How Michael Gregoire plans to put CA back on track
- 20 August, 2014 08:08
CA CEO Michael Gregoire
What's new at CA Technologies? Turns out the company has been quietly trying to reinvent itself as a top provider of enterprise products for managing cloud services and mobile devices, extending its expertise beyond in-house IT management.
It's a tough challenge for CEO Michael Gregoire, who took charge of CA in 2013 to transform the company for this new age. As enterprises slow their spending on traditional IT management software, CA's revenue has stagnated. For the past fiscal year, which ended in June, CA tallied US$4.5 billion in sales, roughly level with the prior year.
But changes are afoot. With close to 200 acquisitions under its belt since its birth in 1975, CA is better known for acquiring new lines of software than building it from scratch. But nowadays more development is being done in-house, with CA coders writing new software for managing mobile devices, the cloud and security.
Before joining CA, Gregoire was CEO for business-intelligence software provider Taleo, which he led from its successful IPO in 2005 to its sale to Oracle in 2012 for almost $2 billion. He also had a successful run as an executive at PeopleSoft.
IDG News Service sat down with Gregoire to learn how the company is transforming itself for the new enterprise software market.
IDGNS: How are you changing things at CA?
Gregoire: We're taking a different approach than 'business as usual' at CA. Number one is organic development: building our own products. We've been beefing up our raw, pure engineering talent and creating products to go into big markets.
When I got here, I found we're spending $660 million on R&D [each year]. We have some good, hardcore technologists, but the product management and discipline of what to build and when to build it, and the analysis of markets, was less than strategic. So we're putting a strategic framework around building interesting products.
We're evolving into three big markets. Market number one is devops. Not many people understand how complicated it is to build applications at the speed and pace at which [customers] are trying to build them. There is no way that is not getting automated in the next several years. I think we have a multiyear head start at tying these things together.
The second business is managing the cloud. Once again, that is a multi-billion market and there is no clear winner in that space, and it is very fragmented. All the things we're doing in product and portfolio management, service management and linking it into all the other applications fits into cloud management.
The third one is security, which has been a very strong area for us. We've been banging the drum on identity and identity management over the last five years, well before I got here. You can't build a moat big enough to keep the bad guys out. Being able to understand how identities are managed and being able to process them quickly so that service is not impeded has become a very big business. We have a whole suite of products with respect to security.
IDGNS: When I think of CA, I primarily think of software rather than cloud services. What is your cloud strategy?
Gregoire: We are definitely a big player in the SaaS [software-as-a-service] market -- we have seven SaaS products in production today.
If it can be built and delivered in the cloud, that will be our primary design architecture. Where it doesn't make technical sense, we still offer software as a perpetual play.
I think what will evolve is that you will see a combination of both, like Nimsoft [CA's IT monitoring software]. Nimsoft has all of the agents running on physical machines behind the customer's firewall -- there is not really a way around that. You want to have lightweight probes on those devices because that will [provide] the best information.
Now, sending all that information to a server that is behind the firewall is definitely one option. But you could also send that information to the cloud. You can do all the data analytics in the cloud and do all the processing on site, so you don't have a latency time.
IDGNS: You're also extending your management products to mobile devices?
Gregoire: Our mobile device management products are very strong. What we're doing on the mobile side is all done organically. We're launching a mobile device management application for developers at CA World in November. MDM will be a big, big play for us.
The interface between a business and a customer used to be people like us, humans. It really is becoming applications, and those applications are primarily being deployed on mobile devices. So you will want to be able to understand if that application got deployed. Did it crash? You want crash analytics. You want security. You want to make sure your application is not being corrupted by any other app on the device. You want to be able to wipe that device, protect that device.
When you're running a company and the app is the major interface between you and your customer, you will want to make sure that interface is well-managed and you want to understand what is happening, who is using it, and how it is being used.
IDGNS: Do you have software for managing the devices themselves?
Gregoire: That is table stakes now. You need to have a base layer and then you layer on the more sophisticated services on top. That is a very commodity-oriented service, and it is more difficult to differentiate yourself there. We've been managing PCs for the past 15 years. Theoretically, there is not a whole lot of difference between managing a PC and managing a mobile device. It's the same kind of thing, but getting these devices to do the same kind of sophisticated things as you could on a PC is more of a challenge.
IDGNS: Where are your customers in terms of adopting the cloud?
Gregoire: It's huge. You don't get measured any more by the size of the data center, or how many people you have under management. If you are a CIO today, you're getting measured by how well you help the business function. If you're not paying attention to that metric, I don't think you will be a CIO for much longer.
Secondly, anything that is commodity-oriented -- that someone else can do better than you -- you want to take advantage of that, and save your precious resources to do the things that only you can do. Oddly enough, what we see most companies doing is building up strong application development environments, because that puts the differentiation between them and their competitors.
I think if you can put it in the cloud, you should. That is pretty much what is becoming the norm.
Think about industries we've taken for granted. When was the last time you talked to a human when you booked an airline flight? When was the last time you talked to a teller in a bank? The last time you opened your mail to get your car insurance? It's all done electronically now. That is the interface between businesses and their customers.
All these businesses that used to be massively manual are being digitized. And that is a great business for us to be right in the middle of.
IDGNS: In terms of cloud management, what will CA offer your customers that the cloud vendors can't offer?
Gregoire: The thing about CA is that our heritage has always been a heterogenous environment. Any reasonably sized organizations will need products and portfolio management. They will need a help desk that covers multiple cloud offerings. How do you link a Salesforce.com, a Concur and a Taleo? How do you link up to these services to make sure they are running?
You want to make sure you understand the latency time of your own network, as well as that of the service provider. How will you manage the service level agreements? Can you solely count on the vendor to provide those? Probably not. So there is a whole host of products to manage those cloud environments. We're agnostic. We can work with just about all of the cloud providers.
IDGNS: Mainframe management still accounts for some of CA's business. What is happening there?
Gregoire: The mainframe, for the most part, especially with IBM System Z, has become a big virtual machine that runs Linux. So, you need more Linux skills and definitely some System Z and networking skills, and a little bit of I/O speciality skills.
We're taking it upon ourselves to make sure that workforce is very well-trained. We're also cross-breeding a lot of enterprise technology with our mainframe technology. The thing forcing that is big data. Seventy percent of the world's data is stored in mainframes. So if you want to play the big data game, you better have an opinion of how to get that data out of the mainframe, and also make sure it is secure.
IDGNS: How should enterprises think of the current state of CA these days?
Gregoire: I would look at it as a pivot of very well-established software company moving into a modern software world. We've evolved to meet the needs of a customer base that wants software that is easy to use, easy to install, has low cost of ownership and, where appropriate, can run in the cloud.