CA Plows Ahead with Business-Unit Restructuring

 
 
By Dennis Fisher  |  Posted 2005-01-28 Print this article Print
 
 
 
 
 
 
 

Computer Associates reorganizes around a business-unit structure and moves top execs Artzt and Barrenechea into new roles.

Computer Associates International Inc. last week acknowledged its plans to reorganize around a business unit structure and move two top executives into new roles, but at least one of those changes may be temporary.

"The business unit structure has proven itself an incredibly effective model in this industry and is a natural next step for CA," CEO-elect John Swainson said in an internal memo to employees of the Islandia, N.Y., software maker. "eTrust is a successful example of what a business unit and its people can do when they control their own development resources and marketing efforts."

Thanks to the success of eTrust—CAs security line—co-founder, board member and eTrust head Russ Artzt was named executive vice president for products and given responsibility for all product development.
Ex-Oracle Corp. executive Mark Barrenechea, who had been senior vice president of product development, was named executive vice president of technology strategy and chief technology architect.

In his new position, Barrenechea is charged with "leading CAs technology and M&A [merger and acquisition] activity, identifying potential acquisition candidates, determining if and how technologies align with our product portfolio, and outlining market opportunities," said Swainson in the memo.

But several sources close to CA said Barrenechea is unhappy with his new role and will soon leave the company.

"[The move] says hes failed, and Russ has been successful. Hes the last man standing. I cant believe hes going to stay," said one source close to CA, who asked not to be identified.

Whether Artzt can reproduce the success of the eTrust security brand across other product lines remains an open question. Some observers questioned the Artzt appointment.

"Artzt is not the person I would expect to be in charge of all products at CA," said Rich Ptak, an analyst at Ptak, Noel & Associates, in Amherst, N.H. "He managed to boost the eTrust visibility and performance in the marketplace. Well see if thats reproducible for all of the products."

How much of eTrusts success is due to Artzts leadership is not clear, according to one CA source with knowledge of the reorganization. "You cant argue with whats happened," the source said. "Security products outsold everything else at CA in the last 12 months, but thats mostly the market, and CA is a big player with a full security suite."

Read more about eTrust here. "[Artzt] micromanages certain things and leaves everything else alone. The product du jour gets his focus, and other product teams are left on their own," the source said.

Former CA employees said Artzt did, in fact, have a great deal to do with the success of the eTrust division over the course of the last few years. But some point out that it may be difficult to reproduce that success in product segments where the software vendors offerings are not as strong and often face much stiffer competition.

The moves come at a time when many users and employees were looking for CA to break with what has been a tumultuous recent history. Swainson was named CEO in November following a corporate accounting scandal and a multiyear Securities and Exchange Commission investigation. CA settled with the government last fall, averting a possible corporate indictment. Several top-level executives, including former CEO Sanjay Kumar and Chief Financial Officer Ira Zar, were indicted last year, and nearly a dozen more resigned.

Oracle sought buyout advice from former CA chief Sanjay Kumar. Click here to read more. Meanwhile, CA customers, for the most part, are taking a wait-and-see attitude toward the newest reorganization. Many longtime CA users have witnessed more than half a dozen shake-ups in top management and are reluctant to become enthusiastic about another management team or another corporate structure.

"Its hard to see how it will make that much of a difference. Artzt has been there for so long and hes a big part of that old CA mentality," said one CA customer whose company has been buying from CA for years. "Im interested to see what will happen, but Im not sure how much a guy at the top can change things down at the level of the sales reps."

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