely independent in all of its functional dimensions. So the opportunity for me to go run another publicly traded or soon to be publicly traded company made me quit Lotus,” emphasized Papows. It is not that Lotus was built around Papows, but the company is certainly going to miss his drive and charisma as its moves ahead with its new focus on KM.

A KM journey
In October 1999, Lotus made a major announcement in Berlin about its KM suite code named Raven. At Lotusphere, Lotus clarified that Raven would be available for shipping in its server and client components by mid 2000. Over 35 customers were given the Alpha version in December 1999 and the Beta
version will be available shortly. The Lotus thrust to KM is closely linked to that of IBM’s. For Lotus, KM represents a natural evolution of collaborative technology and from an IBM ebusiness perspective, it is the component that defines organizational effectiveness. In fact, it is almost a joint strategy where the two companies plan to introduce a broad range of KM services by building a software infrastructure that integrates the best of IBM and Lotus
technologies. Solutions will then be developed through partnerships with the industries’ leading software and service providers. Industry analysts feel that the emphasis on KM in Lotus cannot be overstated as it is going to form the survival kit for the company in the future. Papows feels that the next era for Lotus is going to be about KM. “In an era where the dynamics of competition globally is changing, managing people assets for increased productivity and effectiveness is going to be of paramount importance,” opined Papows. 

People, places and things–this is how Lotus and IBM have summed the essence of their KM offering. According to Marjorie Tenzer, VP, KM Products and Solutions Marketing, Lotus, “The real trick of KM is to find the right people, and then provide them with places where they can exchange ideas and information, create new knowledge and ultimately solve business problems.” While the concept is fine in theory, there is plenty of skepticism about its implementation in a live environment. This must be a matter of considerable concern for Lotus, where KM is much more than just the next prominent jargon of the IT industry. Lotus officials claim that there is tremendous interest in their KM offering from Fortune 500 companies. To begin with, Lotus has targeted its own Domino and Notes clients in the Fortune 500 list, as integration to the KM environment would relatively be more simple. It is also pitching Raven as the savior for the brick and mortar companies of today, as it would help them cross the ‘eline’–the divider between traditional and next generation companies. Skepticism apart, what is certain is that there are cultural, legal, top management commitment, qualitative and other issues that it will have to grapple with, if the company has to emerge successful with Raven, on which it depends so heavily.

Enhanced collaboration
Following its resounding success in the messaging market, Lotus is looking forward to the unified messaging, mobile and wireless markets. According to James Pouliopoulos, Senior Marketing Manager, Messaging and
Collaboration, Lotus, “Messaging is becoming a commodity and in the future unified messaging, mobile and wireless technologies will come together.” The market for unified messaging alone is estimated to be in the range of $5 billion by 2003, with about 90 billion mail boxes. As a strategy, the company has decided to address the emerging unified messaging, mobile and wireless markets through partnerships where a co-branded solution will be offered to the customer.

“This is an environment where you cannot work in isolation. In fact, I think the partnerships with Nokia, Ericsson, Motorola and other companies involved in the explosion of secondary internet devices like WAP phones or pagers are going to be very important,” remarked Papows. Lotus is in the process of identifying and developing significant relationships in order to operate in the collaborative part of the infrastructure. An instance of such a relationship is the work being done by Lotus with a company called ABT in order to bring unified messaging capabilities together. Customers will be able to hear email through their phones, play their voice mails on PCs and be alerted on new voice mails and faxes via pagers. The changing face of the messaging market and the new collaborative environment are also enabling Lotus to examine new business models. It is exploring a model with ISPs like Sprint and considering the option of charging on a per-messaging transaction basis instead of revenues from the traditional per-seat basis. It is in fact ironical that while the bulk of Lotus revenues comes from its messaging business, maximum attention was on Raven and KM during Lotusphere 2000.

As part of its approach to meet requirements of the emerging user profiles in the enterprise, Lotus also announced two new offerings–iNotes and Mobile Notes. The new products are expected to extend the Notes experience to new sets of users and also make the Domino platform accessible to new wireless devices and web users. Ken Bisconti, Senior Director, Worldwide Product
Marketing, Lotus said, “With these new clients, Lotus is fulfilling the needs of its diverse users and giving CTOs the power to deploy appropriate technologies to different end-users based on their needs.” The expanded Notes client family is based on the Domino release 5 infrastructure and will also be supported by, the yet to be released Raven. iNotes will provide messaging, collaboration and mobility to executives using any standard web browser while Mobile Notes will bring the Notes experience to handheld and wireless devices such as
SmartPhones.

Lotus has also announced that Microsoft’s Outlook Express will be integrated as a mail client for Domino servers. The move was prompted by customer demand. But this is being viewed as a bold step by Lotus, as it has been slogging it out against Microsoft and its product Exchange in the messaging market. As a result of the Outlook integration, Papows said, “We may lose some points to Microsoft in some sectors, but we will gain also, as Office users will now want Notes.” He also confirmed that there are no plans to integrate products from other competitors as their market shares are low.

When asked whether this collaboration would weaken the government’s anti-trust case against Microsoft, Papows felt that whether it affects the case or not his job was to manage the company and the relationship with Microsoft for the benefit of Lotus customers. 

The IBM factor 
Ever since the acquisition by IBM, it has always been speculated whether Lotus would continue to exist as a separate entity. Nearly five years have passed since the acquisition, and Lotus continues to exist as a distinct entity. But the exit of Papows and the appointment of Al Zollar, an IBM veteran of 23 years, as the new President and CEO of Lotus, have rekindled the
speculation. The question that begs to be answered is whether Zollar is more qualified for the job because he happens to be an ex-IBM person. John Thompson, Senior Vice President, IBM, does not agree with this, “I came up with Al simply because he was the best, from outside and inside.” According to him, Lotus will have to work independently without getting smothered by IBM. “Jeff has done a great job and we are not going to move away from the current direction that the company is taking,” added Thompson for good measure.

Outgoing CEO Papows agrees with Thompson most of the way but also warns that excessive influence of IBM could be bad for Lotus. Papows opines that Lotus has exercised a great deal of independence during his tenure. “However, the need to maintain the culture, brand and the identity of Lotus probably cannot be overstated. And it’s coming to up to Al Zollar and IBM to nurture that. It’s critically important and I think both sides understand that,” said Papows. When asked whether there is a possibility that the Lotus identity will cease to exist, Papows included the possibility, but was quick to add that people had predicted that it would have happened far earlier. However, he confirmed that the $100 million spent this past year on television advertising to promote the Lotus brand, is proof enough that the brand will not be killed. 

Yet there are other signs that seem to indicate a definite movement to
integrate the operations of Lotus with the software group of IBM. The first of these is the integration of Domino with IBM’s WebSphere Application Server.

Secondly, Raven will depend on WebSphere and its transaction processing and use DB2 for data storage, short circuiting the Domino object store. With increasing integration of the technologies of IBM and Lotus, it is only a matter of time before Lotus gets subsumed by IBM. It is noteworthy, to consider this in the light of Papows’s remark about IBM and Lotus merging their operations as being “set by design.” Corporate requirements and compulsions apart, both IBM and Lotus would hardly adopt a strategy that would not take care of their customers’ needs. 

E Abraham Mathew
in Orlando

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