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The CA and the Fury

CA announced Wednesday the resignation of Sanjay Kumar as CEO and chairman of the board of Computer Associates. In the same announcement, Kumar was appointed to the newly created position of chief software architect.
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Written by Corey Ferengul on

CA announced Wednesday the resignation of Sanjay Kumar as CEO and chairman of the board of Computer Associates. In the same announcement, Kumar was appointed to the newly created position of chief software architect.

This announcement holds many implications for customers; however, a transition of leadership is not cause for customers to question CA investments. It is clear that the board of directors is supporting Kumar by keeping him with the company. We believe, as a bridge to a new CEO, Kumar will be useful, but if an outside CEO is brought in (which we believe will be the case), Kumar’s tenure in this position will be short-lived. If the board is truly going to distance itself from the past indiscretions (and culture) that precipitated this change, it will have to move to appoint outside blood, either an outsider or newer CA executive. Any new CEO (which will likely come from a corporation with strong accounting principles) will want to establish a new management team (rather than retain CA legacy executives). To his credit, Kumar has added many new executives in the past year, and we expect new management to give those individuals the opportunity to execute.

From a cultural perspective, new leadership will undoubtedly affect the already transitioning CA culture. Kumar began down the path of organizational changes, which were targeted at repairing past deeds (this was a necessity) and building on the existing customer base, but was not remaking a company. A strong outside personality who lacks any ties to past CA culture, perceptions, or actions will cause cultural shifts. Generally, this is positive, but the specifics will not be known until a successor is named and the initial plan is revealed. These changes could have material consequences to individual customers, though in total we believe that an outsider at the helm will enhance, rather than diminish, customer portfolios.

This leadership change is cause for organizations to watch the strategies for specific products as well as for CA as a whole. This is due to the many strategy options a new executive will have (e.g., trim CA’s vast software portfolio, begin acquisitions again), but it is too early to speculate what specific strategy/path the company and products will take.

What remains to be seen is whether CA’s legal woes are eliminated with this announcement. Should there be further legal action, specifically an indictment of CA, there will likely be fines and the potential loss of clients. This would further the need for organizations to evaluate their portfolios of CA products and create an action plan if a rapid change is required.

Bottom Line: Although no short-term changes are expected to existing CA products, we anticipate culture changes in the 9-12 months following the appointment of new leadership.

Business Impact: The change in CA leadership requires no immediate action. However, organizations should closely monitor developments during the transition over the next 3-6 months.

META Group originally published this article on 22 April 2004.

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