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| Kill Complexity, it’s Choking Innovation |
July 12, 2005 |
By Peter Wolchak
Computer Associates’ new CEO has two big problems in his sights: one belongs to his company, the other to its customers.
John Swainson received an interesting proposal last summer: would he be interested in taking over the helm at Computer Associates? Normally a plum job, the company was dealing with disastrous revelations about its accounting practices at the time, a scandal that led to the ousting of then-CEO Sanjay Kumar and other executives.
The board wanted Swainson to take over once CA’s legal problems had been resolved, and get the company back on track.
At the time, Swainson had a good gig; he was vice president of worldwide sales for IBM’s software group, a company he had been with for 26 years. Notably, he had taken IBM’s WebSphere middleware from zero revenue to a multi-billion-dollar business.
But the opportunity and the challenge were simply too good to let pass, and Swainson jumped to CA. Seven months later, he talked to Backbone about the PR challenges his company still faces and about technological complexity, a growing problem that literally sucks resources from companies.
Backbone: You came to CA after 26 years at IBM. What has the first half-year been like?
Swainson: Some of [my time at CA] has been spent learning about the market segment CA is in, understanding the issues customers face in terms of managing their IT infrastructures. The dilemma is people need to do that management piece better but it’s becoming harder to do. That’s because everything is getting more complex: there are new products and platforms being added every day. For example, wireless is now emerging as an extension to network platforms. I was at a bank recently that had five different platforms, and that may be a bit extreme, but most customers have at least three. So they are trying to figure out how to manage all those platforms.
Now that is our core competency, so CA can help there. However, it has been a surprise to me both how much opportunity there is but also how difficult it is.
Backbone: How can you help customers deal with complexity?
Swainson: Complexity comes about because of fragmentation and those multiple platforms, and because no one has really integrated across those platforms and given customers a single view.
CA has products that run from the desktop to wireless devices to mainframes, so there is an opportunity for us to take all that information and integrate it, correlate it and display it so people can see it in a form that makes sense. That is going to be the future opportunity for CA: to do that on an increasingly business-oriented basis. Today, people tend to manage islands as islands — you manage the mainframe with a set of tools, Unix with a set of tools and Windows with another. So the first step is to manage all those things with one set of tools.
Backbone: But wouldn’t a CA executive a decade ago have said the same thing, meaning the problem hasn’t been solved?
Swainson: Well, if you talked to CA people 10 years ago, the focus would have been on managing Unix or mainframe environments, and those products didn’t work together because they weren’t designed to work together. Ten years ago, most companies ran proprietary networks and the Internet essentially didn’t exist. It was a much simpler world.
In the last 10 years, we have added at least an order of magnitude of complexity, so the idea of managing everything separately has given way to the need to manage the whole environment. I honestly think my predecessors were focused on an aspect of this problem, but on a simpler aspect.
Think of banking, for example. In the last 10 years almost everyone has gone to online banking, and that addition has resulted in another layer that is now in the IT infrastructure, while the other layers did not go away. And no one would argue that the Internet has not been a wonderful thing for customers and for the ability to deal with customers in different ways, but this has happened at a cost, in terms of complexity.
Backbone: So, what about 10 years from now. Will complexity continue to increase?
Swainson: I don’t think it can. We are already at the point where the cost of complexity is starting to overwhelm the ability of companies to add new business functionality, so they actually are not [proceeding with new technology]. They are sitting back and deciding not to implement new functionality until they decide how to do it cost effectively and in a more automated and less manual fashion.
Backbone: So new functionality is a diminishing return, because you then have to manage that functionality.
Swainson: Exactly. And management costs can exceed the value of the functionality. Now, we can help people manage those processes, because ultimately the solution is not going to be to throw everything back on a mainframe or onto Windows or whatever. All those things will exist, so we need a way to manage this without having hundreds of people in the middle of the management process. And that’s what’s happening today: you have one management person for every 10 servers. So look at a big bank with thousands of servers. They have hundreds of people doing nothing but managing that. And the cost becomes prohibitive.
Backbone: So if the typical ratio is one to 10, what would it be if a company did a full and proper implementation of CA’s management tools.
Swainson: We think we can certainly cut the management load in half, and frankly, even we have only scratched the surface of how much can be automated.
Backbone: Other than complexity, what is the most significant customer pain your company is addressing?
Swainson: Security. That is, the cost of managing security, password administration, etc. Plus there is the fallout from the lack of security: lost information, stolen information and the impact of security on the rest of the IT system, as regulators are telling companies they need to pay more attention to managing identity and protecting information.
So there is a big opportunity for software that automates these processes, that protects data and allows people to be identified and given access to pieces they have the authority to access.
A lot of today’s systems rely on a gateway model: once you’re in, you can get access to anything. But what you want is the ability to give people access to only certain elements and have an ongoing validation.
So, for example, a person may have access to customer buying information but not to billing information, even if those are adjacent records.
Backbone: So again, we’re talking about complexity. Any security solution adds complexity and cost, in terms of both dollars and efficiency. But is security something you simply have to do, regardless of the cost or loss of efficiency?
Swainson: It is becoming that way, which makes people crazy.
Anything that is essentially based on problem avoidance [faces a hurdle], because people don’t tend to see the benefit until there’s a problem.
To give you an example, banks in the past would simply reimburse any fraudulent credit card charges, and they could afford to do that when fraud rates were less than one per cent, but as those numbers are creeping up, banks are no longer sure they can afford to do that. So they are doing more investigations and realizing that the technology in a conventional credit card may not be secure enough.
Backbone: So, strategically, what will CA provide around security?
Swainson: We think of the security market in two big pieces. The first is intrusion detection, keeping the bad guys out. The second is identity and access management, which is letting the good guys in. We have products in both categories, but our strength is in letting the good guys in. So we focus on what companies need to do to make it easier to identify people. This ranges from smart cards to biometrics, all the way to rule-based systems that analyze patterns of behaviour and detect fraud based on behaviour rather than on an access card, for example.
In essence, identity will move from a one-time thing to a contact thing, where you examine an identity against a profile of behaviour.
Backbone: Let’s talk about products for a moment. It has been suggested CA has too many products. Do you plan to rationalize the offering at all?
Swainson: CA has an enormous portfolio of products, which, on one hand, is a great strength, but it is beyond the capabilities of a rational human being to figure out what they all are and to try to sell them. So we need to narrow our focus a little, to the things we’re really good at.
What that means is to ensure we have the right focus on customers.
While everyone says they are focused on customers, there is a difference between showing up to get an order and actually spending time to understand the customer’s business. And it is hard to do that if you are trying to do everything. So we will focus on the things we’re really good at: systems management and security.
So, to answer your question, that leaves us with some products that may not be strategic for us...some products that are not important to customers and not important to CA, and in that case, we’ll have to dispose of them.
Backbone: So you would agree CA had a product-selling focus in the past?
Swainson: Yes, that’s absolutely correct. So we need to change from a product view to a solutions view. Now, “solutions” is the most overused and least-meaningful term in our industry, but nonetheless, we need to frame what we give to customers in terms of solving business problems.
We will keep selling products but we’ll do that in a way that makes it obvious to customers what problems we are helping them solve.
Backbone: Prior to your move to CA, the company endured some serious legal problems and you have since reorganized the company’s structure. What message do you want people to take from that?
Swainson : We want customers to understand that this is now a more customer-focused company, and the response has been what you would expect: some customers are saying “You’re already there,” others says “Prove it, let’s see you do it more than once,” and still others are saying “I still have scars (from what happened) so come back in a year or so.” And that’s okay too.
Backbone: So the brand took a hit but it’s coming back?
Swainson: Yes, and we’ve done a lot of thinking about the brand and now we’re trying to address that hit. But it’s not about clever spinsmanship — what will fix this is people seeing a real difference in the way the company behaves.
Backbone: When you first considered the position at CA, were the legal and branding problems an incentive or a disincentive to move?
Swainson: I was first approached in May or June of last year, and at that time there was no clarity at all about what was going to happen, and it wasn’t clear if my job would be to lead the new, growing CA or to be an undertaker. And the board, at that point in time, made it clear they were not contemplating bringing in a new CEO until the problems with the government had been settled. When they contacted me again, I had both reactions you mentioned. But it really was a great opportunity to fix a troubled brand and help a company, and I felt I had the skill set to do that.
Backbone: I don’t get the sense you were brought in as a short-term caretaker CEO.
Swainson: No, I don’t think I was. I have a five-year contract. As I went through the interview process and thought about the company, I became convinced this was a company with good prospects in a good market space, with a lot of trouble. But the trouble was fixable, and the prospects were all good.
So I came in to help build and grow the company.
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