CA shifts innovation from marketing to business strategy

2000-08-25

Many companies exist by running two lines of products. There are the cash-cow product lines, which keep the company going through thick and thin, and then we have the showroom products that keep the company looking innovative and which give it a chance to compete in the years to come. For a software industry example we need look no further than Microsoft, which continues to reap the harvest of Windows and Office while announcing new strategies such as .NET to show how it is keeping up with the game. Less obvious, but similarly split is Computer Associates, which likes to portray itself as a future-looking company whilst all the while relying on its mainframe-based products to bring in the money. Unlike with Microsoft (which can guarantee a good few years of revenue from its older stable of products), the clock is ticking for CA. There comes a time for every company to make the new range of products strategic, and lave the older lines to wither a little (and perhaps, to die later on).

CA's innovation USP is two-pronged. First up are is Neugents - software modules that use artificial intelligence technology to draw conclusions, such as the likelihood of a server crashing, or to draw out patterns and trends in business data. The second strand is 3D visualisation, as demonstrated through the wrap-around interface of Unicenter TNG (not to mention the acquisition of graphics company Viewpoint last summer).

The shine was well and truly taken off the CA logo a couple of weeks ago, as Sanjay Kumar took over from Charles Wang as CEO of the company. This unprecedented step (Wang has been CEO since the company's formation) came as a result of a series of bad performance announcements and profit warnings. Kumar's is stated to be to intensify efforts in the more innovative, growth areas of CA’s business.

Last week's announcement of the release of the stand-alone package Neugents ii was the first of many that will no doubt see CA's key differentiators being brought to the fore. To be fair on CA, the company announced months ago that it would be “componentising” its product portfolio – a strategy which (in the form of Neugents ii) is now starting to get results.

Over the next few months we can expect to see CA release new products to give it a real foothold in what should turn out to be exciting new markets. It would not come as a surprise for Kumar to take the unprecedented step of replacing the old, dependable approach to its mature product lines for one that is more slash and burn than weed and feed. However it remains to be seen whether he can turn around the behemoth and make it dance. Truth be told, for CA to be successful in the long term the real innovation will need to take place in the boardroom and not in the product catalogue. The CA well is drying up, giving the company little choice but to move the more innovative product lines to the centre of its business strategy rather than just its marketing.

(First published 25 August 2000)