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Mon 2 Jul 2007 08:57 AM

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Changing times

CA has just emerged from one of the most turbulent times in its history, but remains focused on moving ahead. ACN spoke to Russ Artzt, co-founder of CA and executive vice chairman for products, about the challenges facing the company – and his view of the competition.

CA has just emerged from one of the most turbulent times in its history, but remains focused on moving ahead. ACN spoke to Russ Artzt, co-founder of CA and executive vice chairman for products, about the challenges facing the company - and his view of the competition.

As a co-founder, what changes have you seen in CA over the past 30 years?

Russ Artzt:Just a couple! Obviously, when we first started, the computer industry was just getting started - it was a new industry. The first computer came out in the late 60s - the Univac. We started in 1976, we were early. We always had a vision - software would become bigger than hardware. This was the vision we had 30 years ago, and it's not so off - it's certainly very profitable.

Certainly the marketplace has changed dramatically - we've gone through mainframe-centric processing, where everything is centralised; to distributed client-server processing; to internet-based processing. Our company has clearly changed - in the last few years our management team has completely changed. Charles [Wang] is no longer there, our entire executive leadership team has changed - except for me - since John Swainson came in. I think that we've been fortunate enough to put together a very strong management team - you can see that here at CA World, that we have a good team, we have a good business, we have a good company. We have a strong vision for what we want to do.

What do you see as the key challenges for CA?

RA:We need to execute well. There's a lot of competition out there - we have to grow our business - our distributed business - aggressively. We have great products, we need to execute well in the field. Because approximately half our business is mainframe, we have to keep that business flat, maybe a little bit of growth. If we can keep mainframe flat and grow our distributed business well, we'll do fine. Our goal is to get most of our growth from distributed - I think we have the right product line for that.

We also need to execute on our EITM vision - EITM is all about aligning business and IT, it's all about govern, secure, manage - and having each of those areas integrated well. I believe the right portfolio of products to make that happen. It's a matter of staying focused on our vision - the salesforce needs to stay focused in the field, and development needs to stay focused on the products. We can always improve them.

How do you balance acquisition and development, and how far can an acquisition strategy take CA?

RA:We've always had the philosophy that to grow, first you need to know what direction you're growing in, and you need internal development, you need to do acquisitions in appropriate areas, and finally you need to integrate well. And that's the piece that most companies fail in - integration. I think it's very very important - in IT, everything is connected in one way shape or form. Whether you're doing network management, systems management, Wily, Clarity - there's connections.
There's connections between problems you find in the network, to reporting problems through a service desk, to relating problems with web management back to the network or security. Everything's connected - that's why integration is important.

Oracle has been very acquisitive, but its customers are saying they don't trust all these things to work together, and they don't trust Fusion. Do you find CA faces similar problems with its purchases?

RA:In the industry, there's a long history of failed acquisitions and poor integration - from the standpoint of integrating different company cultures, from the standpoint of salesforces, marketing forces, development - a very difficult thing to do. We happen to have a lot of experience at it, and I think from a development standpoint we've done pretty well. Other companies have struggled more.

One of the keys is you need to understand that culturally you have to bring everybody together, but I think you also have to understand that once you have this common vision, this common blueprint for how things are going to work, it makes it a lot easier - you're almost providing a roadmap for the acquired company. So that helps us.

I think it helps that we have a lot of experience at doing integration, at bringing companies together - it gives us a lot of advantages.

And I do think that Oracle will have problems integrating. I think HP's going to have problems integrating Mercury. Veritas and Symantec - everybody knows Symantec has had a terrible time trying to get Veritas integrated, it's tough.

How concerned should CA's customers be about the accounting scandal which has engulfed the firm in recent years?

RA:Frankly, I haven't seen it matter very much to the customers. Customers want value from what they buy - they want the best products, the best solution, the best vision. They also want to deal with a software company that they know will be around. They know we're going to be around. We're a US$4.5 billion company, we generate more than $1 billion in cash every year - we're going to be around. We're very profitable - there's not that many companies that can generate that much cash every year.

If you had to pick one, what would you identify as the ‘next big thing'?

RA:Our next big thing is governance. I think it's a very big area, it's needed for a lot of reasons - companies are attracted to governance because they need to understand their return on investment in IT, it's been out of control for years. Two, companies need governance to control almost everything they're doing - how they're spending their money, what their investment strategies are, and are they getting a return.

What do you see as happening in enterprises to drive this current uptake of governance?

RA:For one thing, CIOs are under pressure - from their boards, from their CEOs - to justify the money they're spending. Many CIOs in the companies we deal with spend $1 billion on IT - it's a lot of money. The CEOs want to know if they're making the right decisions, are they doing the right things - are they doing them well? It's all about governance. It's all about understanding what you're measuring and what the returns on investment are. I think CEOs and boards of directors are demanding that today.

Let's face it - IT has been out of control, in a lot of companies. I think this has been here a long time, but finally companies and CEOs are saying ‘Hey, I'd better figure out what I'm spending on IT, if I'm going to get control of my business - and I need IT to be synched up directly with my business'. Business priorities and IT priorities need to be the same - why are they different? Why is IT off on an island somewhere - they need to be connected.

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