Computer Associates International Inc.'s (CA's) management shake-up is unlikely to directly affect customers or dramatically change the company's products plans and strategy, customers and analysts said Wednesday in the wake of Sanjay Kumar's ouster as chairman and chief executive officer (CEO).
By removing Kumar as the company's leader, CA defused mounting pressure to clean house completely and clear its executive ranks of all involved in its past accounting violations. More than a dozen employees have been pushed out of CA in the past six months as the company tries to put behind it years of questions and investigations into book-keeping practices used before a November 2000 business model change.
In his three years as CEO Kumar expanded CA's management team and improved customer support, said analyst Michael Dortch of the Robert Frances Group. Those changes will help CA survive the transition period as it searches for a new leader, he said.
"The biggest challenge facing CA right now is to reassure customers and partners," he said. "To the extent that CA is successful at this, most customers will continue to care little, if at all, about who's running what."
Paul Francis, senior manager of systems security for New England grocery chain Shaw's Supermarkets, said he's sad to see Kumar go but doesn't expect any negative repercussions. Shaw's uses CA's eTrust security software.
"Things have been pretty smooth with CA in spite of what's happened," he said. "There's a good management team in place. I don't expect any disruption."
Kumar will remain with CA as its chief software architect, a move applauded by some.
"The good thing is that he's still with Computer Associates," said Javed Matin, CEO of Myriad Solutions. Myriad Solutions is a consultancy that deals exclusively with CA products. "Hopefully, with the change, the perception of CA will improve. It's too early to say what impact it's going to have on business. We'll have to wait and see."
CA will soon name an interim CEO and is searching for a permanent replacement, the company said. Analysts expect the new CEO to come from outside the company.
"There is no clear number two," said analyst Gregg Moskowitz of Susquehanna Financial Group in New York. "They have some serviceable executives who can step in for the time being."
CA and Kumar could still face further legal action: The U.S. Securities and Exchange Commission warned CA in January it is considering civil penalties against the company, and court papers filed by the U.S. Department of Justice show that it believes more executives at CA knew about the accounting violations than the four former employees charged so far. Kumar is widely believed to be a target of the investigators' continuing inquires.
CA's product plans are unlikely to be affected by Kumar's shifted responsibilities. Each of CA's product portfolios is headed by a brand executive who oversees developments, and that team remains in place. The company has also taken steps to replace executives forced out by the accounting scandal. Earlier this month it hired Jeff Clarke, the well-regarded former head of global operations for Hewlett-Packard Co., as its chief financial officer.
That hire shows that CA can attract talented executives, Moskowitz said.
One customer who has had a rocky experience with CA said the management turmoil can't make things worse. "We're never happy with their customer service," said Win Shih, head of automation for Saint Louis University's Pius Library. "If the company changes leadership, it could be good or bad. It depends on the new person."
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