Chris Horn is back again to lead the flagship tech company struggling in a tough market, making the decisions that will see it sink or swim, writes Karlin Lillington

Right now, there's only one obvious question to ask Dr Chris Horn: "What went wrong?"

His answer, straightforward and more resolute than resigned, is equally blunt: "Where to start?"

Iona Technologies, the company he co-founded while an academic at Trinity, is struggling in a tough market. In April, it issued its second profit warning in under a year, it recently reported a net loss of $369 million and last month, three top executives - including chief executive Mr Barry Morris - resigned.

Now Dr Horn finds himself back at the helm, presiding over the biggest round of job cuts ever in the company (a third have gone), making the decisions that will see Iona sink or swim.

This wasn't quite how things were expected to turn out. Three years ago to the day, Dr Horn stepped down as chief executive to don the chairman's cap and move away from the day-to-day operations and strategic decision-making of the company.

Until that point, his leadership was integral to making Iona one of the Republic's flagship indigenous technology companies. Founded in 1991, it had ridden out cycles of earlier economic turbulence to become one of the world's leading producers of middleware and related technologies - things that enable disparate computer operating systems, networks and applications to work together and share company data.

Iona has also been deeply influential on the development of the technology sector in the State. No other technology company has spun out as many entrepreneurs with their own start-up companies. Iona veterans also populate senior management in many other companies.

As chairman, Dr Horn invested much of his time in Ireland Inc - becoming the pre-eminent technology statesman for the Republic at home and abroad, serving on numerous industry and government bodies, from the Irish Management Institute to the Dublin Chamber of Commerce to the Government's telecommunications advisory board.

He also continued to work to advance Iona's fortunes.

But those fortunes have been troubled of late - for reasons both internal and external, he says. So he's back, having politely had to step down from his many other involvements.

"I'm somewhat surprised to find myself here, in this role," he admits, sitting in one of the many meeting rooms in Iona's Ballsbridge headquarters, each named for an Irish writer.

So what went wrong? He starts to list reasons.

"I think the company took a bet that the global macroeconomic slump would end more quickly than it did."

So the company geared up for further expansion, increased its sales force and suddenly had "all these people out in the field, and that became a cost".

Iona also made a wrong guess on how quickly organisations would adapt to the Web. "We took a strong bet on Web services integration, which didn't happen."

Web services - using internet technologies to enable organisations to share data across departments and divisions - seemed an obvious development for organisations increasingly comfortable with the Web.

Iona made several acquisitions, including its largest, Netfish, to accelerate into the Web services area.

The acquisitions were a good idea and the technologies gained are important to Iona, insists Dr Horn. "But the business-to-business market hasn't taken off in the way we'd hoped."

Iona also decided to become "a one-stop shop for middleware", providing middleware into small to medium-sized companies as well as its core market, large enterprises.

"Had the general IT market continued to explode, that was probably the right decision," says Dr Horn. But it didn't, and with the sudden slump and the reverberations of September 11th came market disillusionment with companies that were trying to be "generalists rather than specialists", says Dr Horn. He is direct: Iona lacked focus.

And that's where management issues arose.

"We felt we had put in strong management. But in the March quarter, we had a very bad miss, which was a disappointment obviously to shareholders and also for the board."

Analysts began to express concern about the management team.

Several press reports also appeared, criticising the large bonuses paid to Mr Morris and others in the senior management team in 2001, which appeared in the 2003 publishing of the 2002 accounts, right as Iona's share price was diving from a high of over $60 to around $2.

But Dr Horn "absolutely" defends the bonuses, as well as "golden parachute" deals to sweeten the departure of executives in case of a buyout. "Those bonuses would have been benchmarked against the industry. For work done in 2001, they were appropriate to work done."

The "parachutes" are also standard, he says, designed to ensure that executives are compensated if they lose their own jobs by supporting a takeover that is in the interests of shareholders.

The result of takeovers is typically to jettison the existing management, he points out. Without the parachute, executives would be disinclined to make decisions that could potentially lose them their jobs.

But, says Dr Horn, "from the board's perspective, there was a lack of clarity from the executive team."

They seemed unable to decide whether to pursue existing strategies or cut back in focus; whether to go after a bigger or a smaller market.

The board clearly felt "the lack of a decision around [March\]" from the executive team meant it was time to act. Thus, a few weeks ago, Iona announced the resignations of Mr Morris, chief operations officer Mr Stephen Fisch, and vice-president of corporate development Mr David James.

Dr Horn says he "is very focused on rebuilding the company", and the intention now is to return to concentrating on the enterprise market - the very big organisations that have the most complexity in their information technology systems, and need those systems interlinked.

The middleware market is commoditising for low-end business, he says; not a good place to be.

He has also pushed an operational reorganisation that sees each division and each product line evaluated separately on its profit and loss performance. Iona has never been able to separate performance in this way, and it's hoped this will give greater management transparency and control.

Is he grooming the company for a takeover, as some have surmised? "Obviously, if we were approached in a bona fide way we'd sit down and talk." But he thinks Iona's value is that it is "technology agnostic" and not controlled by one vendor, such as Sun or IBM.

"The fact that you are a Switzerland among these warring nations is actually the value of Iona," he says with amusement. "If we were acquired by a major player - I think you'd actually be killing the golden goose."

Dr Horn insists that even as the company began to struggle in the downturn, he was never thinking he'd end up as CEO again. As chairman of Iona's board, he says he "was thinking of the overall company position, but it was only quite late that the possibility of me stepping back in came to light".

He loved what he was doing on the Ireland Inc front, he says, and hopes he'll be able to return to those interests before too long.

He says he views the return to Iona's helm "as a second-in-a-lifetime opportunity. The first was in 1991, building this company from scratch."

He has a "gentle confidence" that the market is beginning to recover; he sees "mild early signs of recovery but it's still very fragile".

Does he enjoy the challenge of a rebuild? "The fun comes when you have momentum and you are building deals," he says.

So why come back in during a time of great difficulty, when the company's own survival is at stake? Dr Horn, one of the State's entrepreneurial millionaires (who retains a 7.5 per cent stake in Iona), certainly doesn't need the cash or, presumably, the headaches.

"It is a love of the company and what it is," he says. "And the people."

Name: Dr Chris Horn

Position: chief executive and co-founder of software company Iona Technologies

Why he's in the news: Dr Horn stepped down as chairman of Iona in May and returned to his former role of chief executive, following poor financial results and the resignation of three executives, inlcuding then-chief executive Mr Barry Morris