By: Clive Longbottom, Head of Research, Quocirca
Published: 1st May 2013
Copyright Quocirca © 2013
CA is a company with a somewhat chequered past. Two of its CEOs (along with other senior staff) have been accused concerning financial irregularities, and the repercussions around these issues are only just quietening down. The other big challenge for CA is that its name is often extended into "CA, the mainframe software company".
The last but one CEO, John Swainson, did everything he could to put CA on more of an even keel. He uncovered and fixed the majority of the issues around the financial problems, and also oversaw the acquisition of companies that would help CA better position itself in a heterogeneous world of mainframe and distributed computing, with an aim of being just as attractive to those who do not have any mainframe computing in their organisation as those who do.
Swainson moved on, and a stint was carried out as CEO by Bill McCracken, a 'safe pair of hands' who was unlikely to ever set the world on fire.
Now, a new CEO is on board—and it looks like he means to move CA along as fast as he can. Michael Gregoire comes with experience from a line of other technology companies, having been at EDS, PeopleSoft and, latterly, Taleo. His first major appearance in front of the public was at this year's CA World, held in Las Vegas, where he presented his vision in front of several thousand customers, prospects, partners and media, along with being streamed to several thousand more people watching remotely.
Gregoire had to make sure that what he said engaged with prospects while not scaring the existing customers. On the whole, I would say that he probably managed this. His view seems to be that CA has to become not only more cloud-friendly, but to become one of the largest cloud companies around. Further speakers covered how CA was not going to be an infrastructure or platform as a service (I/PaaS) company as such—it would provide tooling that would be used by others who were providing such services. However, when it comes to software as a service (SaaS), then CA's aim is to be there—as fast as possible.
A 'cloud first' strategy will be balanced with providing on-premise solutions to keep the faithful customers happy and also to provide a pathway for these customers to move to cloud as and when it makes sense to them. Over time, CA will offer as much of its portfolio as possible as cloud services.
Under Swainson's tenure, the foundations were laid for CA to acquire a group of companies that positioned it well to deal with cloud computing. 3Tera provided a means of designing and automating the build of functions and applications; Nimsoft provided a means of monitoring and measuring how applications were performing. Wily gave application performance monitoring, and existing software such as Unicenter and Clarity provided additional means of managing what was happening in the cloud—or across a hybrid environment of physical, on-premise systems and different private and public cloud systems. Other acquisitions filled in gaps in CA's portfolio.
On top of these, CA has now acquired Layer 7 Technologies and Nolio, bringing API management and application release management to the game.
The problem for Gregoire could well be one which faced Swainson and McCracken. Yes, CA now has a portfolio of tools that provide it with the capabilities to be a world-leader in hybrid cloud management. Yes, there is a lot of work that needs to be done to pull everything together in a way that gets rid of all the redundant functionality that exists between all the acquired systems. The biggest problem, though, is more prosaic: how to make enough money from an overall offering?
A full, soup-to-nuts offering would use the capabilities of 3Tera to enable a business user to define what they need as a business process and have the basic technical components mapped out. Clarity would provide a timeline and resource management layer to create a 'project' for the work. Layer 7 would then be used to manage the various APIs between the internal and external functions identified by 3Tera and pull the overall composite application together. Nolio would be used to roll out the application as required. Nimsoft and Wily would be used to monitor and self-remediate any issues seen in the running of the application in real time.
Six enterprise systems all working nicely together. But, would you pay the full cost for all six systems? Highly doubtful.
It is far more likely that, in this case, six times one adds up to no more that around 2.5. Can CA present a solution to the market that is at the right price point, but also keeps its shareholders and Wall Street happy? It is more likely that Gregoire will have to be bull-headed around the issue and face down the shareholders and Wall Street based on the fact that if CA does not meet the issue head-on, then there may be no CA further on down the track.
As it lies, the mainframe still accounts for around 60% of CA's revenues and more than that in profit. The mainframe side of the business cannot be left to fade, but new revenue streams will come through cloud computing.
CA has the arsenal of software to be a leading player in the cloud world. As always, the devil is in the detail: CA has to be able to move this collection of disparate software built up through acquisitions into meaningful packages of function at price points that are attractive to the markets.
Only time will tell if Gregoire is up to this task.
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