New Look For CA

You see, CA is Kumar's company now.

Since taking the CEO reins in August 2000, Kumar has steadily molded Islandia, N.Y.-based CA to fit his own vision, implementing changes to shed the software company's past reputation as an aggressive,and even arrogant,business partner weighed down by an unfocused product line. Under his command, CA has introduced subscription-based licensing, revamped its branding strategy and launched a vigorous assault into the storage and security management markets. Kumar also has eschewed Wang's strategy of growth by acquisition, choosing to pursue organic growth via improved partner and customer relationships.

At CA World, Kumar unveiled his latest move: a reorganization creating five business units for CA's six brands. The new divisions include Unicenter (enterprise management), eTrust (security management), BrightStor (storage management), Advantage (mainframe technology and database management) and CleverPath/AllFusion (portal, business intelligence and life-cycle management).

"I hope you've seen a definite change in CA and its attitude, and in customers' attitudes about our company. We are very focused on that," Kumar told solution providers at CA World. "I'm rocking the boat the right way."

But Kumar also has worked to keep the CA ship steady.

He has staunchly defended CA amid ongoing inquiries by the Securities and Exchange Commission and the U.S. Attorney's Office, which are scrutinizing the company's accounting practices. And last summer, Kumar spent $10 million to repel a coup attempt spearheaded by entrepreneur Sam Wyly, who criticized Wang's and Kumar's leadership and sought to take over the company's board. The specter of another proxy fight looms this summer, after CA's board recently rejected a request by Wyly's investment firm, Ranger Governance, to fire Wang, Kumar and Ira Zar, CA's CFO and senior vice president of finance.

Kumar said in an interview that another proxy skirmish "would be a disservice to shareholders" and that CA will cooperate with federal investigators. More important, he noted, such events won't interfere with CA's growth plans.

"I am absolutely focused on running the business," he said.

And partners say they're beginning to see results from Kumar's efforts.

"CA has a legacy they've been trying to move away from,I think successfully," said Greg Richey, senior vice president and managing partner at Richey Systems, an Anaheim, Calif.-based solution provider. "A lot of customers that have mainframes felt challenged by the licensing structure."

In a definitive rejection of the hard-nosed business tactics that made CA infamous, Kumar last week heralded a new partner-friendly approach with the launch of the Channel Preferred compensation program for its BrightStor products. The program incents CA's direct-sales force to push deals through the channel.

"What we are telling partners is really clear: There is no advantage for CA [sales people to do anything on their own anymore. None," Kumar said.

And in another reversal of CA's past business strategy, Kumar said the company hasn't made any major acquisitions in the last two years. "Our focus at this point is to work on the new business model, work on the partner model and get the new technology out," he said.

CA's one-time hunger for acquisitions is partly responsible for previous lags in client support, according to solution providers. "That [growth strategy is painful in terms of not being sure whether the customer is cared for," said Todd Huntley, president of Sanserve, Roseville, Minn.

Channel discord has plagued CA for the last two years, said Stephen Richards, executive vice president of sales at CA.

"One of the problems that we've had as a business over the last 24 months has been a conflict between the two different types of channels we have: direct and indirect," Richards said. "Ultimately, we found that style was effectively holding the organization back."

The Channel Preferred program promotes more cooperation with the channel plus encourages partners to seek new business, said Mark Milford, newly appointed senior vice president and general manager of North American channels at CA.

"If [direct-sales reps bring in a partner and [the deal goes down through the partner, they get paid actually a little bit higher on the channel side than they do on the direct side," Milford said. "It's supposed to be channel-neutral, but in reality it's skewed a little bit to the partner side as opposed to direct."

CA expects to achieve more than 50 percent annual revenue growth in its storage line under the new compensation model, Milford added. "We're absolutely doing this to try to get the multiplier and the leverage where the business becomes three or four times what we thought it was going to be if we did it independently," he said.

In turn, CA expects solution provider partners to hold up their end by committing to training and certification, Kumar noted. "It's a two-way street. I want to be really clear. Partners have to commit. They have to be willing to sign up and work hard," he said.

If the Channel Preferred model is a success for the BrightStor line, CA will roll out the program to other product lines, such as eTrust and AllFusion, according to company executives. "I am committed to doing more products this way if this works the way we think it will," Kumar said.

But he noted that the onus is now on solution providers to prove that they can deliver the sales gains CA seeks. "I am telling partners: Come one, come all. If a partner is not there, then that is the partner's fault," he said.

As part of the Channel Preferred program, CA will aggressively track sales leads in each of its regions to ensure that enterprise storage partners work closely with direct-sales reps to wrap up deals. "For every lead I give them, I hope to get one or two leads back and grow this pie bigger together," Milford said.

Later this year, CA plans to set up an automated lead-management system, code-named Rainmaker, which would be accessible to solution providers and CA account managers via a Web portal, Milford said. "I'll look at their close rate, and I'll look at the quid pro quo,how many did I give you, and how many did you give me?" he said. "And we'll be able to look at a lot of different things and use that to qualify partners going forward."

Solution providers called CA's channel-focused compensation model a big step forward. "It shows their focus on storage solutions and how serious they are about being successful in this space," said Dan O'Brien, vice president of enterprise solutions at Sarcom, a Lewis Center, Ohio-based solution provider.

What's more, some solution providers said they can bring value to CA through a relationship with its direct-sales reps. "It helps the direct-sales force when they go through us," said Dharmender Matha, president of PeakIT, Islin, N.J. "There's less paperwork for them. They can concentrate on closing the deal."

Kumar, in fact, has urged solution providers to reach out to their local CA sales reps and blend into the direct-sales force's operations. "There is no reason you could not put together, say, a sales seminar in a city you do well in and invite the local CA sales rep as a speaker. We can stand there and endorse you," he said.

Despite welcoming the extra attention that CA is devoting to its storage channel, some solution providers said Milford needs to establish similar rules of engagement for the Unicenter product family. Others also worry about CA toning down Unicenter as a channel product.

"I know that CA has made it more difficult for channel partners to get into the [Unicenter channel program. You really have to be in the elite," said Gregory Maisel, director of business strategy at IT PartsHouse, Frisco, Texas. "If CA did decide to go direct with Unicenter, they would be making a big mistake."

CA probably doesn't believe that the channel adds much value in selling Unicenter, said Steve Pazol, president of Professional Consulting Services, a Chicago-based solution provider. "I think since that's the flagship product, they feel the direct-sales force can sell it as well or better than the channel," Pazol said.

The fate of CA's Unicenter channel, which includes 25 partners, is undecided, according to Milford. He called the amount of revenue delivered by Unicenter partners "miniscule" and said the management of the Unicenter partners is being moved out of CA's channel organization and under the direct-sales umbrella.

Though CA is turning to channel partners to provide expertise in storage, security and enterprise modeling products, the company's direct-sales force already is well-versed in Unicenter, Milford noted.

"We have that expertise, so the value-add from the channel has to be something different. And that's what we have to sort out," he said.

Because Unicenter 3.0 is built on a modular architecture, one solution to the channel situation might be to have partners specialize in the different modules, Milford added.

Aside from concerns about the future of Unicenter's channel, partners generally have few complaints about their relationship with CA. Many say they just want CA to do more of what it's already doing.

"Our relationship is probably the best it has been in years," said Richey Systems' Richey. "They've made a concerted effort to be a kinder, gentler CA."

STEVEN BURKE and JEFF O'HEIR contributed to this story.