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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



CEO Spotlight: Josh Pickus, Niku Corporation
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Angel Mehta: I read an interview once where a CEO said that most people wouldn’t want his job because it’s too all-consuming. Would you agree?

Josh Pickus: Yes, it is all-consuming and you have to have the personality for it. If you don’t, you’ll get killed.

I did, however, have to go through a mental transition. As a lawyer you think about things in terms of billable hours and you really have to transition out of that. As a CEO you get no credit for how hard you work. The number of hours doesn’t matter. It’s all about the results. You have to change your value structure and work on things that will impact results. So if you have a great idea in the shower, well that can be infinitely more valuable that sitting around all day in a bunch of meetings where nothing happens.

Angel Mehta: Let’s talk about Niku. What exactly does IT Management and Governance refer to?

Josh Pickus: Sure. Here’s the problem. Large organizations spend 40% to 50% of the cap-ex on IT. They spend 3% to 8% of revenue on IT. That translates into hundreds of millions or billions of dollars spent by individual companies each year on IT and that spend is very poorly managed

Even CIOs at the best companies will acknowledge that they don’t have the visibility or control over their organization that they need. We are providing, for the very first time, a business system for the CIO to manage IT spending similar to how other executives manage finance, manufacturing or the sales organization.

IT has application development, help desk, and testing tools, which are very important in the modern IT department, but none of them answer questions about spending. “What am I getting for my $800 million? Am I doing the right work? Where is my demand from the business coming from? Am I aligned with the business’s key objectives?” Those are governance questions. They’re not up-time or band-width questions but ones that a modern-day CIO needs to be able to answer for his peers. He uses spreadsheets and whiteboards and a lot of meetings and you just can’t run a budget that large and get good outcomes without having automation and that’s what where we come in.

Angel Mehta: I know that Niku chose to release the source code of its original product a few months ago. That to me is fascinating because it’s part of this broader open-source trend. Can you tell me what was behind that move and whether there have been any unexpected results, positive or negative?

Josh Pickus: It is only a small piece of our original product called ‘Workbench.’ We offer a suite that has about 8 modules and this one module is the classic basic project scheduling functionality. ‘Workbench’ competes with ‘Microsoft Project’, which has 70% or 80% of the market, and you’re never going to dislodge Microsoft.

So how do you commoditize something? You make it free. We decided to commoditize that functionality because it was an excellent product, but not an important contributor to our revenue. Many people say it’s a better product than ‘Microsoft Project.’ It has over two hundred thousand users around the world, but that’s just not a war we’re going to win or a battle we even care to fight. We decided to do something interesting in terms of upsetting that market by providing a very credible product as a free alternative to ‘Project.’ We felt it would (a) drive some lead generation from people who believed in the open source community, and (b) raise our profile.

Angel Mehta: Has it done that?

Josh Pickus: Yes, it’s been very fascinating as we have almost 30,000 downloads. About 88 countries, including Uzbekistan, Cuba, and many foreign governmental entities have downloaded the product which we didn’t expect.

Interestingly, there are some very large companies, mostly from the U.S. and Europe, that have approached us about replacing ‘Microsoft Project’ with ‘Workbench.’ That’s exactly what we hoped would happen. Surprisingly, this has really energized our developers and we’ve greatly increased work on the product since we open sourced it. Within our own development organization it went from being perceived as the ‘not so sexy’ part of our application, to being something really ‘cool’ to work on. This has also pleased many of our hard-core users of Workbench who were frustrated that we weren’t doing more enhancements to the product. Now we’ve given them the ability to do it themselves.

Joshua Pickus is the President, Chief Executive Officer, and Chairman of the Board of Niku Corporation. Joshua is credited with leading Niku's post-bubble financial restructuring, which enabled the company to reach profitability for the first time during the quarter that ended October 31, 2002. He joined Niku in 1999 and has served in a variety of executive positions, including President of Vertical Markets, President of Worldwide Business Relations, and Chief Financial Officer. He can be reached for feedback at: jpickus@niku.com

Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at: amehta@sterlinghoffman.net


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