In the beginningComputer Associates International is the No. 3 independent software company behind Microsoft and Oracle. Originally a Swiss company, Charles Wang founded a U.S. subsidiary in 1976, bought out his partners in 1980, and took Computer Associates public in 1981. The multibillion-dollar technology company began by making mainframes and managing data center systems, and entered the software business in 1994. Today it is a major force in distributed enterprise management (client/server) networks.
Predator or scavenger?
CA's clients include more than 90 percent of Fortune 500 companies. Commonly referred to as the vulture of the software industry, the company has a 20-year history of acquiring ailing competitors and cutting costs - and jobs - in the assimilation process. CA has also succeeded by creating partnerships, developing strong products, and integrating key technologies. Now offering 500 different products, CA has the ability to deal with technology ranging from COBOL to the latest NT, on any platform. Industry insiders (some, grudgingly) refer to CA as "the plumbers," because they offer so many options, enabling businesses to integrate their existing applications with new technologies, and "manage the network mess."
A stellar product
In 1997, CA launched Unicenter TNG ("The Next Generation"), which allows access to each component of a company's internal and external links from a central console. One of the most desirable aspects of the program is its 3-D monitoring capability, which allows users to see how problems affect the entire network. Sales of the product have skyrocketed since its release, and revenues are expected to continue growing, as more and more companies establish their own intranets. CA now offers Neugent (neural network agent) add-ons to the Unicenter program. "Smarter than a million Albert Einsteins" (according to CA), the artificially intelligent Neugents can manage systems and learn from mistakes.
Land of the mudslingers
Today the company is concentrating on further diversifying its product mix and improving its notoriously poor client services. Ironically, the company tried to strengthen its client services business by acquiring Computer Sciences Corp. (CSC) in a hostile takeover. CA publicly pursued the consulting/computer service company for three weeks before it finally withdrew, citing "ugly mudslinging tactics" and accusing the would-be target of making negative racial overtones concerning Wang's Asian heritage. CSC likewise accused the technology giant of illegal business practices and "economic extortion." The two companies have since made up, recognizing that their strained relationship was "unhealthy for CSC, CA, and the technology industry that has served us both so well."
Though CA may never attempt another hostile takeover, Wang and his company seem to have recovered just fine. CA effectively beat out rival IBM's Tivoli Systems for a partnership with Microsoft. As one industry analyst put it: "CA's the preferred partner. It's the one Microsoft's getting behind" (Note: IBM's Tivoli division is CA's main competitor for the small-business market.)
The Web-based enterprise management application offers a 3-D view of different sources, giving users a cohesive view of their IT environment. This deal further cements the relationship CA has been trying to build with Microsoft over the past few years. CA has also forged pacts with Intel, Tandem Computers, and Hewlett-Packard to bundle software and develop new products.
Harmony
Though CA has traditionally marketed its network management software to big corporations, it is now eyeing the growing small-business market. Bundling the Real World Interface with Windows NT is a good first step, as this Microsoft product is widely used by smaller companies. CA plans to use independent resellers, systems integrators, and consultants to serve small business customers - a cheaper alternative to using its own direct sales force. In addition, CA has launched its own professional services organization, which is expected to employ 3,000 people by the end of 2000. The company's software offerings include Harmony, a strategy for information management, and Jasmine, a multimedia object-oriented database and development environment. Where CA has not done so well is desktop management - but it has launched an Open Desktop Management Initiative, and is looking into partnerships with Intel and Microsoft.
Partnering abroad
CA has also been expanding internationally. In 1996, it acquired South African Dimension Data Group's share of their joint software distribution and servicing center in sub-Saharan Africa. The following year, the company stepped into India, investing $100 million dollars to build a technology center, complete with dormitories and several offices. CA continued with its acquisitive strategy throughout the rest of Asia, opening an office in Japan. Late in 1999 CA expanded to Lima, Peru, joining the company's offices in Brazil, Argentina, Chile, Colombia, Mexico, and Venezuela. The newest overseas CA office opened in January 2000 in Athens, Greece.
In April 1999, the company forged a joint venture with the Italian Post Office (Poste Italiane) to increase the quality, speed, and cost efficency of that service. Poste Italiane will control a 51 percent stake in the business, and CA will own the rest. In the future, the new company will offer management and monitoring services to other public and private organizations in Italy.
At your service
CA has not given up on building itself a formidable IT consulting practice, as Wang has recognized the lucrative potentials of complementing hardware with advice. The company has bought up smaller service providers, including Realogic in 1998 and Computer Management Sciences in 1999. Its more recent acquisitions are also keeping its fledgling services unit in mind. In 1999, CA was cleared to purchase Platinum Technology for $3.5 billion - the largest price tag in software history - after it agreed to sell off overlapping operations. The merger will enable CA's entrance into e-commerce. CA aquired Sterling Software Inc. in February 2000, uniting the former rivals in corporate and government software sales. This new entity is now the largest storage and network provider in the world.
Diverging from its favored track of buying and dismantling companies, CA in April 2000 began a joint venture with an existing corporation and created a new company. This joint venture company will link buyers and sellers across industries and across the globe as the first business-to-business trading exchange of its kind.
New head at helm
As the company announced a corporate realignment to focus on its core businesses, it also named president and COO Sanjay Kumar the new CEO of the company. Kumar replaced CA founder Charles B. Wang, who would remain chairman.
