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5/18/2010
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CA Chairman Says Cloud Computing Is The Future

Bill McCracken, chairman and CEO of CA Technologies, says the company's future revenues lie in virtualization, cloud and security management products.

"People ask me why do I think cloud computing will be the next phase of enterprise IT? I don't think it. I know it."

That's how Bill McCracken, CA Technologies chairman and CEO, sums up the change at CA Technologies, as it tries to leave a $2.2 billion Sanjay Kumar accounting scandal behind and adopt a new direction. John Swainson, who took over as CEO from Sanjay, retired as planned last year. At this year's CA World international user group meeting in Las Vegas, McCracken as both CEO and -- since January -- chairman, embodies a company that is executing a transition that's been over two years in the making.

"We've focused the company on the future and where computing is going to go. We feel we can lead that change in the industry," said McCracken, an accessible, straight forward executive, who started as an autocoder for the IBM 1401 before the mainframe had been invented. He's seen change sweep through the computer industry in repeated waves. The launch of the IBM 360, the first mainframe in 1964, "made IBM" by functioning as a general purpose business computer instead of task-specific machine. Now he wants to lead a similar sweeping change at CA and allow it to renew itself as a company. CA Technologies, the former Computer Associates International and CA Inc., has changed more than just its name. It's changing how its engineering budget gets allocated, shifting one third away from aging products and investing over $200 million a year in new virtualization, cloud and security management products. These areas represent the future revenue of the company, McCracken believes.

Of necessity, it amounts to a product triage process that shifts funds from the ongoing development or maintenance of existing products into developing new products with new code. Examples are Cloud Insight, which will be offered as software as a service in October, and Cloud Compose, also scheduled to become available in October.

McCracken said the reinvestment process began prior to his becoming acting CEO and has helped CA Technologies position itself in the right place as enterprise IT considers the prospect of adopting virtualization and cloud computing.

At the same time, CA is scarcely ignoring its mainframe customer base, which still represents 60% of company revenues. By continuing to grow its mainframe software business, CA augments its revenues from that sector by 1-2% a year. As it grows, however slowly, competitors decline. CA gained five points in mainframe software market share at the expense of competitors last year, McCracken said.

"This company is energized around the common objective of leading the industry into the cloud era. We're just at the knee of the curve," he noted.

"When technology, the economy and user needs come together, nothing stops the change" that follows, he said. The need to take on big tasks quickly while at the same time "every CIO is asking staff to do more with less" means the time is right for cloud computing techniques, he said in an interview Tuesday at CA World 2010 in Las Vegas.

"We think software as a service has grown more inside companies than CIOs know," he said, leading to a CA security offering that detects hidden SaaS usage. McCracken said he is working closely with Salesforce.com CEO Marc Benioff for the two companies to build out better management tools for SaaS.

Last year, CA got some of the new technology it needed through acquisitions of five small companies. A total of $700 million was spent on the likes of NetQOS, Cassatt and Oblicore. It ended 2009, with 13,800 employees, then in March, CA cut staff by 1,000. In response to an InformationWeek question at a press conference Tuesday, McCracken said those cuts were necessary to change the skill mix inside CA.

"We did a restructuring to reset skills… We've acquired five companies in the last six months. We've brought a lot of new skills into the company. We've trimmed some people to align our skills with the strategy" to move into new areas, he said.

It's part of recasting the old CA Inc as the new CA Technologies: make that "technologies for the future," McCracken said.

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