Battle Won, CA Looks Ahead

With a takeover bid squelched, Computer Associates International is ready to get on with plans to push into new markets and treat existing customers better.

With a takeover bid squelched, Computer Associates International is ready to get on with plans to push into new markets and treat existing customers better.

CA, which provides software that manages mainframe and networked computers, is attempting to reach out to a broad new audience. The company wants to sell small and midsize businesses pieces of its larger software solutions that were developed for big corporations. In the past, smaller enterprises have not been able to afford CAs products.

"We need to become the McDonalds of the software business," CEO Sanjay Kumar said. "Many people dont even know we have an antivirus [software] division." Indeed, IDC ranked CA the largest security company in the world, with a 12 percent market share in revenue this year.

However, with 1,244 software tools in its armada, who could blame the average Joe for not knowing exactly what CA has been up to?

Another perception problem for CA has been its reputation for poor customer service. Kumar plans to change that by creating within the company a 650-person customer relationship organization the sole purpose of which is to make sure customers are happy.

CA has spent the last two months embroiled in a battle over control of the company, facing off against Texas billionaire Sam Wyly and Ranger Governance.

Preliminary results from last weeks shareholder meeting reveal owners voted by a margin of 3 to 1 to keep the current 10-member board in place, defeating Wylys proposal. Official results will not be known until mid-September. Despite the victory, CA Chairman Charles Wang called the ordeal "a sobering experience."

Not only has the dispute cost the company more than $10 million to defend its board and allay shareholder fears, but customers have been uncertain about who would control CA and what that would mean.

Some customers, especially those in Asia and Europe, were troubled by the uncertainty, and held off purchase plans. "There have been people that have slowed things up . . . and wanted to wait until [the shareholder meeting] to see what happened," Kumar said.

With the vote behind him, Kumar said he was "hopeful" that purchasing plans would return in full. Now he is committed to looking ahead.

But one analyst believes that CAs push to reach smaller-business customers may cause new troubles because the company does not plan to offer them personalized support. Instead, CA will use its channel partners and Web site to help them.

"Theyre going to take the pieces of their enterprise technologies that make sense for those markets and package them up into nice pieces," said Michael Dortch, a Robert Frances Group principal analyst. "That absolves CA from any responsibility of providing support to those users."

One example is, CAs antivirus portal and desktop solution designed to enable simple downloads and updates of the companys antivirus software, without personalized customer support.

CAs ability to capitalize on its new business plans depends mainly on the person within a company who decides which software to buy, says Jim Mendelson, a financial analyst of SoundView Technology Group, formerly Wit SoundView Group. "Theres a paradox that theyve done well with their relationships at the senior level, but have struggled at the user ranks of the IT organization," he said.