CA CEO reorganizes, creates five business units

Five months after joining Computer Associates International, new Chief Executive Officer John Swainson is implementing an internal reorganization intended to focus CA on two core areas — systems and security management — and to increase the autonomy of the company’s business unit heads.

The realignment, announced Tuesday, sets up five business units within Islandia, New York-based CA: Enterprise Systems Management, Security Management, Storage Management, Business Service Optimization and a CA Products Group. Each will be run by a general manager given full control of the unit, including profit/loss responsibility and control of marketing and product development resources.

Even before CA’s top management team dissolved last year in the wake of an accounting scandal, the company had been through several internal realignments, as executives struggled to efficiently organize the company’s vast, built-by-acquisition collection of software products. Swainson’s new structure creates a catch-all unit, the Products Group, to maintain legacy products, such as CA’s database and application development software.

Swainson expects the real growth engines in the new organization to be the Enterprise Systems Management group, which includes CA’s flagship Unicenter line of management software, and Security Management, which includes CA’s eTrust products. Those two areas accounted for revenue of $1.4 billion, 59 percent of CA’s total, in the first nine months of its 2005 fiscal year, which ended March 31; fourth-quarter results have not yet been announced.

Although the structure gives storage its own group, Swainson doesn’t see that market as a strategic one. “While storage will remain a critical component of our technology offerings, we need to recognize that its entire sector is being commoditized,” he wrote in an open letter outlining CA’s new structure. “CA’s true competitive advantage in storage will be to tie it more closely to our core systems and security management business.”

Systems management, security and storage have long been focus areas for CA, but Swainson’s reorganization includes one entirely new unit, the Business Service Optimization (BSO) group. BSO’s goal will be to help customers connect business and IT processes, using tools such as CA’s AllFusion application management software and its various service management applications.

Swainson said CA isn’t looking to compete with business process consultancies such as IBM’s Global Services and Accenture. Instead, CA wants to provide the software that companies use to automate the business processes they’ve designed.

“We’re actually trying to turn it away from being people intensive and make it more product intensive,” Swainson said in an interview. “We’re in the services business to sell products. We’re not a services company, per se.”

CA’s five new top-level groups will be supported by further internal rearrangements, although CA’s customer support will remain centralized in one unit serving all of its product groups. CA will also maintain a common technology team, reporting to Chief Technology Officer Yogesh Gupta, to develop shared components such as user interfaces and data access technologies.

Gartner analyst Ray Paquet said Swainson’s reorganization decisions are straightfoward. “If you look at Swainson’s public statements over the past few months, everything has been about eTrust and Unicenter. Emphasizing those areas [in the restructuring] is unsurprising,” he said.

Paquet sees the creation of CA’s new BSO group as the most intriguing aspect of the organizational overhaul. Approaching the market in that way will increase CA’s competition with BMC Software and Mercury Interactive, he said.

“I think one of the things you can read into this reorganization is that John Swainson is trying to empower the business units to do more,” Paquet said. “That empowerment could change things, but how it does is up to the business unit managers.”

CA has previously had various incarnations of brand-based organizational structures, but Swainson described this change as “philosophically different” from earlier versions in the extent of the autonomy it grants to business unit heads. By the end of the first quarter of its 2006 fiscal year, which is now underway, CA expects to begin breaking its financial performance out by business unit.

“This really puts together into a business unit all the pieces you need to run the business,” Swainson said.