John Swainson, president and CEO of Computer Associates International, talked Monday with Computerworld about business-unit changes and other matters he has driven since arriving at CA in November.
You are sending a letter to CA stakeholders outlining five business units and other important changes. Why now?
It is a follow-up to what was said last December of how to get CA focused and aligned and with all pulling on the same rope. So, we've obviously been in our final quarter of the fiscal year, and then didn't seem like a great time for organizational changes, but now we're through that and making changes that we intimated in a January interview with Computerworld. We want to position the company so it can grow and focus on its core markets and how to grow in those markets.
Why create business units with managers in charge of profit and loss?
This is what you need if you manage a company the size of CA. You can't manage it from the corner office. You have to create empowered managers focused on well-defined markets and goals and have to give them power to go after those goals. You have to manage the company overall that looks at ROI and invested capital, and that's not historically how CA was run. We did not have a view of how much was spent in a business and what return you would get from it. This is about financial accountability for investment decisions, so we can start to be able to say we want to invest more in security or management. The environment is more empowered and allows people to make decisions more quickly and has a better financial structure.
And this change is tied to your coming SAP ERP system?
It will be absolutely tied to the ERP system, as we design the chart of accounts for how we want the business to run and define account codes in the appropriate way, which is sort of why we had to do it now. The idea of business units was kicking around CA for a couple of years. In 2001, we took the first step, with two business units, one for security and one for everything else. Then the company got distracted, as you might imagine, and nothing happened for a while. When I got on board, for reasons just discussed, it was important to continue the transition and implement business units.
You have wireless and mobility as an emerging product line under Chief Technology Officer Yogesh Gupta. How big could that segment be to CA?
We have wireless as a part of security and an important part of the systems management business unit, but we're not going to organize CA around specific technologies as much as around markets. Wireless is an emerging technology and has an office under the CTO.
You said in your letter to stakeholders that you want to keep your small consumer sales operation, but what products might come out of that unit?
The consumer products are primarily antivirus and antispyware products.
And your letter also mentions the need to beef up the indirect sales channel, since indirect sales are now about 10 percent at CA, with the industry average at 50 percent. What's a good level?
Well, 10 percent can't be right. But I don't know if we'd ever make it to 50 percent. Channel partnerships will help us broaden our reach. Whether it be systems integrators or maybe some smaller ISVs [independent software vendors] or value-added resellers, we need to broaden our reach. We will continue to have a focus on direct accounts with our 2,500 CA reps focused on them. But indirect sales will serve the midtier segment, with whom we have no relationships.
I assume you've met and talked to corporate customers in the last few months. What are they telling CA?
They are quite optimistic. I've talked to hundreds of them, and they're all pretty positive about what they think the relationship with CA can be. A lot are waiting for us to deliver on our promises, frankly. We have more to do in that regard. They have been universally optimistic about what the potential role for CA can be, as a neutral provider of security and systems management across the enterprise. They know they are going to have a very heterogeneous mix of things and would like a partner to manage that mix. And CA can uniquely provide that mix.
But what particular technologies do CA customers tell you they want, whether it is on-demand stuff or something else?
Most want ways of simplifying the IT process. And simplify is a code word for "make it cost less." Management software's become too expensive and too complicated.
Second, they are saying, "Help me in managing the compliance with Sarbanes-Oxley or HIPAA or Basel," and, "Help me manage compliance without adding hundreds of people."
Third, they say, "I need to make my environment much more secure, and how do I do it on an end-to-end basis? The mainframe is secure, but everything else is not."
Those are usually the three big questions, but there is a fourth area they are talking about but not asking directly for. And that's "Help me manage my business as a set of processes. Don't force me to manage applications or servers." They are looking for someone to have a single view into managing the business.
Is that going back to the older manager-of-managers concept?
Well, they are tying the need for this single view into business processes themselves and service-level agreements. They see ERP as a business process, and say they want to manage it according to SLAs and not whether a server is up or down. In fact, if I lose a server, it may not matter as long as the service levels don't go down.
I'm sure people ask you about CA's internal difficulties and the probe and settlement process.
Yes, many customers have wanted me to meet and ask what we're doing to change and how we can ensure something similar won't happen again. So I tell them we've changed five of the top financial executives, we've replaced all 10 lawyers, we have a new CFO, CEO, chief marketing officer. I go through that and then I say we're investing in new ERP software and have a new compliance officer.
So, much of the plan to deal with the problems was set in stone before you arrived, but have you had to significantly change the settlement?
There have been a lot of ideas, but very few new ideas, although my ideas have been different in terms of focus and emphasis. This is a company of very bright people, and a lot of them knew what had to be done and needed permission to do it.
So after five months, you still like work?
Yes, there's lot of challenges and lots of positive stuff happening.