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Tatarinov out as Citrix CEO in surprise shake-up

Citrix has named its fourth CEO in less than two years, appointing its CFO to replace Kirill Tatarinov. The move has analysts and IT pros questioning the company's motivation.

Citrix's latest CEO change magnified speculation that the company is up for sale and raised concerns about its product roadmap.

CEO Kirill Tatarinov stepped down Monday, and Citrix announced that CFO and COO David Henshall would take his place. Replacing Tatarinov, who has an extensive background in software products, with Henshall, an executive focused on financials and operations, could mean that less product innovation is on the horizon, industry analysts said.

"The minute you put a financial guy at the top of the company, you don't think about product innovation," said Bob Egan, founder of Sepharim Group in Falmouth, Mass. "You think about operational efficiencies. And this puts fire toward the rumors that the company is up for sale."

Analyzing the Citrix CEO change

There have been many reports in recent years that Citrix is up for sale, most recently in March, when news surfaced that Citrix had enlisted Goldman Sachs Group to find potential buyers.

"When you're trying to squeeze out more profit and more margins to prepare for a sale, who better than a CFO to lead the company?" Egan said.

Citrix's new CEO David HenshallDavid Henshall

Tatarinov spent 13 years as an executive at Microsoft before joining Citrix as CEO in January 2016. He came to the company during a period of uncertainty, following the abrupt departure of longtime CEO Mark Templeton and the appointment of board member Robert Calderoni as interim chief executive. Henshall has been with Citrix since 2003, serving as CFO since his arrival and adding COO to his responsibilities three years ago.

"Rarely is a CEO replaced because everything is going well, and that means changes that could impact customers," said Patrick Moorhead, president of research firm Moor Insights & Strategy in Austin, Texas.

The leadership change aims to increase profits and shareholder value through quicker growth in Citrix Cloud's subscription-based revenue, the company said in a press release.

[Citrix's] commitment to the Microsoft relationship has played a part in some of their products' decline.
Earl Gaypractice manager, RoundTower Technologies

Citrix increased profits by $216.75 million in 2016, Tatarinov's first year with the company. Much of these profits came as a result of $101.57 million in spending cuts. It was important for Tatarinov to cut these costs, but it's likely that Citrix's board of directors wanted faster growth through the shift to a cloud model, said David Johnson, principal analyst at Forrester Research.

"I thought they'd have a little more patience with Mr. Tatarinov," Johnson said. "My sense is the transition to cloud-based revenue just wasn't fast enough."

Citrix Cloud faces uphill battle

When Tatarinov took over as Citrix CEO, he emphasized the company's core products: XenDesktop, XenApp, XenMobile and NetScaler. During his tenure, Citrix made acquisitions to improve the functionality of these products, including deals for Norskale, a user environment management provider, and Unidesk, an application layering vendor. Both moves drew praise across the industry.

In addition, Citrix discontinued products unrelated to its core offerings and spun off its GoTo line.

Tatarinov also attempted to effect more drastic change, particularly with a push to make all of Citrix's products available as cloud services. This message resonated at insurance company Die Mobiliar, a Citrix shop in Switzerland, where the IT department started focusing on a cloud-first strategy in areas where it would add business value, system engineer Sacha Thomet said.

"Cloud is here, and it's not just to talk about; it's time to implement it," Thomet said.

Citrix's efforts faced resistance in many other organizations, however.

"Customers are used to deploying with perpetual licenses on premises," said Earl Gay, practice manager at RoundTower Technologies, an IT solutions provider based in Cincinnati. "The move to a SaaS management plane and subscription licensing is something Citrix as a business wants, not necessarily what the majority of customers are asking for."

Jarian Gibson, an independent end-user computing consultant, agreed. Citrix users he spoke to thought the company's recent emphasis on cloud was "a little much," he said.

"Hopefully, the new CEO can bring balance to the cloud initiatives while still satisfying traditional on-prem customers," he added.

The future of the Citrix-Microsoft relationship

Under Tatarinov's leadership, Citrix also grew closer with Microsoft, his former employer. The relationship brought Citrix some wins; Microsoft decided to shut down its Azure RemoteApp service and let Citrix take the lead on cloud application delivery, for example.

But in other areas, such as enterprise mobility management (EMM), Citrix ceded significant ground to Microsoft. Since last year, Citrix has pushed the use of its EMM product, XenMobile, together with Microsoft's offering, Intune, which was confusing and seemed like overkill, some IT pros and analysts said. And XenMobile is no longer a leader in the market, according to the Gartner Magic Quadrant report released last month.

"[Citrix's] commitment to the Microsoft relationship has played a part in some of their products' decline," Gay said.

He and others said they hope the executive change sets Citrix on the right track again.

"[Henshall] is one of the old Citrix guys, and he knows how the company and the people work," Thomet said. "I think Citrix is in the right direction."

Senior managing editor Alyssa Provazza and editorial director Colin Steele contributed to this report.

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