“You don’t take a 30-year-old, 16,000-employee, four billion in revenue a year company and change it overnight.”
That was one observation made by CA chief executive John Swainson at the CIO lunch in Auckland late last month, at which he was guest speaker.
However, after 15 months at the helm of the enterprise software maker, Swainson has overseen plenty of changes, some of which have been at the behest of him and his executive team and others of which were made at the prompting of the US Department of Justice following its 2004 investigation of CA’s finances and revenue reporting.
An example of the latter is the implementation of a company-wide SAP ERP system.
Speaking to Computerworld after his presentation, Swainson pointed out that committing to such a system was one of the requirements the DoJ made after its probe of CA.
“We’ve met that criteria.”
He says the lack of such a comprehensive system was a shock when he started at CA in late 2004.
“One of the things that surprised me was the primitive nature of the IT systems we were running.”
He says the “porous nature” of CA’s exiting ERP systems — which were a mish-mash of various products, including PeopleSoft HR and Masterpiece, an accounting application CA once owned — was a factor in the accounting and revenue reporting fraud CA was found to have carried out between 1998 and 2000. The allegation was that revenue was recorded for the wrong financial quarter in order to boost quarterly earnings.
CA settled with the Justice Department, agreeing to pay US$225 million in restitution to shareholders and to other conditions, including getting underway with the implementation of a company-wide ERP system.
“We picked SAP and made the commitment to implement it end-to-end to all our core business processes and we’re well into that process now,” Swainson says.
The financials and CRM components of the new system are due to go live in the US next month and will be up and running around the world by the end of the year.
He says bedding in such a system “is a very big project and it’s sad we had to do it, because there are better things to spend one’s money on than a full scale re-do of IT systems.”
That remark may seem strange coming from the chief executive of an IT vendor, who of course has a vested interest in getting customers to buy as much of his company’s products as possible.
However, a major theme of Swainson’s speech was that CIOs and IT managers are under constant pressure to do more with less.
“No CEO is happy with the overall percentage of fixed costs that IT represents,” he told the audience.
He noted that in his 30 years in the IT industry, he has lived through three major cycles — mainframe, client-server and web — and many other changes.
In all that time, “people have developed applications to manage and run the business and now we’re in the era of applying technology to solve business problems.
“However, we haven’t used technology to solve technology problems and that’s a result of years and years of different systems, each with its own infrastructure and management silos.”
The complexity of today’s IT environment is affecting IT’s ability to deliver service in an effective way, he noted.
His next point, naturally enough, was "What’s CA doing about it?” Simpler IT management software is the short answer.
“We need to find ways of managing across systems — CA aims to tie together complex, heterogeneous IT environments and use technology to manage technology platforms with a common set of tools, services and data.”
The process of collecting data about what’s going on right across an organisation, applying a set of tools to it and letting users see how IT is running things “is what CA has been doing for the last 30 years,” he noted.
“We’ve wandered off that track from time to time over the years, but that’s always been our goal.”
That goal has been redefined and narrowed down under Swainson’s tenure, with CA focusing on two main areas – systems and security management.
The former covers the company’s flagship Unicenter brand of tools and has been boosted by recent acquisitions including that of IT governance software vendor Niku last year.
Other changes Swainson has made include disbanding the team of customer advocates his predecessor Sanjay Kumar had appointed.
That move earned him some flak, with Computerworld US columnist Don Tennant penning a column titled “Dear John” which berated him for this apparent shift away from customer service. However, Swainson is unrepentant about ridding CA of what he says was an unnecessary institution.
“I’ve always considered that customer advocacy is everyone’s job,” he says.
“The fact that there was such an organisation proved to be something of a crutch and the crutch had to be removed so we could complete the transformation of the culture to one that is focused on relationships, not transactions.”
The former customer advocates have been redeployed to other roles, mainly technical, sales and pre-sales, he says.
Another Swainson policy is not to have delegates attend the company’s annual CA World conference in the US as guests of CA.
“We had 5000 paid attendees at CA World in November and 1000 of them were business partners.”
Partners are becoming increasingly important for CA, he says.
“Part of CA’s transition is to move from a direct sales model to one where most business is done through partners.”
New Zealand, with its SMB-dominated economy and high proportion of channel sales compared to most other countries CA operates in, is “a model for what needs to happen in the rest of the world” regarding the channel, he says.
Swainson, who worked for IBM for many years before being appointed as CA’s chief executive in November 2004, visited Australia before coming to New Zealand in late February.
After speaking at the CIO lunch and meeting customers and channel partners, he unwound for a couple of days in the Taupo area.