CA Announces New Subscription-Based Business Model

Computer Associates International (CA) announced Wednesday that it is changing its business model so that clients have the option to subscribe or license the company's business software.

CA will enable clients to determine the length and dollar value of their software license with discounts determined by both parameters, the Islandia, New York-based business software company said during a morning teleconference. Flexibility is a key benefit of the change.

"For the first time, we will be able to change the mix of software the customer needs," said CA's President and Chief Executive Officer Sanjay Kumar during the teleconference. "We can't do that under the current model."

While customers will gain flexibility in how they get their software, CA will no longer see all of its quarterly revenues show up at the end of those three-month periods, Kumar said. He said nearly $US1 billion of the $US1.68 billion reported during CA's second quarter that ended Sept. 30 came at the tail end of the quarter. That occurs because of the way current software contracts are structured, he said.

Now customers will be able to choose month-to-month or longer terms for their software contracts, Kumar said. CA already is moving some of its clients toward the new way of doing business.

"It is a faster, simpler way of doing business," Kumar said. "I believe it will cause leaders in the software community to follow."

With the change, CA said it will change the way it recognizes revenue. CA said it will now provide pro forma and pro rata financial information because of the business-model change.

CA, in Islandia, New York, can be reached at +1-631-342-6600 or http://www.cai.com/.

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