CA's Comeback?

If there were any doubts that John Swainson would make significant changes at Computer Associates when taking over as CEO earlier this year, the software giant's new chief quickly put those doubts aside: Fresh into its new fiscal year, big changes are afoot at Computer Associates.

The software giant has made a major acquisition--that of Marlborough, Mass.-based Concord Communications for $350 million--realigned into five business units and is moving to a named-account model. As CA looks to boost its sales through the channel, all three moves give it a much more compelling story, though one that will take a year or two before the company can claim success. At the same time, CA seems to have finally moved past the accounting scandal that forced out chairman and CEO Sanjay Kumar.

"The speed at which changes are being made there is quite impressive," says Dennis Drogseth, an analyst at Enterprise Management Associates (EMA), who is a longtime follower of CA and an expert on the systems and network-management industry. "The energy level and focus is very positive."

For starters, the acquisition of Concord fills a major hole in CA's systems-management story, says Russ Artzt, a CA founder and executive vice president for products. Specifically, CA gains Spectrum, the network-management software developed by networking vendor Cabletron during the 1990s and spun off as Aprisma, which Concord acquired earlier this year. "We were always a leader in systems management with Unicenter, but never in network management," Artzt admits. "This gives us another best-of-breed solution."

EMA's Drogseth points out that Spectrum has a powerful root cause and analytics engine, which had been a "glaring hole" in CA's portfolio. "This is a very important acquisition," in that it pits Unicenter against HP OpenView, he says. The key to CA's success in transforming Unicenter into a systems-management solution with a strong network-management component will be its ability to integrate Spectrum into the core architecture.

Artzt was less clear about how quickly channel partners will be able to sink their teeth into Spectrum and how broadly CA will sell Unicenter through solution providers. Currently, 90 percent of Unicenter goes through CA's direct sales force, Artzt says. "Our strength will be our direct sales force for Unicenter, but we will start to develop a third-party channel presence...to sell Unicenter and Unicenter network management through the channel."

Gary Quinn, CA's executive vice president of partner advocacy, also says the company is committed to selling Unicenter through the channel for the long haul. "Unicenter was very monolithic; now it's decoupled," he says.

Also key to propelling CA's growth is the company's new business unit structure, which is much broader than the product units that preceded it. Each of the five new business units will have their own P&Ls with their own management, marketing and development teams, as well as their own support and service organizations. Each unit will also have its own general manager. The goal is to make the individual product groups more accountable and responsive to market and customer needs.

"This is truly a major effort for CA, and will give us the kind of accountability necessary to drive leadership across the company and growth for the long term," Swainson said, in a statement.

The five units are enterprise systems management, which will be headed by Alan Nugent, the former CTO of Novell who just joined CA in April; security management, to be run by Toby Weiss, formerly senior vice president for CA's eTrust product management and marketing; storage management, with CA executive Chris Broderick; business service optimization, to be under Jacob Lamm, former product development lead for Unicenter; and the CA Products Group, to be led by longtime CA development executive Mark Combs.

Longtime CTO Yogesh Gupta will continue as CA's senior vice president and CTO, ensuring a common technology architecture and development standards across the business units. He will also oversee emerging technologies, including mobility, RFID and pervasive computing.

Todd O'Bert, president of Productive, a CA partner in Minneapolis, is hopeful that the moves will lead to more products that are focused on customer requirements. "CA has an enormous wealth of technology knowledge and intellectual property under its name," he says. "Hopefully, the guys on the security and storage side can harness it more effectively."

Swainson also suggested the company will move away from offering commodity products in the storage segment. "CA's true competitive advantage in storage will be to tie it more closely to our core systems and security-management business, so that customers can manage storage as part of the enterprise," he said in a letter to employees, partners and investors.

Indeed, CA's key focus will be in dominating systems management and security. In his letter to stakeholders, Swainson defined growing the company's reach through partners as one of six key priorities for the new fiscal year. "CA must do a better job of working with partners to expand into new markets and better serve our customers' diverse and expanding needs," Swainson said.

As part of that effort, Swainson pointed to the company's new named-account model, which has already taken effect. The company has earmarked 12,278 such named accounts that it plans to call on directly, but the program will also include incentives to CA's sales force for driving sales through the channel. The goal of the new program is to "unite our direct sales organization with our partner network to better serve new and existing customers," according to an April 5 letter to partners.

During a meeting with company officials at CA's Islandia, N.Y.-based headquarters in April, executives said moving to a named-account model is pivotal to CA as it seeks to either get into or expand accounts where it clearly can't provide an entire solution.

"I can't sell you a complete SAN environment that includes EMC disk arrays, Brocade switches and some BrightStor [data-protection] software," says Gary Quinn, CA's executive vice president of partner advocacy. "We're not an IGS or an EDS. We have to build that capability through a network of partners."

The named companies fall into accounts with revenues ranging from $300 million and up, though CA hasn't categorically slotted out all companies in the upper echelon. "There are thousands of companies out there that provide opportunities for us and our partners, and we are just scratching the surface with them," says George Fischer, CA's senior vice president of sales.

CA officials say they intend to continue efforts to eliminate channel conflict and encourage cooperation between channel partners and the company's direct sales force.

"I've definitely seen the direct people engaging us more--there's no question," says Tony Ferrigno, CTO and vice president of business development at Ciber, a CA partner. "They're finding opportunities, they're reaching out to us for help."

As well, Ferrigno says CA's efforts to assign channel-advocacy management teams throughout eight North American regions has made a marked difference.