Computer Associates Reorganizes Business

CA officials announced that the company will adopt a "channel neutral" business model that will see CA's direct sales force compensated for both direct and channel deals (Computer Associates Introduces New Channel Stratgey). In essence, CA plans to additionally leverage its internal sales force to help channel partners sell. The company says it plans to phase the "channel neutral" model into the company starting with the storage product line.

CA president and CEO Sanjay Kumar called the new strategy a "refined" channel model.

"We've been working toward this for 12 months and we've been working very hard to pull together a terrific channel organization," Kumar said at a press conference.

The internal organization change will integrate the business aspects for the major brands, creating marketing, development and customer support teams for each brand unit--security, storage, portal, application lifecycle management and mainframe software. Previously, the six major brands at CA had their own business components in what Kumar calls "a vertical silo." Kumar says the new structure will give each brand unit greater accountability for their respective products with every brand eventually being responsible for product profit and loss margins.

Despite the restructuring, the CA sales team will remain its own entity and will not be split up between the various brands, Kumar says. In addition, the channel business will be independent of the brand units as well. Kumar says the company wanted to keep its customer facing business components the same.

"What is not changing with this new organization structure is our interaction with our customers," Kumar says.

In addition, he stresses a new and improved dedication to customers and a desire to make CA and world-class customer service synonymous. CA has built on several models introduced in recent years to improve customer satisfaction, such as the CA Customer Relations Organization and the CustomerConnect online service that gives customers account information and product support. The company also highlighted its software licensing model, which uses a short-term subscription based model instead of one-time multi-year agreements.

Kumar promises to build on the recent initiatives, adding that more than 95 percent of customers have had the same sales manager since last March.

"We've made customer satisfaction our number one priority," Kumar says. "Are we more focused on customers today than before? The answer is yes."

Computer Associates had been contending with several tribulations in the last year, including a shareholder proxy battle and, most recently, federal investigations into accounting and business practices. However, the Department of Justice announced last week that an inquiry concerning CA's March 2000 acquisition of Sterling Software has been closed without any action being taken.

"I remain very confident that our company's accounting practices are proper," Kumar says, adding that CA would continue to cooperate with the government investigations.

Kumar repeatedly thanked customers throughout the opening day at CA World for being loyal to the company supporting CA through thick and thin. He also says CA has grown and improved following the recent tumult.

"There's a number of things we've learned from those episodes, and I intend to make our business better as a result," Kumar says.