What's on the horizon for CA?

NETWORK WORLD NEWSLETTER: MIKE KARP ON STORAGE IN THE ENTERPRISE
06/21/05
Today's focus: What's on the horizon for CA?

Dear networking.world@gmail.com,

In this issue:

* Thoughts from a 2-day meeting with CA
* Links related to Storage in the Enterprise
* Featured reader resource
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Today's focus: What's on the horizon for CA?

By Mike Karp

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:
here 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.

RELATED EDITORIAL LINKS

Data archiving attracts new wares
Network World, 06/20/05
http://www.networkworld.com/nlstorage2731

Storage conference focuses on recovery
Network World, 06/20/05
http://www.networkworld.com/nlstorage2732
_______________________________________________________________
To contact: Mike Karp

Mike Karp is senior analyst with Enterprise Management
Associates, focusing on storage, storage management and the
methodology that brings these issues into the marketplace. He
has spent more than 20 years in storage, systems management and
telecommunications. Mike can be reached via e-mail
<mailto:mkarp@enterprisemanagement.com>.
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