New Business Mantra

Computer Associates is sounding more like IBM everyday. No longer satisfied with playing in the enterprise management space, CA is now pulling together the distant components of its software portfolio and heavily marketing itself as an e-business player.

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By  Greg Wilson Published  July 25, 2001

Business Plans|~||~||~|Computer Associates is sounding more like IBM everyday. No longer satisfied with playing in the enterprise management space, CA is now pulling together the distant components of its software portfolio and heavily marketing itself as an e-business player.

CA’s e-business mantra positions the vendor as a key provider in faster growing software segments, such as security, storage management and middleware. However, it’s not just all talk. Over the last six months there has been a comprehensive re-branding exercise, an internal reorganisation — to enable it to better sell and support its 1200-strong product range — and the introduction of a subscription-based licensing model. CA’s reengineering of both its internal organisation and relationships with customers is designed to introduce a greater degree of flexibility and responsiveness to the organisation. “The most successful companies are adaptable and flexible… based on that we’re adapting to the e-business marketplace,” explains Tarkan Maner, vice president corporate marketing with CA.

“[From] the foundation layer, to the organisation layer, to operations, to the research & development, to services, to the way we strategise and manage our products, all are part of this re-transformation [and] realignment of the company,” he adds.

CA’s drive for e-business status has also been pulled together under the vendor’s 3x6 strategy. Speaking at the vendor’s customer event, CA World, company chief executive & president, Sanjay Kumar, outlined the 3x6 strategy to customers, pledging it would result “in continued innovation… from CA.”

The strategy’s title refers to the vendor’s three primary solution areas — infrastructure management, information management and process management — and its six strategic focus areas: storage management, security, enterprise management, portals & knowledge management, e-business transformation & integration and predictive analysis and visualisation.

Over the week-long event, Kumar and his colleagues padded out the strategy with several core product components to CA’s overarching strategy. Topping the agenda of product announcements was the unveiling of Unicenter 3.0, which Kumar described as “revolutionary,” in terms of infrastructure management.

CA also delivered additional components to its eTrust security range and revamped its storage strategy.

However, CA’s effort to stake a claim in the e-business landscape has come in for early criticism. Bloor Research was one analyst house predicting troubled times ahead for the world’s fourth largest software company. A report from the research group described the strategy as “very diffuse and difficult to understand.” Furthermore, the report went on to state CA’s core product areas had little in the way of a connecting theme.

According Herb Vanhook, senior vice president, Meta Group, part of the confusion stems from the sheer volume of products in CA’s stable. Peeling back the covers on the strategy reveals a “plethora of individual products within each focus area… I don’t think the final product alignment and packaging is [there] yet,” says Vanhook.

“A lot of that stuff is still being worked on as [CA’s] products evolve. The reality gets a little messy, and this is true of all complex product lines. [CA] is trying to present a product marketing message that [it] hopes simplifies to some extent, and potentially targets different buying or using constituencies,” he explains.

If CA is to evolve into the e-business powerhouse it’s senior management envisions, the vendor has to deliver several components to its product portfolio. Although IDC statistics put CA at the top of both the enterprise management and security software segments, the vendor still needs to build in other areas.

With the launch of its BrightStor enterprise backup & recovery software the vendor is clearly making a play for the highly lucrative storage market. CA’s Kumar went so far as to promise to “put a dent in [Veritas’] figures,” at the official launch of BrightStor.

But CA is still facing a tough task to build a presence in the fastest growing segment of the market — middleware/integration platforms. However, says Vanhook, CA’s Jasmine platform is struggling to define itself. Since its inception, Jasmine has been an object orientated database, a visual front end and now it’s being positioned as a middleware integration platform, explains the analyst. “Jasmine has [been] different things over its lifetime — it’s not clear to a lot of people what it is,” says Vanhook.

“We don’t really see Jasmine much, and where we do see it, it appears to be this kind of visualisation [role.] CA is using Jasmine technology in some of the other products.
But in terms of competing as a real middleware in the market, up against [vendors] like BEA for example… no. They are not even on the radar screen,” comments Vanhook.

CA is facing a similar uphill challenge if it’s to successfully penetrate the portal & knowledge management segment, which is currently occupied by smaller, dedicated players. The portal space “is very strategic for CA… but you can’t think of CA as a strong player here,” says Vanhook. However he adds, “never count [CA] out if they want to enter a market.”

CA’s Maner realises that the company has its work cut out to deliver the missing components to its software portfolio. “There are several components,” that have to be delivered, says Maner. “We’re looking to improve the product portfolio everyday to support the core business functions,” he explains.

||**||Takeover Attempts|~||~||~|However, CA’s attempts to build credibility in the e-business space are, in the short term at least, being undermined by Sam Wyly. At the time of going to press, Wyly, a Texan billionaire and former chairman of Sterling Software, which CA purchased last year for $840 million, was trying to wrestle control away from the incumbent board.

Wyly employed a market research firm to survey CA customers, which concluded that there was a high degree of dissatisfaction, especially in pricing and customer support. Citing reasons of poor stock performance and abuse of customers and employees, the Texan billionaire launched a proxy fight for control of CA’s future. If he is successful, he plans to break up CA into four separate organisations.

Although thought unlikely to succeed — the incumbent board has the support of the largest shareholders — the incident was obviously on the mind of CA’s leadership throughout CA World. During a press conference, Kumar described Wyly’s actions as “self-serving,” and “opportunistic.” He also went on to attack Wyly’s ‘software’ credentials.

Introducing the opening keynote, company chairman Charles Wang described Kumar as “the man that will lead us to another 25 years of innovation.”
During the keynote address itself, Kumar emphasised customer support and employee care.

Research body, Gartner Group agreed with Wyly’s report regarding customer dissatisfaction on support and pricing issues. However, Gartner points to CA’s recent attempts to rectify the situation with the creation of its customer relationship organisation (CRO) and the flexible licensing scheme. “Gartner expects that CA’s largest customers will see results from CA’s customer support initiative by year-end 2001 and from the pricing initiative as contracts come up for renegotiation,” stated the group’s report.

The importance of customer support isn’t lost on Tarkan Maner. “Products by themselves won’t make this strategy happen — the one thing that you really need is customer support,” he says. “[CRO] has nearly 1000 people all with one incentive —customer relationship and customer problem solving, both in business terms and in technical terms. We’re investing heavily to ensure we support customers,” says Maner.

CA’s efforts to kill criticisms about its support capabilities have also been boosted by the monthly subscription license model introduced last October. By paying on a monthly rate, end user organisations can take up products immediately, on a trial period if necessary.

However, Meta Group’s Vanhook believes CA is overplaying its subscription pricing structure. Even before the introduction of the subscription licensing model, end user companies could form bridging contracts or take software on trial. “If you talk to CA, it sounds like everybody but your grandmother is using it [the subscription model],” says Vanhook.

But the reality is “IT organisations don’t have monthly budgets… IT organisations have yearly budgets and they build cost into contract value, and they negotiate maintenance and discounts on longer term contracts. You’re not going to do that on a monthly basis, that is ridiculous,” explains Vanhook.

Work has also been progressing to improve the support to customers in the Middle East. The local Middle East operation has been able to leverage on CA’s South African office for additional projects over the last two years.

The UAE’s MashreqBank has already taken advantage of South African resources when it deployed PPC approximately six months ago. Experts where flown in to sit with the bank for two weeks, mapping the solution to the organisation’s needs and conducting training.

Further partnerships, to ensure a constant flow of skills to the region, are also being formed. Running in parallel to CA’s efforts to import greater support resources to the region, the vendor is searching for more partners to bring other core CA technologies to the region. “Business partners are key in the provision of technical [resources] and solution delivery,” says CA’s senior vice president, Africa & Middle East, Dan van der Westhuizen.

“It’s accepted that partnerships on a selected and focused basis in certain technology service provision areas, will be ongoing… we will address and encourage this in all territories.”

Further partnerships are going to be necessary if the local operation is to equip itself to deliver the full vision of CA’s leadership. For example, CA Middle East has won several large Unicenter deals, particularly in Saudi Arabia, but the level of market penetration for the Jasmine portfolio is limited.

Prior to launching a significant Middle East offensive with the Jasmine portfolio the local organisation will undergo what van der Westhuizen calls ‘a significant training initiative.’

“We also acknowledge that there is weakness in that specific area within the Middle East, from the Computer Associates perspective and that needs to be addressed,” pledges van der Westhuizen.

“We are deploying an internal education programme. That will probably start in August, to raise the level of skills in the Gulf and Saudi Arabia.”

CA’s long term strategy will be to make the region ‘self-sufficient’ in terms of skills availability. Middle East staff are already working in South Africa in an effort to gain the right training and experience.

However, CA still has to address localisation issues with its software, particularly if the organisation is looking to push management portal technologies and other Jasmine components in the region. “In terms of localisation, priority is always given in terms of market demand,” says van der Westhuizen. “We will continue to provide localisation, but it’s a question of at what pace,” he explains.

Although opinion appears to be mixed on the value of CA’s 3x6 strategy, it’s clear that the vendor still has work to do before it makes the transition to the e-business space.

However, with the growth on the traditional mainframe market slowing, CA is being increasingly pushed toward the high volume, lower margin distributed space. The whole e-business space is therefore making the opportunity a top priority.
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