CA Technologies customers should expect a call some time soon from their local sales rep, after new chief executive Mike Gregoire revealed plans to move all customers onto the latest releases of the firm’s software.
Gregoire told delegates attending the CA World show in Las Vegas this week that the strategy would enable the firm to focus more on developing the next-generation of innovative technologies, rather than worrying about supporting countless release versions going back years, thus benefitting customers by supplying them with fresh, improved products.
“If we’re going to drive this organic engine and innovate, we have to get you off old releases,” Gregoire said. “You don’t like them, we don’t like them. I want to find a way to get you from where we are to where we’re innovating. We’re going to miss an opportunity to really be your partner and drive business value if we can’t get you onto new releases.”
While Gregoire’s management team supported his message, they did not predict an easy ride for the firm in getting customers on-board.
“Customers like when you put them under pressure, if it pushes them in the right direction,” Jacob Lamm, executive vice president of Strategy and Corporate Development at CA, said. “That’s not to say they won’t beat us up for it, we expect that. But at the end of the day, if we can articulate the value to them – if we’re not supporting quart-old releases, we can help you move into the future, we can give you the features that you’re asking for - once they hear that, they’ll say, ok I’ll agree to the pain that you might be giving me of pushing me off an old release. So it’s really about us articulating the value of that, rather than us setting rules for the customers.”
Lamm said linking the upgrade push with new innovations would make the sales pitch smoother. “If we’re delivering new capability and new functionality on a regular basis at a high velocity, customers will deal with us laying down some ground rules,” he explained.
Lamm added that for certain products such as CA Service Desk, customers are often happy to move off the old product and go straight to the cloud, without bringing across any process changes. In these cases, customers will end up paying equal or less than their current perpetual licence charge when moving to a monthly payment model.
“We’re going to make it inherently in their favour to move. They’re certainly not going to lose anything, and they’re likely going to gain something,” he said. “But there are others where there’s a critical need to carry forward data process changes, customisation and so on, so it’s really product by product.”
In these cases, customers would face additional payment for any required customisations based on the extent of what they want to move over. “But the goal is to make the software as upgradeable as possible, so there’s not a services engagement required to move customers,” Lamm added.
CA chief technology officer John Michelsen believes it will only push upgrades through by making it cost-prohibitive for customers to stay on old software.
“We need to borrow a page out of other software companies’ books and make it more and more expensive to run dead software. When we do this, there will at some point hopefully be a law of diminishing returns,” he noted. “I think we have to get to a point where, if we can’t maintain the software appropriately without losing money, we have to do something. There’s also incentive – that’s disincentive – we’ll do the analysis for free, we’ll do the upgrades for free, if there’s data conversion that we should have made easier and we didn’t, we’ll do that for free.”
CA is aware that the move could lose it a number of customers along the way, but Michelsen said the firm has done its analysis and decided the risk is worth taking. He explained that continuing to support numerous old versions, and making changes to the software each time a customer buys a new piece of unsupported hardware, is not economically viable.
“They don’t want to upgrade, they want us to upgrade the software,” he explained. “There’s the disincentive, you have to raise the cost of continuing that maintenance. At some point you have to say, you’ve gone so far, I can’t support new equipment with old software unless you pay me extra in order to do that.”
Until now, CA has agreed not to kill off products if there is customer demand, with no additional charges when customers request support for a new piece of hardware, so the change in strategy needs careful handling by the firm.
Michelsen does not expect the upgrade process to be a quick one, noting that it would take a minimum of two years to get all customers onto new releases. In the first instance, CA will approach its largest customers about upgrading.
“We’ll go through the process with those folks, and they’ll be the hardest to move, they’ll be the ones with the biggest disincentive because they’ll be the oldest customers with the oldest product,” he said.
The technology chief predicted the mainframe business would be the easiest to tackle, noting that mainframe customers are already doing frequent upgrades, often twice a year.
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