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5/4/2004
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SmartAdvice: It's Time For CA To Focus On Product Improvement

Computer Associates has to move beyond its accounting turmoil and focus on competitive performance to stay viable, The Advisory Council says. Also, look for integration with current products when buying asset-management software, and treat developing a disaster-recovery plan as a project and devote some resources to creating it.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers three questions of core interest to you, ranging from career advice to enterprise strategies to how to deal with vendors. Submit questions directly to smartadvice@tacadvisory.com


Question A: What adjustments in our software portfolio should we consider in light of the turmoil at Computer Associates?

Our advice: While it's natural to ask this type of question when a company such as Computer Associates faces what it has recently, we aren't convinced that the effects of current events will be long lasting. If one scans the newswires and analyst reports, one gets the sense that there are few who believe that CA's recent travails will have a significant impact on either customer-purchase decisions or the strategies and plans of the company itself.

Related Links

Clarke Says CA Is Ready To Move Forward

IT Alignment Program



What started things rolling, of course, was the specter of alleged accounting violations prior to CA's business model change at the end of 2000, and the termination of more than a dozen employees over the past six months. The Securities and Exchange Commission investigations go on, and earlier this month the company's CEO and chairman, Sanjay Kumar, left those positions. He will remain with CA as its chief software architect. The newly elected chairman, Lewis Ranieri, has made it clear that Mr. Kumar's removal wasn't based on the assumption or conclusion of wrongdoing on his part, but given the fact that events leading up to the SEC's scrutiny took place under his tenure, the action was considered by the CA's board of directors to be appropriate. Mr. Kumar's continued, and quite visible, presence within the company bolsters the board's position, in our view.

While we aren't in a position to assess the validity of the allegations, we believe that the ultimate result, while it could conceivably involve punitive action against either individuals or the company, won't end up being disabling in terms of CA's ability to move forward with product development, marketing initiatives, or sales activities. We believe the company will survive, and that whatever the resolution, the process won't drag on too long. No one, not even the SEC, has an interest in dealing CA or any other major industry player a knockout punch. Customers should therefore feel confident they can continue to evaluate CA and its solutions based on the products' technical merits and suitability to solving their particular problems.

So, while CA will work its way through its accounting woes and management shakeups, it would do well to take a careful look at its product positioning and competitive performance. The AlignIT Group's IT Alignment research has studied what it calls the Application Performance and Availability Management (APAM) market through surveys of users of relevant products, such as CA's Unicenter. Users who took part in their surveys indicated that CA lagged significantly behind the average performance for the products that make up the total APAM market in all major life-cycle phases covered: engagement, deployment, run-time use, and maturity.

The task for CA is therefore twofold: First, it must continue getting its house in order in terms of its dealings with the SEC. Second, it must continue to focus on customer satisfaction and retention through product improvement and customer-engagement activities. Again, it's our view that it's CA's performance as a vendor as reflected in its relationships with its customers and the quality and suitability of its products that will determine its future success, not the results of an accounting investigation or the firing of selected executives.

-- Steve Garone

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