Web Re-energizing Informix

As chief financial officer of Informix Corp. for the past two years, Jean-Yves Dexmier had a tough assignment -- to get the ailing database vendor back on its fiscal feet. This week he takes over as Informix's chief executive officer and president just in time for the company's annual user conference in San Diego. Dexmier is moving into the CEO hotseat buoyed by news of a fiscal turnaround for his company. On Monday, Informix beat analyst expectations by two points, reporting second-quarter earnings of US$17.5 million [M], or 9 cents per share, on revenue of $206.8 million [M]. He took some time out of his conference schedule on Tuesday to speak on the phone with IDG News Service about his plans for the future of Informix.

As chief financial officer of Informix Corp. for the past two years, Jean-Yves Dexmier had a tough assignment -- to get the ailing database vendor back on its fiscal feet. This week he takes over as Informix's chief executive officer and president just in time for the company's annual user conference in San Diego. Dexmier is moving into the CEO hotseat buoyed by news of a fiscal turnaround for his company. On Monday, Informix beat analyst expectations by two points, reporting second-quarter earnings of US$17.5 million [M], or 9 cents per share, on revenue of $206.8 million [M]. He took some time out of his conference schedule on Tuesday to speak on the phone with IDG News Service about his plans for the future of Informix. Do you think the financial troubles are behind Informix now? If so, what would you point to in your second-quarter results as indicative of a lasting turnaround? Jean-Yves Dexmier: I have to say that for a while this last quarter customers and analysts didn't ask any more questions about our financial condition. I think people recognize that we are on a solid financial footing and today all the questions I get are 'what's next?' and 'what are you going to do with the company and how are you going to help people win in the i-dot economy' (the Internet-based economy)? So I would say there really is no inquiry anymore about the financial condition of the company. If you just look at the results over the past 12 months we have posted a growth rate of 20.5 percent year over year. We have increased profits -- we have more than US$200 million [M] in cash on hand. We have no debts. We make money every quarter. We are in an investment mode so really the problem is more how do we address the challenges of the Web? How are we going to help our customers win? With the improvement in finances, will Informix be able to attract back any former users? Do you have migration programs in place to lure users back to Informix from IBM (Corp.), Microsoft (Corp.), Oracle (Corp.) and Sybase (Inc.)? Dexmier: The Web is really a new computing paradigm. It has really changed the rules of the game in how we do business. Solutions, infrastructure and software which was well-optimized for client/server architecture does not work anymore on the Web. What the Web has done is it has evened out the playing field. This is a new market. Marketshare has not settled. And I have read that experts believe that Internet infrastructure spending next year is estimated at $240 billion [B] worldwide, a third of which will be in software. It is huge. It is a market without limits. So the problem we have is not how do we attract customers from our existing competition to Informix client/server. The question is how do we solve the Web problems? Companies which are traditionally database companies have been fighting over the past several years about how to displace one account at a time. This is extremely costly. This doesn't bring you a lot of margin. What is happening with the Web and with the arrival of this new market means that now the game has changed. Now what is important is to understand the technological requirements of the Web and to provide a solution to the Web problems. So the way we are looking at it is to focus on bringing the right solution to Internet problems. Is Microsoft's SQL Server 7.0 cutting into Informix's customer base? Or do you think Microsoft is attracting users new to relational databases? Dexmier: I was very interested in a panel discussion which happened last month in New York (at PC Expo) about what was happening on the Web and what the requirements were. All experts concluded, without exception, that the necessary technology to solve Web problems was object/relational technology. And those experts concluded that SQL Server was the only server that didn't have, even remotely, object/relational technology. What's happening really with SQL Server today is that Microsoft is gaining marketshare in NT platforms in client/server architectures. This is a tiny fraction of the immense market for information management. It looks like Informix has set its sights on the analytic and business intelligence software markets. Can you define those markets from Informix's perspective and explain your plans there? Dexmier: The amount of data is growing exponentially. Before when we were trying to make business decisions using data, data warehouses and business intelligence, mostly what we did was to use proprietary data. We used our existing data... through OLTP (online transaction processing) systems, built a data warehouse on that and built some queries and extracts to be able to make decisions. What is happening today with the Web is that you have access to much more information. You have access to all this public information in addition to your proprietary data. I would characterize it as death by data overdose. We need to define solutions from a business intelligence problem point of view. We need to customize the solution to the problem, not try to customize the problem to the solution. The business intelligence problems are so diversified that you can not have one technology solution to do that. And today we are helping customers build their business intelligence solutions on Foundation 2000, which is a great engine for the Web, also on Yellowstone, our new platform for very large data warehouses, and Red Brick, which is a wonderful technology solution for data mart applications. Do you think the company will get into the ERP (enterprise resource planning) business, perhaps in the area of CRM (customer relations management)? Dexmier: I believe that the ERP era is over. You know what happened with ERP is that usually it took two years to build an ERP system. This was typically an era where you built $100 of software and $600 of consulting to make it work. In the Web environment at Internet speed we can not wait two years to get a system to work. We need our site up and running yesterday and we compromise, say, at three months. We do not intend to enter the ERP market. We will continue to support our partners very aggressively in that market. For instance, Baan (Co.) already runs on Foundation 2000. PeopleSoft (Inc.) is moving to Foundation 2000 and we will start SAP (AG) in August. So our strategy there is to support those people and those partners who continue to work and deliver solutions in the ERP space. As far as custom relationship management goes, we have the same strategy. We offer a technology foundation to those partners who have developed a CRM solution. A good example is Siebel (Systems Inc.). Technology frameworks have a history of not working. What is your strategy for success with the Foundation 2000? Dexmier: Well, Foundation 2000 has been developed from the ground up for the Internet. It took us a three year effort to build it. And we have worked hard at understanding the requirements of the Web and building the right integrated platform for it. As we bring Foundation 2000 to market, we are also offering our existing customers and new people an easy migration path from a client/server architecture to a full Web architecture with Foundation 2000. Do you know that with Foundation 2000 we have more than 40 sites in beta and that all those sites said it was working absolutely great? It even had more performance and was more reliable than our existing OLTP engines. So really we have a very mature technology. We are setting the Internet free and helping customers migrate at their pace from a client/server architecture to a Web architecture. Do you see any holes in your current product portfolio? And how can you prevent the company from repeating the mistake of betting on one new product as was done in the past with your object/relational Universal Server database? Dexmier: We are focusing on four major market opportunities: our traditional OLTP market, the Web technology foundation market, the Web solutions market and the business intelligence market. And yes, we have some technologies which we would like to bring into the company to complement our product offerings. Our strategy is to own the core technologies in our offerings and to have strategic partnerships for the other part of it. And there are areas where I believe we will do mergers or acquisitions because this is the right way to bring technology as fast as possible to the market. I think we should expect to see some acquisitions going forward in business intelligence, in Web technology foundation or in Web solutions. When? How soon? Dexmier: Well, as soon as possible, meaning that we have found the right technology, it fits our strategy and it fits the financing evaluation criteria we have. But sometime over the coming 12 months I expect to execute several merger acquisitions because I believe that the overall growth of the company and the increase in shareholder value will come from the combination of organic growth and external growth acquisition, and that if we want to become a multibillion U.S. dollar company in a few years we will need to have an aggressive M&A (merger and acquisition) plan and we do. What is your strategy on database tools? It seems that the company is moving away from in-house tools development and more toward providing technology to allow Informix database customers to use third-party tools. Is that accurate? Dexmier: Yes, it is accurate, and beyond that what is important to understand is that there are lot of tools on the market. What is most important is be sure that users of our technology are able to use the best tools to satisfy their needs. Now something that is really interesting with the Web and with Foundation 2000 is that we are bringing some new highly visual technologies to the marketplace and that some of the necessary tools do not exist today in the market. And that is the reason why two years we started an effort with a tool called Visionary. We officially released Visionary to the market in January 1999 and we have already seen some very good success with that product. This might sound ludicrous given your responses earlier, but what are the chances of Informix being acquired? Dexmier: The short answer is none. I will also tell you that being the chief executive officer of this publicly traded company, I have the fiduciary responsibility to report to the board if we are approached, and I have the fiduciary responsibility to analyze any offer which comes to the company and make a recommendation to the board. But I can tell you we have not been approached. Now that you are in charge of the company, what would you say is your biggest challenge going forward? Dexmier: Our biggest challenge is clearly one of execution. I think we know exactly what our market opportunities and how we can capture them. With the Internet, which is everywhere, everything is moving at an incredible speed and those who will be successful will be those who can adapt to the change faster than the market. So the challenge is execution.

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