Computer Associates International, Inc. (CA) Chairman and Chief Executive Officer Sanjay Kumar said customers are demanding more from technology vendors than ever before and that companies that refuse to be flexible and reduce IT complexity will risk putting themselves out of business.
Delivering the opening keynote at CA's worldwide customer conference in Las Vegas, Nevada, Kumar also predicted that the technology industry will continue to see substantial vendor consolidation.
“We're in the midst of challenging economic times,” Kumar said. “IT managers are under tremendous pressure to justify every technology purchase. In turn, IT companies are under pressure from IT managers to perform. Some will rise to the challenge, others will stumble and some will fall by the wayside.”
Kumar urged technology companies to adopt flexible models that provide customers with the freedom to choose licensing terms that fit their needs, and payment metrics that reflect the value that technology has created for their businesses. Doing so, he said, will free them to be true strategic partners.
He also maintained that technology companies must reduce complexity and help make IT infrastructures “more simple and more transparent.
“Clearly, there are too many products from too many vendors,” Kumar said. “There is not enough integration and, as everyone knows, no technology ever dies. IT is just too complex. Real progress isn't going to be measured in just finding new ways to use technology; it's going to be measured by making complex tasks simple.”
“I believe that partnerships between technology vendors and customers are the future of this business,” Kumar continued, “not a fad, or a temporary measure to see us all through a period of tight IT budgets.”
CA, he said, completely revamped its business model more than two years ago to provide customers with increased flexibility. The move has been applauded by customers, but was initially questioned by Wall Street and competitors who could find no value in this radically different approach to structuring contracts and booking revenue.
Customers very quickly warmed to the flexibility, Kumar said. “And Wall Street seems to be coming around too, because analysts like our model's greater transparency and the increased predictability of our revenue. IT providers need to recognize that the future of this business lies in serving customers, in building partnerships, and in adding value beyond the software. I would argue that those IT providers who don't leap quickly and embrace this new way of doing business will risk significantly damaging their enterprise and face the possibility of going out of business.”
Kumar also predicted that the current wave of consolidation in the technology industry will continue as customers move to working with fewer vendors in a more strategic way.
“There are too many players,” he said. “Large companies will survive, small companies will continue to pop up and a few will innovate their way to success. But, companies without sufficient scale will be most vulnerable.
“It's not bad news for customers, it's good news,” Kumar continued. “Our industry needs to respond with unprecedented flexibility. We need to be flexible about platforms, about applications, about licensing and about overall computing needs. In fact, flexibility will become the key differentiator because there is no way we can predict what the future will be.”
Kumar told attendees that CA will continue to focus on what it does best: Management software including infrastructure management, information management and knowledge management.
“Helping manage a customer's IT resources isn't a job for a vendor, it's a job for a partner, for someone who understands the customer's business and IT infrastructure and is able to help maximize resources and match solutions to needs,” he said.
He added that CA will continue to push the envelope in providing the industry's most comprehensive solutions for managing on-demand computing.
“Because CA is able to offer cross-platform solutions, to work with our customers' existing technology, we are ideally positioned to help them realize the next wave of IT - on-demand computing. We believe that the key to reaping the benefits of on-demand is management.”
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