Computer Associates has just wrapped up its first industry analyst symposium under new CEO and President John Swainson.
The day and a half event was pretty good, allowing us to get a feel for the “new” firm, or at least the completely overhauled management team. The bench is pretty deep. As an industry analyst you get so used to being lied to by vendors that after a while you hardly need a clothes peg to cover the whiff of bull-oney. So it was refreshing in the extreme to see Swainson go to war against the “old” CA when he kicked off the sessions yesterday morning. Pull punches? Nope. He came out with haymakers. He said the company needed to be remade, and for now it is a wet piece of clay. This is what industry analysts love- an opportunity to help a vendor kiln and glaze a strategy.
The key theme was probity, for obvious reasons. If Swainson achieves anything at CA a new culture of integrity at all levels must be, and evidently is, his primary goal. Like Louis Gerstner, who Swainson must have learned a lot from, he obviously realizes that culture is more important that technology right now. It is certainly more important that vision; to paraphrase Gerstner, the last thing CA needs right now is a vision. No it needs remorseless execution, to get more out of its hugely valuable assets.
I wanted to include some quotes to show just how hard on the company Swainson was. This is tough love, or shock treatment or both. Certainly he made no attempt to hide the ills of the past.
“CA’s history has not been to have a set of warm and comfortable customer relationships.”
“Many customer relationships were litigious. CA was a very efficient predator, a holding company whose principal assets were software companies.”
“How to make the salesforce more relationship oriented? How to become a trusted advisor? 25% of customers see us that way, 25% of the customer base still hate us. 50% are on the fence . Why hasn’t CA grown – customers have been worried what we’ll do to them if we gain a bigger foothold in our shop.”
Swainson is playing from the Dancing Elephant playbook. (CA is a bit smaller than IBM of course, a dancing walrus perhaps?) What has he been doing since he took over the reins seven months ago? “I do almost nothing more than customer relationship meetings.”
I asked if Swainson had needed to fire anyone when he came onboard, for reasons of lack of integrity, or perception thereof. Again he was completely straight with me: “The board had already fired the top 50. so it was up to them. We have been able to complement. The people left were resilient, knew the business, and had been investigated up the yazoo. So how to complement them, with new people, finance and legal, controls and process.”
CA will continue to be acquisitive – expect more deals in the security and systems management spaces. Indeed he even acidentally preannounced a deal (but my NDA precludes me from mentioning it). Luckily the target was a private company, but it was another insight into the honesty (bluntness?) of the man.
What does CA have to do? For one thing, diversify. 80% of CA’s revenue comes from just 2000 customers. The customer base is also very US-focused. This limited footprint however also offers significant opportunities for growth, especially if CA can persuade some of the fence sitters to buy more from the firm. CA is also looking at partnering and OEMing opportunities in the SMB space.
In order to be a more effective dance partner, Swainson and his lieutenant Jeff Clarke are sorting out the company’s internal IT systems. That means tearing out a patchwork and going wall to wall SAP. “For a software company we didn’t have very effective business systems, as recent accounting problems might have made clear….”
Swainson also set himself an extremely aggressive growth target – to double the size of the company in 5 to 7 years. That would mean becoming a nine billion dollar company, no mean feat when the bigger competition is IBM, Oracle, Microsoft and SAP, and software industry margins are heading South, not North.
There were some interesting points to note – Swainson’s championing of the capabilities of CA’s recent acquisition Niku seemed a tad overdone. Niku had been on the block for a long time before CA acquired the company, and its not clear that it was winning great customer traction. Perhaps though the support of a parent company like CA will make Niku more attractive. The firm’s other recent acquisition, Concord, was also somewhat distressed. From this perspective there is an element of business as usual at CA. For all its voracious reputation for acquisitions, many of the firms it has bought over the years initiated the deals. As we all know, hostile acquisitions in the software industry are extremely difficult to pull off.
I am not saying these weren’t smart and strategic acquisitions. On the contrary the Concord Spectra network discovery and management toolset is an ideal battering ram to try and push into HP OpenView accounts, and also provides a new set of customers, products and skills in the telecommunications space. Niku meanwhile will help compete against the cashrocket Loadrunner fueled Mercury, with its Business Technology Optimization (BTO) narrative, with its asset, portfolio and project management promises. And then there is IBM, ready to go for broke with the Tivoli Unified Process.
CA does have some issues though, and here i felt the year zero approach did create a couple of problems for the firm. It now has a discrete business unit structure, and it wasn’t clear yet exactly how the two key orgs, Business Service Optimization (BSO) and Enterprise Systems Management (ESM), would work together from a messaging perspective. Service Management is a really tough meme to explain, and CA’s wet clay still needs some modelling. We can expect some more progress in that regard before CA World.
We did get some nice teasers about Unicenter release 11 (now that is what i call a mature enterprise management platform).
But overall, the one slight concern was that CA was underplaying its past strengths and achievements. It has service management customers, and happy ones at that, and it must be careful to show continuity of purpose and narrative to these shops. Enough vision already…
I was just a teeny bit worried when new chief marketing officer Don Friedman started with a slide on customer perception that said: CA is big and lost, a hodgepodge of unknown tools.” The majority of customers, he said, are confused about the company’s extremely wide portfolio. Friedman of course wants to make an impact, but by the time CA-World comes around, i would recommend that Swainson is the only guy allowed to make negative comments about the old CA. For everyone else i recommend Only Forward. Friedman knows how to do it too, he was on the AS/400 launch team, one of the most successful launches in corporate computing history. Friedman, Zeitler, Palmisano, Buell Duncan – you might recognize the names – IBM’s heaviest hitters basically. So Friedman has talent. He will be looking to simplify the CA service management and business aligment narrative and I expect him to do just that.
The AR team did a good job, although some one to ones would have been appreciated. The event was short and sweet and the evening on the East River on a boat (photos to come, my cameraphone ran out of juice) was very nice. No hard sell. No forced seating plans, sandwiched by executives. Lots of fresh air. And a nine am start. Nice one Debra and Janice.
One idea from me? For all the reasons I think IBM should be very wary of its nascent relationship with Google, CA on the other hand should be in like flyn. Security, identity management and storage on top of Google enterprise search appliances would make a lot of sense. Unlike IBM and Google, CA isn’t a platform. Having said all that, its actually BMC that is eating Google’s intranet search chow, using them in earnest to improve operations.
Content, like applications, is a business service that needs to be managed. But that’s one for the future. For now, its year zero.