Software giant CA attempts to reinvent itself

The company formerly known as Computer Associates is seeking to rebrand its image having endured a damaging accounting scandal, writes John Collins

Even given the lowered expectations of corporate governance that scandals such as Enron and Worldcom have engendered, it's been a rough couple of years for enterprise software company Computer Associates (CA).

During 2004 the company became embroiled in an accounting scandal that forced it to restate financial results stretching back to the start of the decade. Former chief executive Sanjay Kumar, and some of his key deputies, were subsequently indicted on several counts of securities fraud, conspiracy and obstruction of justice, making false Securities and Exchange Commission (SEC) filings, perjury and making false statements.

A recent revised indictment gave salacious details of Kumar flying to Hawaii to allegedly offer a $3.7 million (€3.14 million) bribe to a reseller who was involved in helping CA record fictional sales, but who was threatening to go the authorities.

With such details circulating in the US media, it was no mean feat for CA to get 6,000 customers, press and analysts to come to Las Vegas last week for CA World, its annual user conference - especially when you consider that the customers who made up the vast majority of those attending had to pay for the privilege of learning about CA's products.

That suggests there is a keen appetite to hear more about the software giant, which employs 16,000 globally and announced at the event that it was officially changing its name to CA.

Clearly, that reflects a desire on the part of the new management to draw a line under the old Computer Associates and start afresh with CA.

The man leading that change is CA's new chief executive John Swainson, a 30-year veteran of IBM where his career culminated as head of worldwide sales for its software business.

Many may have considered the CA job a poisoned chalice and, almost a year into the job, Swainson himself is not playing down the challenges facing the company a year ago.

"The key achievement is being here," he says only half-jokingly. "I'm fairly pleased that a year into this thing not only have we survived, we've thrived, and have addressed a lot of the issues we need to, to get the company going again."

As one might expect from a veteran of a company as conservative as IBM, Swainson didn't do anything rash when appointed. He spent the first three months talking to customers and employees and then emerged to make the changes he thought necessary.

"I haven't blown the place up, that was a conscious strategy," said Swainson. "There had been a problem at CA, there is no doubt about that. It wasn't a pervasive problem it was a fairly narrowly focused problem. It was really concentrated around prior management and a relatively small number of individuals. That cancer had spread to a few others but it wasn't something that was pervasive across the organisation."

Swainson hired some key senior management - particularly in the areas of finance and marketing - and then set about instilling the new values and vision into the company's staff.

In addition to the new name and logo, Swainson has reorganised the company to focus on key areas - systems, network and storage management, and business service optimisation. The overarching vision espoused by the company is Enterprise IT Management or EITM, an acronym that cropped up again and again during the presentations in Las Vegas. In his address to attendees Swainson said it was about "using technology to manage technology" and compared it to having a single console that would give a total view of an organisation's technology infrastructure.

Such a vision is not something that the old CA was renowned for. It had, and still does, literally hundreds of different software products ranging from anti-virus to complex network optimisation tools. At CA World alone it announced 26 new products, mostly modules of its systems management tool Unicenter.

Contributing to the massive portfolio was the fact that CA was something of a serial acquirer in the past, gobbling up companies in related areas and leaving it with products that in many cases were only loosely integrated.

Swainson plans to continue to use acquisition as a driver of growth - this year alone it has purchased network management specialist Concord for $357 million and IT governance software vendor Niku for $285 million, not to mention several smaller privately held companies.

"CA was a very successful acquirer of companies for a very long time and kind of wrote the book on that," said Swainson.

"There were two acquisitions late in the old CA history, Sterling and Platinum, both of which CA didn't completely understand the reasons for doing the acquisition. Both of those became problematic and we didn't integrate those products as well as we might have. In the nineties it didn't matter.

"The market wasn't buying solutions, it was buying individual products and having more individual products was good. So the strategy worked extremely well for a long time."

Customers buying patterns have changed significantly, from buying the best products from a variety of suppliers to seeking solutions - combinations of software, services, and methodologies - from a single vendor.

Swainson expresses pride that the company has managed to express such a coherent strategy in such a short space of time - the decision to hold CA World was only taken in March.

But surely some of that good work will be undone when Kumar and co go on trial early next year.