Digex CEO sees calm after WorldCom storm

Managed hosting firm Digex has had its share of troubles, not the least of which is the bankruptcy filing of parent company WorldCom. Over the past six months the company has replaced its CEO, reduced staff and revamped its board. It recently announced it is seeking "strategic alternatives," including a possible sale of the company. Network World Senior Writer Jennifer Mears recently spoke with Digex CEO George Kerns about where the company is headed.

You took over as CEO of Digex in June, during a particularly turbulent time. Could you talk about that transition and what your goals were at that time?

I took over four days prior to the [firing of former WorldCom CFO] Scott Sullivan, so it was soon in my tenure that external forces came into play. But irrespective of what was going on at WorldCom, the first thing was that Digex needed to have a business plan that made sense in today's environment. It was clear to me that growth was not going to take place as planned and that we needed to do some calibration to get in line with where our revenue really was. So we put together this revised business plan. We did that in less than a month, presented it to our board members and then to WorldCom. At that time WorldCom was pretty near petitioning for bankruptcy so we made sure we were protected, that the funding that we were dependent on from WorldCom was in place through the bankruptcy petition.

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Managed hosting firm Digex has had its share of troubles, not the least of which is the bankruptcy filing of parent company WorldCom. Over the past six months the company has replaced its CEO, reduced staff and revamped its board. It recently announced it is seeking "strategic alternatives," including a possible sale of the company. Network World Senior Writer Jennifer Mears recently spoke with Digex CEO George Kerns about where the company is headed.

You took over as CEO of Digex in June, during a particularly turbulent time. Could you talk about that transition and what your goals were at that time?

I took over four days prior to the [firing of former WorldCom CFO] Scott Sullivan, so it was soon in my tenure that external forces came into play. But irrespective of what was going on at WorldCom, the first thing was that Digex needed to have a business plan that made sense in today's environment. It was clear to me that growth was not going to take place as planned and that we needed to do some calibration to get in line with where our revenue really was. So we put together this revised business plan. We did that in less than a month, presented it to our board members and then to WorldCom. At that time WorldCom was pretty near petitioning for bankruptcy so we made sure we were protected, that the funding that we were dependent on from WorldCom was in place through the bankruptcy petition.

In addition to looking at the financial picture, what kinds of changes have been made in operations and services?

We're focusing on three major solution segments. One is what we call e-enablement, which is basically comprehensive Web hosting. That's where Digex got started in 1996. Our second major segment is commerce. Now we're spending a lot of time in our research and development on a solution segment called Enterprise IT. As more software vendors have written their software to run in this network-based architecture, it avails us of a lot more opportunities. We're taking other slices at the marketplace by looking at verticals. The two verticals we picked out to concentrate on now are pharmaceutical, medical device companies because we have a good share of that market already. We're also looking at consumer product goods, where we have a big market share with the Krafts and the Nestles and the Hersheys and the Mars.

What kinds of services are you offering those vertical customers?

Some of this is under development, so I don't want to portray this as it's ready to go. In the consumer product goods, a lot of our customers are extracting information from their Web sites, pumping it into data warehouses and then using business intelligence software to mine the data. I'm saying why shouldn't we be doing that for them? That should be part of our offer, so besides providing all that high availability Web hosting, we can offer people a way to mine their data. When you get into pharmaceuticals, there is a lot of stuff they're subject to from the Food and Drug Administration standpoint and things like that that we're looking at. How do we accommodate those requirements so that we can be a unique entity in the marketplace.