'Cloud' growth strategy may turn into pie in the sky

NET RESULTS:CA Technologies faces a major challenge as it seeks to offer cloud management software to service providers, writes KARLIN LILLINGTON

TECHNOLOGY COMPANY chief executives subscribe to an eternal truth: going forth on to a stage to do your major conference keynote without girding yourself with the audience-distracting prop of PowerPoint risks having them focus intently on – yikes – you.

I cannot remember the last time I saw a chief executive hit the stage for a keynote without the protective force of the almighty PowerPoint. Or even if I have ever seen a chief executive take such a risk.

The corollary to the Keynote PowerPoint Law is the Law of the Distracting Minion, an almost universal arrival onstage during the keynote. At least once, and typically, several times, some lower level executive or other Demo Guy (or very rarely, Demo Gal) will join the chief executive for some artificial banter about a new service or product.

Thus does the keynote pass, with a good chunk taken up with slide elucidation or minion briefings. Sometimes, as a result, it takes a very long time to pass, because it almost always starts late and then runs late.

So imagine the audience consternation when new CA Technologies (formerly CA, and before that, Computer Associates) chief execute and chairman Bill McCracken delivered his keynote at CAWorld in Las Vegas 1) without slides; 2) without minions; 3) without a teleprompter; 4) speaking plainly; 5) in under one hour.

Surely it could not be a simple message, well delivered? At a major event? By the chief executive? But it was.

And it was fascinating to watch. Instead of that constant blank gaze towards the teleprompters, McCracken strode back and forth, spoke out to the audience, and occasionally paused to look at his notecards for his speech.

Notecards! Really! He didn’t bring anyone on to bore us with a complex product demo accompanied by a congested slide of technical specifications bullet pointed ad nauseum.

Instead he talked in a relaxed but compelling way about where he sees the technology industry going (into the cloud), where he thinks CA Technologies fits into that changing world (offering cloud management software to cloud service providers, not offering cloud services itself, and also, virtualisation management software), and why the firm is changing its name (“Frankly, I got tired of googling ‘CA’ and getting ‘California’,” he said).

And he made a straightforward and direct plea to the audience, noting CA Technologies wanted to be first in its sector.

The whizzy stuff was limited to an opening video before McCracken took the stage, in which several industry chief and senior executives – including Microsoft’s Steve Ballmer and VMWare’s Paul Maritz – congratulated McCracken on his new post.

Such a pared down keynote was a risk for McCracken, a former IBM man who stepped into CA Technologies’ chief executive spot after a rapid ascent through its board – he joined as a director in 2005, became chairman in 2007, then executive chairman last year.

There have been several turbulent years for the software giant, which saw its former chief executive Sanjay Kumar jailed for fraud in 2006. Revenues have remained generally flat the past couple of years (shares dropped slightly after new results this week showed a slide in revenue for the last quarter).

But McCracken is an unknown quantity to the broader market. He told his audience of 7,000 that his experience running IBM’s personal computer division, just as Michael Dell revolutionised PC production with just-in-time manufacturing (nearly bringing down IBM), enabled him to spot and react to change.

Computing is at one of its “inflection points” when all changes, he said, referring to former Intel chief executive Andy Grove’s term for revolutionary shifts. That point is cloud computing – where services and activities move online and data is held “in the cloud” rather than in concrete servers and computers.

But the former CA has built its business, since its founding by Charles Wang and Russ Artz in the 1970s, around an aggressive model of buying up companies, adding the customer base and charging lucrative contracts for software and services.

How will CA Technologies cope with the new cloud paradigm in which contracts are supposed to fall by the wayside? The keynote gave a part-answer: provide the software and services infrastructure for the cloud companies themselves – keeping them on contracts, not delivering the services via the cloud.

The strong performance by McCracken will go some way towards presenting the new chief executive as a calm, considered presence, ready to be taken at face value, not hiding behind a flamboyant or excessive keynote.

As for the renamed CA Technologies and its purported remake: the devil is of course in the detail, with new products and services. The company has been hoovering up some cloud sector acquisitions – among them 3tera, Nimsoft and NetQoS – and McCracken told the Wall Street Journalhe is ready to spend up to $500 million (€408 million) more on similar purchases.

So there’s a base of bought-in innovation on which to start the inflection point shift. Building on that will be a major challenge.