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Analysis

Progress at CA Technologies - Looking good
Clive Longbottom By: Clive Longbottom, Head of Research, Quocirca
Published: 17th February 2014
Copyright Quocirca © 2014
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At a recent CA Technologies (I'll just refer to them as "CA" through the rest of this article) analyst event, CEO Mike Gregoire gave a 'state of the nation' address to the assembled industry analysts. In an open (mostly under NDA) and wide ranging talk, he addressed several issues head-on. It is only a little over a year since Mike took on the mantel of CEO to redefine CA and try to reinvigorate it as a brand—and develop, package and sell its products.

With a background of working for large and small companies (EDS, PeopleSoft, Taleo), Gregoire brings in new insights—but still has a steep hill to climb. One interesting aspect of Gregoire's talking style was a highly unusual modern usage of "I" and "me" in the discussion. Not "We will be addressing..." or "My team will be..." but a personal commitment that the outcome for CA will be on his watch, through a lot of his doing. Sure, the 'team' will be a core part of the implementation of what will happen, but without saying it quite so starkly, Gregoire made it apparent that, even though he joined CA due to seeing a lot of good stuff within the company, he has felt the need to grab CA by the scruff of its neck and give it a good shaking. Looking to more of a SaaS and mobile focus and playing to the big data/analytics markets, Gregoire is also dealing with some of the issues that have dogged CA in the past.

Firstly, CA has been well known throughout the industry for stuffing deals. Enterprise licence deals were pushed by large parts of its sales force in order to close deals. This resulted in a lot of customer shelfware—and bad feeling about stuff paid for but not used, with contracts that could not be changed. Gregoire is now focusing on making sure that a deal is a deal: only the software that a customer needs will be sold to them—and it will be sold on proper commercial terms. Sure, negotiation is still possible—but massive sweetheart deals will be out the window. Sales cycles will be speeded up through greater adoption of SaaS-based products, better training (and culling) of its own salesforce and its channel as necessary, ensuring that CA gains the revenues that it requires to be continually viable in the market.

Secondly, the product portfolio has to be better managed. This still seems to be an area under development. There are two basic approaches: create offerings to the market that have some 'umbrella' capability and then use professional services to put together all the different components from the portfolio to make the umbrella service work, or aggregate and consolidate the existing portfolio to have fewer but more functional offerings. Both come with one massive issue that the financial markets struggle with—it is pretty difficult to get a customer to cough up the same price for a bundle as they would for all the component parts. For example, if a 'solution' for dealing with DevOps requires 30 different CA components, a prospect gets confused with all the permutations and will just go for the bits that they can understand—and afford. If the components are replaced with a complete single monolith of a system, then the prospect still can't afford all 30 bits of functionality that are now within the system—but they cannot choose which bits to leave out. If it is a bundled offering, then there is more opportunity for bits to be left out—but the bundle price will still be high—and the complexities of putting everything together still remain, even if it is CA that will pull everything together, rather than the customer.

But, if you reduce the price to make either of the packaged approaches more appealing, then your overall revenues and profit could take a hit, unless the amount that is sold ramps up appreciably.

Here, Gregoire and other CA executives intimated that big changes should be expected. The internal sales force is being reviewed as to its capability to manage these new approaches—and this will also be reflected in the channel.

Marketing around brand value and capabilities is being ramped up so that more people can see that CA is no longer just "the mainframe management company", but that it has a raft of new services and approaches for the modern world. A high-profile ad campaign built around "CA at the Center" has been launched at several major airports around the world to drive awareness to major decision makers; after all, airports are where they tend to be for large parts of their life. This will also be pushed out online to capture the eyeballs of as many people as possible.

Along with other details presented to us, I would say that this would seem to be a new CA that we are looking at. Whilst full marks must go to last-but-one CEO, John Swainson, for putting the company into a position where it could be picked up by the scruff of the neck and shaken, Gregoire looks like he is the CEO CA now needs—a straight-talking, hard-headed person with strong ideas and the capability to push them through.

Obviously, the proof is in the pudding. Only one year in, it is difficult to discern exactly how well Gregoire is managing to push ahead. The discussions with the other executives sounded positive: Gregoire seems to be respected by those reporting to him.

Looking at positive actions to date, Gregoire has pushed through a different approach for CA already. CA Nimsoft Monitor Snap (not exactly the most mellifluous naming of a product) is available on a freemium basis of try and use, and buy if you need more storage or other resources. This sales approach would have been anathema to CA before—we can expect to see more in this mould as CA moves forward. Newer systems, such as CA DCIM, based on pulling together several capabilities of different packages to attack a different market, are already winning news sales—most noticeably with a major win at Facebook.

Overall, there is good progress under the new management at CA. Another year will allow for a more in-depth review on the success—or otherwise—of Mike Gregoire.

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