Swainson Pledges Forward Momentum At CA

In tapping Swainson, CA for the first time places an outsider at the helm of the software company. He will replace interim CEO Kenneth Cron, who has steered the firm steadily and to growth since last April, when then-chairman and CEO Sanjay Kumar resigned amid a multibillion-dollar accounting fraud scandal toppling CA into full-blown crisis.

In Swainson, CA pulls in a proven success, an IBM whiz largely credited with orchestrating much of Big Blue's middleware strategy and, in turn, taking the WebSphere application server product to its market-leading position. The 50-year-old worked at IBM for 26 years, most recently as vice president of worldwide sales for the software group, overseeing an army of sales executives nearly three times the size of CA's total head count.

On Tuesday, Swainson spoke with assured confidence about his still-percolating vision for growing CA's business, developing new products in the systems management space and recasting the firm as a more customer- and partner-friendly company.

"I believe CA has great opportunity around what we call enterprise infrastructure management -- that combination of security, systems and storage management, and our strategy is to grow this business, both organically and through acquisition," he says. "If there is a downside at CA, the company clearly has a legacy here of difficult customer relations, and I will be working to improve those relationships and turn them back into partners, not adversaries."

Indeed, the public relations challenge is bound to be one of Swainson's most formidable tasks, although Cron must be credited with laying the groundwork for polishing CA's badly tarnished reputation. The situation Cron faced as a leader could not have been worse following the corporate accounting fiasco and Kumar's eventual indictment in September on securities fraud conspiracy and obstruction of justice for his alleged participation in that long-running scheme.

During his interim tenure, Cron sought to rebuild faith by agreeing to pay $225 million to compensate CA shareholders for losses caused by the improper practices and firing of executives with connections to the scandal. Under Cron, CA also reorganized its management ranks, acquired several companies, including Netegrity, and cut 800 jobs out of a workforce of 15,000. Swainson will need to pick up the torch and hit the ground running to build on that momentum.

Yet, in spite of the good job Cron has done, most analysts agreed that CA's board was shrewd to look to an outsider like Swainson to occupy the corner office. And by selecting an individual steeped in the culture of IBM, CA sets the stage to possibly remake its own image.

"CA has been trying to focus on moving away from its stereotype and be a kinder, gentler organization," says Dennis Drogseth, vice president at Enterprise Management Associates, in Portsmouth, N.H. "And while 'kind' is not a word to describe many companies today, IBM has a good heritage in respect to the individual. And I think that's a good quality to bring to the job."

Some of CA's partners also welcomed Swainson to the job, calling it a much-needed new start, one made more comfortable because the new CEO comes from channel-focused IBM.

"By bringing in someone new with a new perspective, you can get the ship steered in a direction that will be good for business, good for customers and ultimately good for partners," says Todd S. Pekats, director of strategic alliances at CompuCom Systems and a member of CA's partner advisory board.

Pekats says he would like to see Swainson build on Cron's channel strategy at CA so that partners see more forward momentum. Shortly after taking over in April, Cron articulated an accelerated channel approach, with a goal of making CA's software easier for VARs to seamlessly integrate into the vertical-market installations they sell to their customers and upping the percentage of revenues that go through the channel. Currently, only 10 percent is indirect.

Swainson could be the key to taking things to the next level. "I think [CA's] channel strategy has been a good strategy, but they've had challenges in execution," Pekats says. "I think that someone who understands the channel well can help execute on some of those strategies and will be able to facilitate some real good movement forward."

Indeed, Swainson said today that he will continue working on CA's four targeted areas of growth, two of which -- international and geographic expansion and finding new routes to market -- have obvious roles for more partners.

From a software business perspective, CA presently has an array of strengths and weaknesses. Drogseth says the company is on the right path with its integrated strategy around managing systems, security and storage, which he says are now a "continuum" of one network within the enterprise. In that vein, the company has invested wisely in technologies that help manage data flowing across these disparate systems and applications. CA has also done some promising work in the area of roles-based monitoring, seeking to provide individual user constituencies with customized monitoring information.

Where the company needs work the most is in the network management space, which Hewlett-Packard dominates and IBM plays strong as well, Drogseth says. The whole on-demand computing model holds some promise for CA, however, if it is able to position itself as the "neutral" vendor that is able to provide the monitoring and management of disparate hardware and software systems.

CA's analytics play could use some tinkering, while the overall portfolio is in desperate need of better integration, a deficiency partners have decried for years.

"For a vendor like CA, they need to be able to get the data, to store it, to analyze it and then present it," Drogseth says. "It's all a work in progress right now, and they don't have the luxury of waiting. You can't wait in this particular market."

To that end, Swainson says he's more than ready and believes CA is uniquely positioned. "As the world gets more complex and you are integrating more things, the demand for security and systems management goes up," he says. "So as companies like IBM execute on-demand, the need for what we do goes up. And we will take advantage of it."

-- Jeffrey Schwartz contributed to this story.