Last week at Computer Associates International's headquarters here, President and CEO Sanjay Kumar spoke at length with Computerworld about CA's historically stormy relationship with its customers and the recently initiated federal investigations into changes CA has made in its financial accounting and reporting practices. Excerpts from that interview follow:
In light of the problems CA has confronted over the past year, what are you going to tell your users at this year's CA World?
There has always been a number of technology announcements at CA World, but this year you'll find that we'll also have a lot to do with the customer. We have our current crop of customer surveys being wrapped up; we're going to talk about them more openly with our customers. We have absolutely focused on the customer being No. 1. I have said clearly, it will make or break careers in our company. We have not used those words before.
To what do you attribute CA's long tradition of having combative relationships with its customers? What does it stem from?
No. 1, from acquisitions. They have been a great thing, and they have also been a thing that has introduced its fair share of contention.
You're the end user. You bought [a product from a CA competitor]. One weekend, two guys did a deal, and the next thing you know, the product that you chose over the other guy's is now owned by the other guy. Huge problems.
No. 2, we clearly have had a long-standing policy of restructuring the acquired company immediately. We have taken the big-bang approach we cut upfront, and [we're] done. We have never had a second cut in any acquisition. But, let's face it, in one day, there are hundreds of people who have left the company. Some don't have nice things to say about you; some go to work for competitors. Competitors hire them en masse to create a force to compete against CA. That's how Legent [Corp.] was created. And Legent went around and said, "We're the alternative." Well, it didn't work out that way, [and CA acquired Legent]. That wasn't a hostile deal. It was a friendly deal they wanted out. Platinum [Technology International Inc., which CA also acquired] was the same way they were in trouble.
Platinum was an interesting case, because some Platinum customers had it written into their contracts that they would be paid up to three times the value of their contracts if Platinum was ever acquired by CA. And we didn't pay a single person not a single one. The reason is, every customer has come to us and said that's not the basis on which they want to do business. [For] one of them, the amount was over $75 million. Admittedly, we've had a few discussions. Not every one has been an easy thing.
What, in your view, is the concern that these companies had about an acquisition by CA in the first place?
It's the momentum that people create. You have Legent going out and saying, "CA buys the products, they milk them, they don't enhance them, they fire everybody." Platinum comes in and says, "We're the alternative to CA, we're kinder, we're gentler, we're different." It's the perception you paint in the marketplace. And let's face it, we were not very savvy and not very smooth in how we dealt with the press and with the market.
The other dark side that people don't talk about take, for example, Platinum. Platinum had technology they were selling for which there were no software developers working on them. Platinum had layoffs, and Legent had some cuts before we bought them they've all had some cuts. The products were frozen. So we pick them up, we publish a nice little white paper because everybody wants to know what's happening. I point out in the white paper that the product ain't going anywhere. And people go, "That son of a bitch." This is what happens. That's a tough hurdle.
Have you learned any more about the recently initiated federal investigations into CA's changes to its financial reporting practices since you informed the news media on Feb. 22 that you were unaware of the details of those investigations?
We have had some dialogue with the [Securities and Exchange Commission] and the U.S. attorney's office. I'm being mindful of their need to do whatever they're going to do. But I will tell you that whatever they have going on is very preliminary. We still have not been asked for any information. The issues I think they're interested in have been issues that have been the subject of many newspaper articles over time. Our job is to work with these folks, to help them understand what the issues are, and I believe they'll go away and we'll be vindicated. Customers have been very supportive.
How difficult has this year been for you, having dealt with the proxy fight to unseat your board of directors last summer and now all of this?
The proxy fight was a very difficult time for me personally, but it was a time where we had to get out and communicate more. It forced us to do things that we historically hadn't done before. We generally have not been big to get out and communicate with people, and the proxy forced us to do it. So, while it was a difficult experience and a difficult time, I think we learned a lot from it and we came out stronger.
This will do the same for us. There's a lot of anger in the company about being poked and prodded right now. As a management team, we're working on channeling that anger to delivering strong results.