Micro Focus - Full of surprises

(By Richard Holway 11.00pm 9th Sept 09) In May 2006 I met Stephen Kelly for the first time. We had a superb meal at the Vineyard at Newbury and as a consequence I decided that Kelly would be great for MicroFocus. We agreed on many things and I’ve continued to both like and respect the guy since. Kelly appointed Mike Shinya as his COO. But, in Jan 08, I got the first of my surprises from MicroFocus when Shinya departed – clearly after a top level disagreement. See my 8th Jan 08 post Mike Shinya departs Micro Focus

But Micro Focus continued to go from strength to strength. They joined a small group of UK-HQed software houses, like Sage and Autonomy, prepared and able to compete internationally

Indeed, for that reason I accepted Kelly’s personal invitation to join their IT Manifesto programme – Making BrITain Great Again. I had been interfacing with Kelly on this Manifesto just a day back.

Then, this morning, I was shocked to learn that Kelly resigns from MicroFocus. Initially I thought perhaps I had missed something. But, it looks as if 1500 employees at MicroFocus + every other analyst were equally shocked. The reasons given were ‘family’. Kelly had been on holiday and something had triggered this pretty staggering decision.

I have ruled out a boardboard bustup and I’ve ruled out ill health. Kelly has insisted he has no other job lined up. So I’ll have to accept it’s a ‘meaning of life’-type decision.

Now I don’t have any issue with that. Too many times in my own life I have chosen work over family and suffered greatly as a result. BUT Kelly’s leaving could and should have been handled in a better manner. There is NO successor lined up – indeed a frantic headhunting operation has started. The markets were shocked enough to write MicroFocus shares down 14% (I readily admit to being a MicroFocus shareholder and, up until today, had been delighted with their performance. But, in a stroke, most of the gains for the year were negated)

I’m sure Kelly could have achieved his objective of ‘spending more time with the family”. A word with his respected Chairman, Kevin Loosemore, could have seen this happen whilst overseeing the recruitment and grooming of a successor over, say, a year. Kelly could have departed a hero.

As it is, many are worrying that unexploded bombs have been sighted in the recent acquisitions. And that is a very damaging view – even if not correct.

Personally I feel pretty let down over the IT Manifesto. Soon after its launch I received an email from one of the most influential people in our industry suggesting that the “manifesto was more about personal and corporate profile building”. I strongly refuted that. Kelly was very much the driver behind the IT Manifesto and I now doubt that it will get the support it deserves. Afterall Micro Focus will now have its hands full on other issues closer to home.

The lessons from this are old. Firstly, nobody likes surprises, Secondly, succession planning is vital. And maybe we should all spend more time with the family.

Footnote - I've had a number of media interviews on this subject including Lombard in the FT. Perhaps another good reason for keeping your friendly analysts informed...