CA CEO: Cloud Computing Adoption Underestimated

Business adoption of cloud computing enablers, from virtualization management to software-as-a-service, is happening faster than even the most optimistic projections, according to BIll McCracken, CEO of CA Technologies. And it's CA's partners and cloud-focused products and services that are among the best positioned in the industry to profit from that trend.

"The rate and pace is going to pick up," McCracken told a gathering of CA solution providers in New York Tuesday, discussing cloud adoption. "The industry estimates are wrong. They're low. You can write that down. It's growing faster and moving faster than we're predicting. The opportunity is standing in front of us."

The kickoff Tuesday of CA's first Channel Summit in several years showed a sense of renewal for the oft-conflicted software management company. A parade of CA executives -- many of whom have been with CA for less than two years -- sought to assure the more than 125 partners in attendance that CA is a channel-focused company, free of the channel conflict and process issues that have plagued its program in the past, not to mention the financial scandal that shattered confidence in CA years ago.

It's time to start a channel renaissance, said CA's leadership team.

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"Years from now, we will look back and say this is the group of people we started a new chapter of growth with," said George Fischer, executive vice president and group executive, worldwide sales and operations.

At the heart of CA's strategy is a big bet on the cloud. In October, CA lifted the curtain on a new MSP channel program based off the acquisition it made of 3Tera and 3Tera's AppLogic offering. What's coming next, said CA executives Tuesday, is also a turn toward the midmarket, which CA defines as customers between $200 million and $1 billion in annual revenue and representing a potential $17 billion opportunity for CA and its solution providers.

Cloud is coming fast in the midmarket, executives said. It's coming fast, period -- even to the large enterprise customers that still account for 90 percent of CA's $4.5 billion in annual revenue, and who are hesitant to put aside the massive data centers in which they've invested millions.

But the change is unmistakable, McCracken said. CA is looking at ways to make all of its products deliverable as-a-service.

"Today's technology allows companies to change the way they're able to run their businesses and compete in their business," McCracken said. "Companies have a business model that's built on IT that drives their competition out of business."

In his keynote address, McCracken sought to portray CA as deeply experienced in IT management software, and therefore decades more prepared for the cloud migration than newer entrants to the market.

"We will grow off our base. We're not going into an adjacency," he said. "We have managed and secured IT for 35 years, and that's what's [needed] in the cloud environment now. It's our core, it's what we've done, it's what we've learned, it's what we've made mistakes in. We've probably forgotten more about management than some companies trying to drive into it have yet learned."

In the past two years, CA's spent about $1.2 billion on acquisitions, but also about $600 million on its own technology research and development, he said. That adds up to nearly a $2 billion investment by CA in the cloud environment -- "that's where the growth is coming from," McCracken said.

"You're in the heart of it, and we're in the heart of it," McCracken said. "We need you to partner with us to become who we want to be and grow the way we want to grow."

Next: CA's Focuses For 2011 And Beyond

The breadth of CA's portfolio, including the myriad technologies and platform options its acquired via acquisition, is one of the industry's best bets for cloud computing, said David Dobson, executive vice president and group executive, customer solutions group. The biggest areas of untapped potential for CA are the midmarket, and also with service providers, who are building as-a-service infrastructure to deliver to customers.

"The opportunity for us to grow is a very large opportunity," said Dobson, who joined CA from Pitney Bowes, where was president of Pitney Bowes Management Services, in April 2010.

Going forward, CA will increase -- by a factor of five, Dobson said -- the amount it invests in how to turn products acquired by CA into integrated solutions more effectively. In general, CA will look to optimize what Dobson called "outdated processes" and make it easier for both solution providers and end user customers to do business with the company.

"We have a fair amount of work to do to transform our business to make us easier to do business with and streamline," he said.

Watch for CA to continue to focus on all of the areas where it has strengths, said Dobson, who described CA as "the glue that holds all this together." Those include service assurance, security, virtualization management and service automation, service and portfolio management, mainframe and the cloud connected enterprise.

"We can't be a thought leader and industry leader if we don't participate in every one of these segments," Dobson said. "We need to be a leader in these segments."

Dobson said solution providers need to think of the cloud computing migration as both evolutionary and revolutionary: the former in the sense that bigger enterprises will make the transition more slowly, while hanging on to a lot of their existing infrastructure for a few years, and the latter in the sense that smaller companies are generally faster cloud adopters because it's easier and more effective for those customers to buy and use IT resources on demand.

CA executives urged partner patience as CA continues to tighten up its channel program and attempt to leave the past in the past.

"It's a work in progress," said David Bradley, senior vice president, global channel sales. "One pillar we're going to bring forth is simplification."

"We're not defect-free," added Fischer. "We're not here to compete with you, we are here to partner with you. We take this very seriously and we've made a few mistakes. The good news on that is that we have learned, and we are in learning mode."