CA Technologies wanted to be viewed as the leader of their business sector, offering quality service while keeping their organization aligned and thriving in a strong corporate culture. However, the leaders of the organization did not agree on how the organization should achieve these goals nor were they confident that their business structure could sustain them.
Overall, CA Technologies financial performance is viewed as stable and growing. The organization had shown growth in revenue, income from continued operations and stock holders equity between March 2007 and March 2011. Furthermore, the company had grown their assets and reduced their long term debt during the same time frame (Annual Report).
CA Technologies focus was/is creating solutions to contribute to their customers businesses and support them in a challenging IT environment (p2). Their main customer focus was 1000 of the Fortune 2000 organizations that were $2 billion businesses and above. None-the-less as their product line changed so did their customer base, to $300 million to $2 billion sized companies (p1,13). Their customer base is international consisting of companies from the United States, Europe, Asia, Africa, and Latin America. Their consumers come from various industries including banks, insurance companies, financial services, governments, manufactures, technology companies, retailers, educational institutes and health care providers. Their product line consists of service management and assurance, mainframe, project and portfolio management, security, virtualization and automation, and cloud computing (Annual Report).
CA Technologies chooses to go to market through their own sales and marketing team and by leveraging partners. They have selected strategic partners to help them enter into new markets, grow their product awareness and integrate different technologies. At the same time they have their own direct sales team to create rapport with customers and to use initial consumer’s feedback to cannibalize on new opportunities (Annual Report).
It is imperative that they use multiple ways to go to market because this is a highly competitive industry. At one point the organization’s “merger and acquisitions team had about 250 to 300 companies on their radar at one time” and in nine months they had acquired nine organizations and within twelve months they had invested close to $1 billion in acquisitions (p11). Some of these organizations are going to be commentators and others are direct competition, none-the-less there is a lot of competition. Furthermore, this market is not saturated as it is changing every day and has potential for new entrants. When the focus is on cloud technology and not their full portfolio, calling cloud technology highly competitive is an understatement. To display how competitive the industry is there is an online newspaper called “CloudTimes” that has a list of the top 100 Cloud Computing Companies (Martin Tantow).
The CRN (online technology cite) goes as far as listing the coolest cloud computing vendors by their business category (CRN). There are several other articles such as “The Top 150 Players in Cloud Computing”, “85 Cloud Computing Vendors Shaping the Emerging Cloud” and more (Ray DePena). The buyers have a great deal of bargaining power. With so many organizations offering cloud services and offering to customize their services for customers business needs, there is a lot of competition. The CRN breaks down Coolest Cloud” companies by the top 20 in each cloud specialization. These specializations are: Platform and Development, Infrastructure Vendors, Security, Storage and Data Center, Applications and Software (Mark Tantow). CA Technologies was listed under “Coolest Cloud” top 20 for security.
This specialization may give them a leg up especially in the Security market. On the other hand, if an organization is looking for a generalized cloud function, this may discourage that organization from choosing CA technologies. The suppliers in this situation are the employees and they have an immense amount of bargaining power. With there being hundreds of Cloud companies currently, more starting and existing companies expanding their cloud products, the job market is large. Microsoft alone has reported they will create 14 million jobs from 2011- 2015 due to public and private cloud computing (John Callaham).
CA Technologies has 13,400 employees, 4,000 are in sales and marketing and 4,400 employees are in product development (Annual Report). Selling, marketing and product development are the rolls that will be created and that other companies are looking to fill. If not all employees, nearly two thirds of the organization’s employees have a great deal of bargaining power due to the expansion and demand for experienced workers in this field.
There are several substitutes to cloud computing and most of them are what organizations were using prior to cloud computing. Some of these substitutes are main frames, networks, and email. The plus is CA Technologies already offers the substitute services. There are many commentators to cloud computing right now that we use every day, for example Microsoft is a complementor to Google.Docs. A company that offers the cloud also has the power to decide what complementors are going to work with their cloud, some of these complementors can be calendars, emails, word processors and many other every day applications.
On the Treacy and Wiersema 3-D Chart the organization would fall under the product differentiation and customer responsiveness category. Even though the organization would like to see themselves in the middle of these two categories, realistically, they were not, when this article was written. The case states the organization was functioning vertically in all divisions, which made it difficult to focus on the customer and created inefficiencies in development (p10). With this being said, they would fall closer to the axis between the two categories on this chart.
Before the reorganization, the business strategy, organization strategy and information’s strategy were not aligned. The organization was running like a manufacturing company, internally focused (p11). The mission of the organization that can be gathered from the case is that the organization wants to offer superior customer service, to create the most innovative and leading technology in an effective manner and sustain a thriving corporate culture. However, this mission was not achievable because they went to market vertically and that is not what their customers needed. The different structures of the organization worked independently which meant many inefficiencies and repetition in development (p11).
The organization was not set up to reach the business needs of superior customer service and creating innovative leading technology effectively. Furthermore, the information strategy was unattainable due to the organization strategy. In the moment of truth the organization decided to reorganize. They created five focus areas to focus the information strategy and product development. Furthermore, they split the organization into 3 main categories which focused on customers, go to market and innovation. The new strategy helped align the business, organization, and information strategy.
On the strategic grid, CA Technologies was acting like a factory. They were not prepared to make changes that would be necessary for future success such as creating a prosperous cloud system. They were working on their already existing product line and even showing signs of complacency with that product line. However, once they began reorganizing to a new strategy their organization went into the turnaround phase, splitting the business into a customer innovation focused. This is where they began working on getting the proper structure to create a sustainable business in the cloud revolution. On the grid, the organization would fall in the top turnaround stage close to strategic. Their management is learning new ways to go to market and handle customers and at the same time the business is going to be shaped by their future innovation.
Overall, I do not believe that the organization had a choice whether or not to embrace the cloud. By 2011, they had already entered into the market and were seen as leaders in their already existing technology systems. If they backed out at this point, they may be viewed as not willing to move forward with the direction of future technologies. Furthermore, the market is fast and highly competitive, but CA Technologies has an advantage due to their rapport with already existing customers and their seniority in the industry. The cloud made the organization re-evaluate their strategy and now they will be a stronger organization in all categories due to their reorganization. The cloud is not going anywhere; however their legacy way of thinking would not be relevant if they did not move forward with cloud innovation.
Callaham, John. “Microsoft: 14 Million Jobs to Be Made via Cloud Computing.” Neowin.net. 5 Mar. 2012. Web. 21 Sept. 2012. . CA Technologies. Annual Report. One Goal Our Customer Success. Islandia, NY: CA Technologies, 3/2011. Annual Reports-CA Technologies. http://investor.ca.com/annuals.cfm CRN Staff. “The 100 Coolest Cloud Computing Vendors Of 2012.” CRN. 12 Mar. 2012. Web. 21 Sept. 2012. . DePena, Ray. “90 Cloud Computing Companies to Watch InÂ 2011.” Business Innovations. 1 Jan. 2011. Web. 21 Sept. 2012. . Tantow, Martin. “CloudTimes Top 100 Cloud Computing Companies.” Top 100 Cloud Computing Companies. 24 Apr. 2012. Web. 21 Sept. 2012. .