Iona sets out stall for future

1 Sep 2005

Having been at the epicentre of Ireland’s software sector since it was founded in 1991, Iona Technologies scores better name recognition than almost any other indigenous technology firm in the land. But past glories only get you so far. As with most technology firms these days, future survival depends on the company being able to reinvent and renew itself in line with market requirements.

In a media briefing last week, senior Iona executives elaborated on the degree to which the company had achieved this over the past two years. Peter Zotto, who was appointed CEO in succession to company co-founder Chris Horn in April having been chief operations officer for 18 months before that, argued the company had come through its transition period very well. Reviewing 2004’s performance, he said it was clear it had turned the corner — making a profit for the first time since 2000, winning far more repeat business from customers, launching a major new product in its middleware integration engine Artix and piling up the cash.

Although the company’s resurgence had suffered a recent setback when it missed its second-quarter 2005 revenue target last month after failing to close some expected deals in the US in the quarter, Zotto felt the company had restored its reputation and credibility with the investor and analyst community by making some important strategic changes. These included becoming a leading player in the emerging services-oriented architecture (SOA) market, spearheaded by Artix, which has received a ringing endorsement from influential industry analyst Gartner, and whose customers include Deutsche Post, Bell South, MMO2, AT&T and 3.

Zotto was confident SOA, which IDC predicts will be worth US$15bn by 2009, represented the future for middleware firms such as Iona. “The SOA train has left the station; the only question is how fast it’s going to move.”

Iona had also overhauled its distribution strategy, building for the first time a global network of channel partners that was well placed to sell Artix into large enterprises. While less than 10pc of Artix revenues currently go through channel partners, the company was targeting “40pc to 50pc of revenues” to go via the channel within the next three years, he said.

Bill McMurray, vice-president of worldwide sales, added the company had “good relations” with tier-one system integrators such as BearingPoint and CSC while technology partners such as IBM, BEA Systems, Oracle and Cisco were also opening up doors to new revenue. “If you can get in the wake of these organisations it’s key, because they can lead you into their customer base,” he commented.

The third element of Iona’s strategic shift, Zotto said, was its push to develop open source middleware — the previously announced Celtix product that is being developed in conjunction with open source consortium ObjectWeb and due to be launched by the year end. This would help Iona gain greater visibility within the developer community and encourage the market to migrate to Artix over time, he said.

Larry Alston, vice-president of worldwide marketing and product management, added that, unlike some of its competitors, Iona viewed open source as a significant opportunity. “We don’t view open source a threat; it can be used strategically to grow our visibility, set industry standards and enable us to compete in a market we weren’t addressing before.”

Zotto agreed that open source represented an important commercial opportunity. Not only would Celtix provide a migration path to its commercial SOA product, Artix, but it would allow Iona to sell training and other services to the Celtix user base. “There’s a myth that open source is free. There are ways to make money from open source — we want to do the same as companies such as JBoss and Red Hat,” he said.

Zotto added that while innovation and technical leadership were very important to Iona’s success, the company had learned that good technology on its own was not enough to succeed in the global marketplace. “To be successful, companies have to be excellent marketing and customer-focused organisations as well as great innovators,” he observed.

Ironically, although Iona is still held up as an Irish software success story, it is becoming less Irish. The company’s revenue spread is more international than ever and its management team could be that of a mid-size software firm anywhere. Zotto and Alston are both American, while McMurray is an Aussie. Of the three company founders only chief technology officer Sean Baker plays an active role in day-to-day affairs, although as chairman, technology veteran Kevin Melia helps keep the Irish connection alive. Despite Iona’s increasingly global identity, Melia was convinced it would always be a role model for Irish software firms. “It’s important for the Irish software industry for Iona to be successful. Iona is backing innovation; we need more of that.”

Pictured were Iona CEO Peter Zotto (left) and chairman Kevin Melia

By Brian Skelly