Computer Associates (CA) has set up a global professional services organisation to boost its top line growth and generate pull-through product sales.
The move comes in the wake of the software company's failed hostile takeover bid for services giant Computer Sciences (CSC), but the aim is to make the unit a $1 billion business within the next year by means of worldwide acquisitions in key skills areas and in geographies where the company has little presence.
With anything up to the $9 billion the CSC purchase would have cost to play with, CA is looking at small to medium sized Vars, systems integrators and consultancies as possible prey, and hopes to make its first purchase this fiscal quarter.
Chris Wagner, CA's executive vice president of worldwide professional services and former head of the firm's mid-Atlantic sales region, said: "We're changing strategically. For 22 years, we've been a product based company, but we now see services as a tremendous revenue opportunity.
Speaking at the company's CA World conference in New Orleans, he went on: "Our Unicenter business is worth between $1.6 and $1.7 billion, but companies spend $2 on services for every $1 they spend on product. That gives us an opportunity of between $3.5 and $4 billion."
Sanjay Kumar, CA's chief operating officer, backed up the statement in his keynote speech. "This is a very short termist industry. Too many companies are concentrating on the bottom line, but they need to focus on the top line to be successful," he said.
The company's existing service organisation generated $200 million in revenues last year and is currently staffed by 600 people. The goal is to up this to 1,000 employees over the next year via acquisition.
The organisation will offer implementation, consulting, training and outsourcing services in sectors such as corporate infrastructure management, application development, integration and Year 2000, to both existing CA accounts and new customers.
The firm hopes to woo new customers by offering "better rates" than existing services organisations by "doing things with less labour". As a result, it intends to use its own offerings for applications such as remote management, with the aim of generating pull-through product sales.
To try to boost its appeal outside its traditional large corporate base, CA also plans to supply fixed price, fixed term service bundles, in particular to the increasingly competitive small to medium sized enterprise (SME) marketplace.
The scheme will be rolled out in Europe in CA's second fiscal quarter. Here, its offerings will be sold via an independent services salesforce, CA's existing product sales staff and its third party channel. Service Packages will cover different CA product sets and cost between $12,000 and $18,000.
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