Savvis CEO Phil Koen resigns
Savvis announced the resignation of CEO Phil Koen on Friday, citing a “joint decision” between Koen and the board of directors. This was clearly not a planned event, and it’s interesting, coming at the end of a year in which Savvis’s stock has performed pretty well (it’s up 96% over last year, although the last quarter has been rockier, -8%). The presumed conflict between Koen and the board becomes clearer when one looks at a managed hosting comparable like Rackspace (up 276% over last year, 19% in the last quarter), rather than at the colocation vendors.
When the newly-appointed interim CEO Jim Ousley says “more aggressive pursuit of expanding our growth”, I read that as, “Savvis missed the chance to be an early cloud computing leader”. A leader in utility computing, offering on-demand compute on eGenera-based blade architectures, Savvis could have taken its core market message, shifted its technology approach to embrace a primarily virtualization-based implementation, and led the charge into enterprise cloud. Instead, its multi-pronged approach (do you want dedicated servers? blades? VMs?) led to a lengthy period of confusion for prospective customers, both in marketing material and in the sales cycle itself.
Savvis still has solid products and services, and we still see plenty of contract volume in our own dealings with enterprise clients, as well as generally positive customer experiences. But Savvis has become a technology follower, conservative in its approach, rather than a boldly visionary leader. Under previous CEO Rob McCormick, the company was often ahead of its time, which isn’t ideal either, but in this period of rapid market evolution, the consumerization of IT, and self-service, Savvis’s increasingly IBM-like market messages are a bit discordant with the marketplace, and its product portfolio has largely steered away from the fastest-growing segment of the market, self-managed cloud hosting.
Koen made many good decisions — among them, focusing on managed hosting rather than colocation. But his tenure was also a time of significant turnover within the Savvis ranks, especially at the senior levels of sales and marketing. When Ousley says the company is going to take a “fresh look” at sales and marketing, I read that as, “Try to retain sales and marketing leadership for long enough for them to make a long-term impact.”
Having an interim CEO in the short term — and one drawn from the ranks of the board, rather than from the existing executive leadership — means what is effectively a holding pattern until a new CEO can be selected, gets acquainted with the business, and figures out what he wants to do. That’s not going to be quick, which is potentially dangerous at this time of fast-moving market evolution. But the impact of that won’t be felt for many months; in the near term, one would expect projects to continue to execute as planned.
Thus, for existing and prospective Savvis customers, I’d expect that this change in the executive ranks will result in exactly zero impact in the near term; anyone considering signing a contract should just proceed as if nothing’s changed.
Posted on January 11, 2010, in Industry and tagged colocation, hosting, SVVS. Bookmark the permalink. 2 Comments.
I don’t know. Usually taking a “fresh look” at an organization means he may have built the wrong org with the wrong people. Typically means restructuring (i.e. layoffs). Like you said, if he’s built an org that is on its heels w/r/t cloud computing, probably means they’re going to have retool. Again.
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