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Taking the broom to CA's legacy

Brought in from IBM to clean up a royal mess, new CEO John Swainson looks to the future.

John Swainson has taken on the challenge of his career.

After working at IBM for 26 years, Swainson last November was appointed president and CEO of Computer Associates International, a 29-year-old company in need of an image makeover.

It's not that CA is in critical condition--it's on solid financial footing and has thousands of large enterprise customers. Yet, the company needs a clean break with its past.

Accounting scandals forced out its former management staff, including former CEO Sanjay Kumar, who's been indicted on charges of financial fraud. Meanwhile, CA needs to continue mending a history of antagonistic customer relations.

It also needs focus. After swallowing up dozens of companies over nearly three decades, it has to home in on the areas where it's strong, namely systems management and security, according to Swainson. That means de-emphasizing a large proportion of its bulging product portfolio.

Finally, Swainson and his team have set out some fairly ambitious financial goals for CA in the coming year, including double-digit growth in some areas.

Swainson, who officially assumed responsibility earlier this month, spoke to CNET about CA's past and directing the company's future.

Q: CA has a bad reputation with some customers, which was being addressed even before you came. And there's also the accounting scandal. What do you think it's going to take for that cloud over the company to fade away?
A: Look at MCI (formerly WorldCom) or Enron. It takes a responsible management team coming in and demonstrating that they have corrected the systemic problems that led to the failings in the first place. And then they have to deliver. It takes years; it's not something where I think there are any shortcuts.

Why should customers give you a second chance if they were burned or had some bad experience?
CA, despite the fact that it may have had objectionable business practices, always had pretty good products. I think most customers recognize that it's tremendously disruptive to try and rip out the core of their infrastructure.

There are other alternatives to all of it, and if you really piss your customers off badly enough, they will go somewhere else. But I think that they have been hoping that we would address these problems, I think my coming on board has given them a little bit more hope.

One of the things I've been doing is running around the countryside telling them that we will fix the problems. We will address the issues and we will turn ourselves into the kind of partner they want to do business with. I'm deadly serious about that.

You've made some management changes already. Should we expect more?
Yeah. We will continue to refine our development organizational structure.

You competed with CA a bit when you were at IBM. What mistakes did CA make over the years?

There are about 1,000 or so products that we have. Probably more than half of them are not really current products anymore.
I think fundamentally it didn't build a modern management infrastructure. It was very much a founder-led company for a very long time. Charles (Wang) was a brilliant guy; he founded this company and was extremely successful in growing it. Sanjay (Kumar) was clearly brought up in that same school. But along the way, the company sort of grew to $4 billion dollars and 15,000 employees. CA didn't necessarily have the structures, controls, management and business systems in place that it should have had. That eventually allowed some unscrupulous individuals to actually manipulate the system, in my opinion.

So what mistakes did CA make? One was not investing in the infrastructure as a group. The second one was creating an overly confrontational environment with its customers. And while that has been addressed--and Sanjay started to change that--it takes a long time to get out of that mode.

Your first order of business was to look at the product strategy. CA's product portfolio is huge and it's diverse. Do you think the company needs to focus better on what, exactly, it does?
Absolutely. I think that it got huge kind of by accident. I don't think anyone set out to say, "Let's see if we can acquire one product in every category in the industry." On the other hand, when you build a company through acquisition, like we did, that kind of naturally happens. Along the way, people normally do some pruning...and we didn't do much of that pruning until recently.

With my coming in, I asked embarrassing questions like: What do we do? What do we want to be when we grow up? And how can we possibly do all these things well? And the answer to (the last) is we can't and we shouldn't. So we need to focus on a smaller number of things and do them really, really well.

You've done the review of the parts by now. So what's the good, the bad and the ugly?
The market is a tremendously efficient thing because it tends to winnow out pretty quickly the ugly and make it noneconomic. There are about 1,000 or so products that we have. Probably more than half of them are not really current anymore.

Some of our products, like systems management and security products, have a big installed base and are very strategic for us. Those are the things we want to really concentrate on and do well.

Can we expect more acquisitions in those areas?
Yeah. We're trying to basically build on strength.... We need to do some targeted acquisitions as we did with Netegrity in the identity-management space. I think we have an opportunity to significantly grow our market share and have the industry grow with us.

How does open source play into all of this? CA's Ingres database is open source. But if you're focusing on systems management and security, what is its role?
I don't want to fight in the (database) market place head-to-head against Oracle and IBM and Microsoft on their rules. I sold DB2 for years against Oracle. It was a better product and at lower cost, and we may have made 1 percent market share difference. And that's with tens of millions of dollars in marketing budgets and thousands of people. We're just not in a position to do that.

If you can't go and sell it head-to-head, what do you do? You create community where you could make it part of the open-source platform.... It's another way of attacking the market place as opposed to just a frontal assault. Taking on the big guys on their territory and their terms, that's hard to do.

Do you see open-source products coming into the management security areas?
I can see it. Open source is neither good nor bad. It's not necessarily the No. 1 (threat); it's only a threat. If you believe that you have a God-given

Open source is neither good nor bad.
right to establish a space and live there forever, then guess what? Competitive pressures of every kind will eventually force you out of that space. Open source is really one of those competitive pressures.

I think it's a very healthy discipline for the industry so they'll have to keep innovating. It forces people to keep thinking about what their customers need and where they need to go next, and that's a great thing.

Sun Microsystems has talked about doing its own database, and it would seem that CA's Ingres would be an obvious choice for that.
It's not something that's in the works, but it makes absolutely no sense for Sun to go and build an open-source database, particularly when Ingres is now an open-source project.

There's a lot of talk of how there are too many open-source licenses. What are your thoughts?
I think the industry does need to converge around a standard commercial license. The problem with the GPL (General Public License) guys is they'd want all things to be GPL. Believe me, I understand what GPL is. I think GPL is a fine license for certain classes of things, but it's not necessarily going to be the license that everybody uses for everything. There is a place for a nonviral license.

CA grew basically by acquiring and was never really known as an engineering-led company. Do you think you can be an innovative company from a technology point of view?
We can be an innovative company. The truth is there is a lot of very cool stuff at CA that has been developed inside CA. But it's not well-known. Part of what I want to do is reshape the company as a trustworthy, innovative partner for our customers.

Is that your vision for what CA should be?
It's still a work in process so I haven't reduced it down yet, but I'll share with you a little bit of it.

We believe that we have a natural franchise, a natural market around enterprise-infrastructure management, security and systems management. We want to be known as the trusted partner of our customers in those things.

It doesn't take a big stretch to get there. On the product side, we're already in those security and systems management spaces. But I'm not satisfied that our customer relationships are at the stage where we want them to be. To me, trusted partners means they're something very special, and I'm not under any illusions that we're there yet.