CA Technologies' (NYSE:CA) Q4 2013 results, announced yesterday, revealed plans for 1,200 layoffs and dramatic changes in how the company develops and sells software. CA Technologies will back-fill most of the 1,200 cuts by hiring new professionals with high-demand skills in the Big Data, Cloud and SaaS markets. During an earnings call, CEO Michael Gregoire made it clear the company will also lean heavily on the CA Nimsoft team to drive organic growth.
Gregoire, a Taleo and cloud services veteran, joined the company earlier this year. During the earnings call, Gregoire made it clear that his honeymoon with the company is over. On the job for only a few months, Gregoire said CA Technologies needs to modernize its sales, marketing, lead generation and R&D efforts.
For its Q4 2013, CA said revenue fell 3 percent to $1.151 billion. Gregoire and CFO Richard Beckert said the company experienced a "tough economic undercurrent" for the full year and a low renewal portfolio for the year. A sales force overhaul, completed in the first half of the fiscal year, also was somewhat "disruptive."
But the earnings call's central theme involved Gregoire describing out-dated sales, R&D, marketing and lead generation processes.
Where's My ROI?
"We spent about $600 million and it was very difficult for me to understand where are the products that drive growth for that spend," Gregoire told analysts."And when you take a look at our development organization and where we spend money and how we spend it, I think that there's room for improvement."
Going forward the company will invest in five areas: Mainframe, IT Business Management, Security, Application Delivery and Service Assurance. "Net new products will be built on our own platform," he said.
In the IT Business Management area, CA Technologies will lean even more on Nimsoft, which develops IT service desk and managed services software solutions. "I would encourage you to take a look at [Nimsoft Service Desk]," he said. "I think it's the most competitive user interface for a Service Desk on the market. This is an area where we have had to make some improvements in our ability to have an easy to use Facebook social-like user experience and when we show this to customers, we think that this is a product that's going to sell extraordinarily well."
And in the Service Assurance area, Nimsoft pops up again. "First of all, we have Nimsoft Monitor, which can be operated both in the [public] cloud or private cloud, or can be operated behind the firewall, which is exactly how we want to be deploying these applications. It's got a great interface. This is an application that can be sold to smaller companies but it also fits in to our IM 2.0 platform, which is the most comprehensive infrastructure, application and network management system on the planet."
Finding Net New Customers
CA's big challenge, said Gregoire, involves selling to new customers -- beyond the company's 600 core customers. "There's really only two ways to grow, either you're building more highly differentiated products so you can sell to those 600 customers, or you have to get net new customers. I want to do both. I want to sell new products to those 600 customers. I won't stop doing that, but we need to sell more net new customers. We are not good at it."
Gregoire mentioned the need for modern lead generation and "try and buy" approaches that will further bolster CA's business. He noted that none of CA's products are available as free trials on the company's website -- a huge missed opportunity in the age of cloud services.