Business software giant Computer Associates (CA) detailed a new business model this week, which sees the vendor risk losing $4 billion in global profit in order to get closer to the customer.
The change is embodied in a new licensing methodology under which CA moves from an enterprise licence model to a subscription licence model.
The new model lets clients determine the length and value of their licence and choose their software mix as their business and technology needs change, a company statement said. Contracted periods may be month-to-month and within fixed values, said Stephen Richards, CA's local executive vice president and general manager of sales.
"This model gives the large-to-medium customer a more trustworthy technology environment and cost certainty," Richards said.
According to Richards, CA will quell the risk of missing this year's $7 billion profit forecast through the guaranteed revenue stream of existing enterprise licensing deals. He stressed: "Our ability to sustain the organisation is not in any danger at all - we're continuing to receive cash, with revenue continuing to be realised from old-model contracts. Our revenues will be just over $3 billion in the next financial year."
CA said that, under the new model, the company will account for contracted revenue over the life of the licence term, translating into revenue month by month.
While CA's focus has shifted from the bottom line to customer engagement and end-user flexibility, the company says it remains committed to its six lines of technology covering enterprise management, security, storage, e-business transformation and integration, portal and knowledge management, and predictive analysis and visualisation.
The vendor is committed to being number one or two in each of those categories and will add "greater granularity" to all lines, Richards said.
In an October 2000 statement, CA president and chief executive Sanjay Kumar claimed the new approach would give CA a competitive edge against "hardware vendors who bundle software and services, and gives [CA] a leg up on independent software vendors who cling to the traditional enterprise model."