CA changes payment model

CA will be among the first e-business solutions provider to adopt a subsription scheme for the licensing of its softwares. The move is said to be beneficial for both its customers and shareholders.

HONG KONG - Computer Associates International, Inc. will be changing its licensing model from a fixed quantity model to one that's on a subscription basis.

Companies can now employ CA software products for the duration of a contract period, including month-to-month, at a fixed price.

Under the old model, customers pay a fixed amount of money for the use of CA's software for an unlimited period of time and a definite number of users.

While there isn't an upfront lump sum, under the new scheme, customers are required to pay on a regular basis for the continual use of the software.

According to CA, this will enable its customers to determine the length and dollar value of software licenses and vary their software mix as their business and technology needs change.

"Our clients have told us they need more flexibility in how they license software, and a faster, simpler, more cost-effective way to do business with us in the new economy," said CA president and CEO Sanjay Kumar.

The new model is expected to improve both the visibility of CA's revenue stream and quarter-to-quarter revenue predictability.

Contracted revenue from the scheme will be accounted by CA over the life of the license term.

This translates into a huge amount of residual value at the end of each quarter.

As clients adopt the model and CA changes its operations, the accumulated residual value will grow quarter-by-quarter, giving shareholders a clearer view of quarterly revenues down the road as residual value turns into revenue month-by-month.

"Our new business model empowers clients to take full advantage of our diversity and excellence while enabling shareholders to build residual value that transcends quarterly performance," said Kumar. "It eliminates the back-end loaded nature of our business where most license agreements are concluded in the final days of a quarter."

CA's client relationship managers and sales executives will visit the company's clients over the next 30 days to explain the new licensing model.

The move comes after the company posted a less than sterling second quarter financial results ended 30 September 2000.