What's on the horizon for CA?

Computer Associates has been around in one form or another ever since computers ran on coal. Over the almost 30 years of its history CA has grown - both organically and through frequent acquisitions - into the fifth largest software firm in the world.

All this growth hasn't been painless of course, and within the last year or so the company has undergone a withering investigation of its accounting practices, shed 15 of its top managers (50% of the management team now comes from outside the company), and implemented sweeping changes both in its methods of governance and in its many sets of products.

Last week I spent two days with the company's senior management: there are some first impressions.

Despite the legal and market ups and downs, the company presently maintains 28% margins and a strong balance sheet. What can we expect next? CA's mainframe software business - historically a large segment of its income - is essentially flat. Look for increased efforts in CA's lines of business that supply software to distributed systems. It is also clear that a lot of effort is likely to be invested in CA's overseas operations (non-U.S. readers take notice: CA may be coming to a city near you sooner than you thought). The key takeaway however, is that CA sees non-mainframe markets as the keys to its future, and it must accelerate the growth of its business in that segment to compensate for the slow growth of the mainframe markets.

How will this is impact the BrightStor line of business, CA's storage division (and not incidentally, the company's most profitable business unit) Right now CA's Storage Resource Management (SRM) products manage storage at about 1,900 sites, approximately 45% of which are mainframe sites, and its ARCserve backup products protect data at about 368,000 sites worldwide. Anticipate a continued focus on SRM, business continuity and disaster recovery planning, particularly for distributed systems; expect much more emphasis on attending to the needs of smaller and midsize businesses; and look for the BrightStor management to keep their passports handy as the group bends every effort towards extending its sales and support reach overseas. We should also look ahead to see a flexible set of storage bundles with pricing based on capacity.

BrightStor has enjoyed 20% year-over-year growth in the last few years. CA will need to be aggressive in its go-to-market efforts if the company is going to keep up that pace. We'll talk more about BrightStor in another week or so, after I collect some more information from the company.

One last general note: John Swainson, the new CEO, began our meeting by saying that "25% of our customers love us, 50% are neutral, and 25% hate us," and then went on to express dissatisfaction regarding the company's growth over the last three years. These are pretty amazing comments coming from a senior manager, and are made all the more so considering the self-serving platitudes we have heard coming from this company's head office in the past. Thus, while I have to say shame on CA for the 75% of its customers who are less-than-delighted, I should also acknowledge that thus far the new guy at the top appears to be a straight-shooter. This augurs well for the future. If such an attitude filters down through the rest of the organization, CA storage customers and employees both will benefit hugely. Honest companies make for better long-term partners.

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