William McCracken took over as chief executive officer of CA Technologies close to two years ago and in that time has engineered a series of organizational changes and acquisitions aimed at improving the company's perception among buyers and broadening its reach into new areas of technology and new customer segments. Among those acquisitions were the deals for authentication vendor Arcot (August 2010), application testing company Interactive TKO (ITKO; June 2011) and management-as-a-service provider Nimsoft (March 2010). As part of the IDG Enterprise CEO Interview Series, McCracken spoke at the recent CA World conference to IDGE Chief Content Officer John Gallant about how the concept of 'business service innovation' is driving CA's business. He also discussed how CA is working to improve the customer experience, CA's unique position in a crowded management market and the company's strategy for making mobile and cloud easier to handle for IT shops. You may also be interested to read our companion interview with Nimsoft CEO Chris O'Malley.
You took over as CEO in January 2010. What were your goals then, and what have you accomplished?
One was to put this company back in a leadership position in the industry that it had the ability to hold. Also, to reward our shareholders, because many of them have been with us for some time. They've held steady with us, although they get frustrated at times because we've been through different situations that have delayed the kind of results we've wanted to get. The third one is probably a little bit more personal to me. I've told our 14,000 employees that I'd like to leave a company behind that when somebody asks you where you work and you say CA Technologies, they say 'Wow, boy I wish I could; I hear that is a great place to work.'
Now, what haven't we done? I haven't penetrated yet to the level we want to penetrate. We are moving into the second thousand [companies] and then the next seven thousand because that's where a lot of the innovation's going on with customers; they're adopting this new technology more rapidly. Smaller companies are driving large companies out of business because they're adapting new technology and building a business model that competes better.
We've expanded enormously around the world. I've been all around the world in every geography talking to business partners, explaining to them how committed I am to them. In one of my past lives I drove the PC business worldwide for IBM. That grew to an $18 billion business, and we did it all through business partners. I know how important they are. But I also know what you have to do to make them a partner. You have to take care of them at the same time they help you take care of your customers. So we're building that out because it allows us to get at that [next] customer set. We start penetrating that customer set, which we are starting to do, then you can start writing mission accomplished. But I'm not going to call it until we get there.
Talk about the competitive landscape. You are in a tough spot because you compete with big guns like HP, IBM, Oracle, as well as companies like BMC, and then there are upstart companies attacking pieces of the market, whether it's cloud management or cloud security. How do you navigate all that and avoid being squeezed on all sides?
In the past, one the criticisms of CA was that the company acquired lots of things and threw them together without a lot of integration. What are you doing to avoid this with this new set of acquisitions?
We're taking [our strategy of] model, assemble, automate and assure, with security wrapped around it, and we're putting it on a common platform. We've got fantastic technology sitting over here at Nimsoft. We've got great technologies in service assurance and all these other things. Do we keep parallel development going on this stuff? Our on-premise customers for service assurance want the capability advanced, and it's advancing over at Nimsoft, and that's costing us expense. We said why don't we build the bridge to attach this to this? We'll keep putting little things in here, we'll grow Nimsoft even more rapidly, as we are. I've got my core set here, I get some new capabilities, and I just attach this SaaS thing into that. And I start surrounding this thing with all the new capability and I get a common platform out of it. So that helps us build the customer bridge from where they are to where they want to be.
Customers don't have to take out [products to take advantage of management as a service]. Everybody knows the only thing harder than putting in software is taking software out. Don't have to take it out. Don't have to throw your investment away. A CIO told me this morning he's got legacy stuff back decades and doesn't want to change it. But he wants to virtualize it and put it in a cloud and be able to run it. So we're giving you a bridge now, you don't have to change this. You can put the changes in that you want, but you could attach additional unique capability from SaaS on top of it.
Q: If someone's been a longtime CA customer, they've been on a long, strange trip with the company over the years. In the past, customers didn't feel particularly loved and appreciated by CA. I think that's changed, but talk specifically about what you are doing to delight those customers as you mentioned earlier.
A: The first thing I'm doing is spending about $300 million a year doing whatever they need me to do to delight them, which, when I get everything working right, I don't think I'll have to spend. I took our service organization, our support organization, our marketing organization, our sales organization and said we're going to delight our customers. We've got a customer problem? Fix it. Don't ask whose budget it's in. It's in my budget. Fix the customer problem. I just decided to invest it in fixing customer problems. And that's what we started doing. And I've probably spent between $200 and $300 million dollars doing that. I don't have as much to do this year as last year and it's going to get a lot less as we go forward. So, first thing, I just paid to fix it. That's the first answer, because I want them happy. I call on customers a lot. Probably [the sales people] take me to see the best customers, so there's a little bias. But they say, 'we don't have a vendor that's better than you. We don't have anybody that's willing to invest and do what you do'. We get requests now from our customers -- QUALCOMM is a good example -- 'give us the early releases, the new stuff you're doing. We want to put it in. We'll give input back to you. But we want to get the advantages of new technology before other people do.' People are coming to us saying they want to be one of our test beds.
But it's like an upside down pyramid, we're up to here, we've got this much more to go. I sat down in Bentonville [Arkansas] talking to Rollin Ford, the CIO at Wal-Mart, and he looked across the table at me -- this is a year ago now -- and he said, 'Do you really want to be my partner? Show me. Put people in here. You put five people in here. They can be new people and I'll give them back to you better than they are now. But show me you care about me, and if you do, you're my guy. We'll do this thing worldwide'. So we did. We put five people in there right away.
Let's talk now about the data center. There's much more virtualization taking place -- network virtualization, storage virtualization, compute virtualization. What are you doing to help people manage in those highly virtualized environments? Also, talk about VMWare. They are a partner now, but aren't they also much more of a competitor as well as they set their sights on moving beyond basic virtualization?
That's so true. Yes. Paul [Maritz, VMWare CEO] and I meet and we talk. He's always got a whiteboard behind him, because he turns around and starts drawing things. Here's where we've positioned ourselves: We're focused on virtualization management, we're above the hypervisor. We're not building a hypervisor; we're not going to compete there. Paul and I have talked about the fact that we've been managing secure IT for 35 years. We have learned a little bit about managing secure IT. Paul's going to learn it. But he's not there yet and he's building it, at the moment, on VMWare. Not everybody has VMWare in. Some have [Citrix] Zen in. Some have [Microsoft's] Hyper-V in. Again, it's the ability to put [secure management] across the whole environment. I'm focusing across the whole thing, again, including [VMware] as well.
VCE, [the VMWare, Cisco, EMC joint venture,] is a great example. We were the only ones certified for management on the VCE Vblock [platform] when [CEO] Michael Capellas brought Vblock out. Because Michael knows that the only thing that isn't inherent in his Vblock is management. We've got more comprehensive management than anybody else has. We just need to maintain our lead there. Paul's going to compete. It's a natural [move] to go to management because of the penetration he has with VMWare. But I think now they recognize with the moves we've made that this is not a lay down either. Some of their stuff is not as comprehensive yet as it needs to be and we get to come in and bring it all together.
You mentioned services earlier. Why wouldn't you get into a broader services capability with customers, like a HP with EDS, or Dell with Perot Systems or IBM Global Services?
It's a different business. I was in the front end of that business in IBM and it's a hard business to get into. I think I've got much more access to customers and much more help getting customers installed by working with them as partners than I do competing with them. That's another place we decided not to compete, but rather to partner.
You meet with lots of CIOs and you see the mistakes they're making and the good things they're doing. What's your advice for CIOs today?