Zotto seizes initiative to save 'a national treasure'

Peter Zotto, chief executive of Iona, sees the Irish technology company as "a national treasure", but that's not to say he doesn't cast a tough, appraising eye on the firm he has run since April.

"We had become an irrelevant company," he says of the rocky period Iona went through after the technology sector crash, when it lost customers and sales, and share prices plummeted from highs of $100 (€83) in 2000, to single figures today. "But we are becoming relevant again."

A new product line (Artix) based on the emergent services oriented architecture (SOA) platform, a new focus on open source projects (Iona's Celtix) and major partnerships, rather than rivalries, with big technology players like Sun Microsystems and Oracle are the key to that relevance, he says.

In the nearly three years since former chief executive Barry Morris left the company, Iona has gone through a major overhaul. Under Morris, Iona had moved away from its core focus of middleware, making numerous acquisitions and expanding service and product offerings.

"When Chris came back, the company had invested a lot in markets outside its traditional customer base," Zotto says.

"But they were late to a crowded party - there were already a lot of companies there doing those things. And even though the technology was excellent, you can't win only on your technology. You have to be the most popular, you have to be customer and market focused."

Zotto joined Iona at this time as chief operations officer "because I saw the company still had significant assets: a blue-chip customer base, a reputation for innovation and quality and a brand bigger than the company's size, very unique but poorly positioned product lines and some incredibly talented people. And Iona also had cash and no debt." What happened next was some painful restructuring and employee cuts.

"We eliminated all the unprofitable product lines and looked after retaining the customer base we had."

Now the focus is on SOA. The information technology world is moving away from the client/server model for setting up IT systems - where specific services and applications are provided to clients from a centralized IT hub - to services oriented architecture, where hardware and software is loosely interconnected to provide a range of services where they are needed at any given time, he says.

Client/ server architecture is expensive to manage and difficult to add on to, "too inflexible and costly", says Zotto.

By contrast, SOA gives flexibility and is easily scaled out as an organisation's IT needs grow, say industry analysts. SOA can also make use of increasingly popular open source software as its building blocks, which is where Iona is also making itself relevant again, Zotto says.

Iona's open source Celtix application functions as a kind of software glue (known as a bus) that makes it easy to connect new services on to an IT network. Open source software is far more significant as a way of building IT infrastructure in this way than as standalone applications, Zotto says.

Did the company worry that moving into open source software could cannibalise its own product lines? "We didn't do it as a tactical advantage, like some companies. We did it as a strategic initiative."

Far from damaging the market for Iona's higher margin product lines, he says Celtix is designed to work together with Artix, which performs a similar function.

"So there's a relationship between our open source product and our high end product," he says, which have spurred sales of Artix.

With this new strategy of open source and SOA, they have re-targeted the market sectors they have always specialized in - telecoms, financial services and governments.

"When we announced our open source strategy, the response we got from the market was overwhelming. It really caught all of us unaware."

The result? "In 24 months, Iona has gone from being isolated in the market and poorly focused, to leading in some key trends, SOA and open source."

As evidence of Iona's new significance, he cites its role in developing SOA standards with much larger companies such as BEA, IBM, Oracle and Sybase.

The company still has a stable market for its older Corba product line as well, he says. "We didn't lose any of that heritage, we built on it."

He says the toughest challenge he has faced as chief executive is getting Iona employees to believe in the company again after the battering it has taken. But with a profitable quarter just announced, and some positive analyst reports, Iona looks to be stabilising and on the move again. The company is down to 350 employees. Any future expansion will be based on making sure the number of employees matches the needs and cost structures of Iona, Zotto says.

What lies ahead for Iona and Zotto? "I just have to get out there and tell the story."