Former CEO Sanjay Kumar, who is now facing fraud charges over the financial irregularities that were unearthed at the company earlier this year, once proudly said in an interview with ComputerWire: It’s been two years, nine months and six days since we made a major acquisition, and look, we’re still growing. Kumar was making the point that the formerly acquisitive company could still grow without acquisitions.
Kumar presided over a relative slowdown in the company’s acquisitions. For many years CA had bought companies left, right and center, with purchases on the scale of Platinum, which it bought for $3.5bn, and Sterling Software for which it paid $3.8bn.
But in a sign that CA could once again become one of the industry’s more regular acquirers, Clarke said acquisitions are once more seen as one of the company’s four key growth drivers. He would not say definitively in which areas the company is likely to make acquisitions, but did say that security and storage management software are two extremely hot areas for CA. In early October, CA made what was perhaps the first in a new series of acquisitions when it bought security vendor Netegrity for $430m in cash.
The other three mechanisms for growth, according to Clarke, are indirect sales, international sales, and organic growth. About 60% of CA’s sales are direct, with the remainder from indirect channel partners. I want to see that figure more like 50-50 or even 40-60, said Clarke. We’re going to invest in our channel partners – VARs, SIs and so on, and use the channel to reach a new set of customers. Today if I have 2,500 salespeople with five accounts each that’s only 7,500 customers. I’m going to use the channel to hit the rest of the companies we can’t reach directly.
Clarke said the company would try to avoid channel conflict issues by offering salespeople a 15% bonus on their commission if sales are eventually fulfilled via the channel and not directly. That forces people to collaborate with the channel, he said.
As for international sales, Clarke conceded that CA’s international sales, at only 43% outside of the US, are below the international sales of the competition. We will do joint ventures rather than subsidiaries in many countries, but either way we will increase our international revenue, said Clarke. I would prefer for a lot of that activity to be covered by channel partners rather than direct sales.
Meanwhile, Clarke also said the company’s new licensing model, whereby it has moved to a monthly subscription model instead of one-off up-front licensing fees, provides improved transparency around CA’s billing and cash flow.
Clarke’s comments come as a real annus horribilis draws to a close for the Islandia, New York-based systems management vendor, which was the subject of an SEC investigation that uncovered accounting irregularities, and saw three of its former senior management plead guilty to fraud conspiracy. Clarke said those problems, which occurred under a former management team, are now firmly behind it.
We have new leadership now, and the incredible thing is that during this whole process customers have continued buying [from CA], he said. When we have talked to key customers they have said ‘it’s great you have got that behind you – you have new leadership and it’s a new day.’
Last week CA named John Swainson, a 26-year industry and IBM veteran, president and CEO-elect. Jeff Clarke was originally hired as CFO, but he told ComputerWire his role increasingly took on more operational management and that it made sense for him to become COO too.
