Computer Associates (CA) said it aimed to build a services business of more than $1 billion by the end of the year and confirmed it was still pursuing an acquisition strategy to help it achieve this goal.
But despite these ambitious plans, Charles Wang, CA’s chief executive, said on Monday that products rather than services remained the most lucrative part of the software giant’s business.
He explained that CA’s services operation currently generated between $600-700 million in annual revenues compared with between $200-300 million last year, but he hopes to increase this ‘run rate’ to $1 billion by the end of 1999.
And this goal will have been helped by the company’s acquisition of Platinum Technology and its $200 million services business earlier this year. Despite lingering memories of CA’s failed takeover bid for services giant Computer Sciences, however, Wang said he was still pursuing a strategy of further services acquisitions.
“We’re looking for them [service companies] all over the world. We still have quite a few on the drawing board,” he explained.
But he does not expect services to become a larger part of CA’s revenues than its products business. “Frankly, the margins are better [with products]. But it’s important that we do services and do it well,” he said.
And CA’s approach to services is very different from major competitor, IBM, he claimed. “The approach is fundamentally different. Our professional services are built around making, customising and deploying CA solutions. IBM’s approach is very different. Tivoli is a very wonderful systems programmers toolkit, but it’s driven by billable hours and people - that’s not CA,” he attested.
“Because we have a solution, not just a bunch of tools, our service is focused on getting a solution, deploying it very quickly and making it successful, because once we can do that for one department or one Lan, we can very easily spread it to the rest of the enterprise,” Wang added.
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