CA Shuffles Executives, Looks to Reorganize

By Paula Musich  |  Posted 2005-01-24

CA Shuffles Executives, Looks to Reorganize

Computer Associates International Inc., still reeling from scandals while professing a renewed commitment to customer service and corporate governance, is undergoing a management shake-up that pushes aside one of CAs rising stars in favor of the last remaining member of the companys old guard.

According to sources familiar with the plans, Russ Artzt, a CA co-founder, has been put in charge of the companys entire product organization. Until recently, Artzt had been running the eTrust Security Management product line, which has become one of CAs better-performing lines.

In his new role, Artzt will take on the duties of Mark Barrenechea, executive vice president of product development, who joined CA in 2003 from Oracle Corp. Barrenechea had been responsible for the R&D organization and has recently become the public face of CA, evangelizing its products and strategies.

Barrenechea will take over many of the duties of Chief Technology Officer Yogesh Gupta, a longtime CA employee and one of the more well-liked senior executives at the company. Until now, Gupta had been able to sidestep the various reorganizations and resignations that have plagued CA since an accounting scandal last year resulted in federal indictments and guilty pleas by several top executives.

One source familiar with CAs executive team questioned why Barrenechea would be satisfied with his new assignment. "Unless they took a stronger incubator approach and set up the [position] with separate funding, I cant see why Barrenechea would want [this] job," said the source.

A CA spokesperson in Islandia, N.Y., confirmed the promotion of Artzt, adding that Barrenecheas role is "still being worked out." Gupta will remain CTO, the spokesperson said.

Beyond the executive shuffling, CA is looking to reorganize with distinct business units that have their own profit and loss responsibility, according to sources. "They will bring development and marketing back under the business units," said one source.

And CA has already made some organizational changes that could undermine its efforts to improve customer satisfaction and become a trusted partner to its users.

Why does a Symantec-Veritas combo mean trouble for CA? Click here to read what Steven J. Vaughan-Nichols has to say.

For example, CAs customer relations organization will now report to sales, sources said. When the CRO was independent of sales, "it was empowered. Now it has no teeth," said a source.

A return to its infamous hardball sales tactics could undermine gains CA has made in customer relationships, said Corey Ferengul, who as an analyst for Meta Group Inc., of Stamford, Conn., follows CA. "Its a tenuous truce. They were on the path of repair, but every customer would end the conversation with Lets see if they keep it up. Any slip will be magnified and put CA back where they were."

After a multiyear Securities and Exchange Commission investigation into CAs accounting, the company settled with the government last fall to avoid a corporate indictment. Several top executives, including CEO Sanjay Kumar and Chief Financial Officer Ira Zar, were indicted on fraud charges last year, and a dozen more resigned.

Next Page: Do moves send the wrong message?

Page 2

CA customers and former employees said that by promoting Artzt, CEO-elect John Swainson may be sending the wrong message to a public looking for a clean break with accounting investigations, securities fraud indictments and customer complaints.

Click here to read more about CAs hiring of Swainson.

"Russ is an interesting character. He promised us some things and then didnt deliver. He apologized, but not sincerely," said one CA customer, who asked to remain anonymous. "This is a really strange move. Theyve been pushing software again, making the cost so low it knocks out the competition. But the products dont deliver. Product management [is] overselling it to the sales guys, telling them it can do things it cant. The sales guys are just pawns. A lot of people warned me about this, and its all come true."

An ex-CA employee who worked closely with Artzt for several years said Artzt liked to have his hands in the daily workings of the eTrust division and had a lot to do with the successful launch of one of the organizations recent high-profile products, Security Command Center.

"When he took over eTrust, he spent a lot of time with people trying to work out a strategy to pull it all together. Basically, he was applying a Unicenter strategy and claimed our only competitor was IBM. A bit myopic, but he eventually shifted gears and rallied the organization to build Security Command Center, do the eSecurity Online acquisition and more," said the former employee, who added that Artzts sometimes-disorganized approach frustrated his colleagues.

Despite the management turmoil, some users report little change in their dealings with CA. "Theres always sales pressure from CA. I havent seen any difference," said Kelly McDonald, assistant vice president of IT at Brigham Young University, in Provo, Utah.

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