CA’s Kumar Admits Challenges Ahead

Comes Clean on Service

• By Linda Briggs
• 05/07/2002

In what might be a warning note to Hewlett-Packard Co., Computer Associates International Inc. CEO Sanjay Kumar talked frankly at a recent conference about the challenges of maintaining good customer service after an acquisition. “Customer service issues are a nasty by-product of acquisitions,” Kumar admitted. “It’s not something the analysts write about.”

Kumar admitted publicly once again that CA has struggled with customer service, articulating its huge and diverse product line clearly, and overall perception issues, but pledged to move the company in a new direction. “We haven’t done the things we’ve wanted to do…” he said, but “much of our focus is now customer service.” He cited the company’s Customer Connect customer service program, announced in April at CA World, the company’s annual user conference.

Kumar made the comments during an on-stage interview with two Gartner directors at Gartner Symposium ITxpo 2002 in San Diego last week.

The CEO also said, as he has before, that it’s “unlikely” that CA will be making any large acquisitions going forward, although “as a public company, you can never say never about acquisitions.” He also said that the sale of its interBiz software in April will be a rarity. “I don’t think you should expect other businesses to be sold off.” In that deal, CA sold some supply chain, finance and human resource product lines to a Chicago company, SSA Global Technologies Inc.

In an impromptu vote during the presentation, perhaps two-thirds of the several thousand audience members raised hands to indicate that their perception of CA is currently “negative.” Kumar appeared unperturbed and continued to stress that he plans to improve services and fix perception problems. “I read every one of my emails personally. I’m the guy to talk to. I guarantee I’m going to fix things.”

Gartner research directors Betsy Burton and Ray Paquet also drilled Kumar about CA’s hefty $3.8 billion debt load, suggesting that the shear size of the debt calls into doubt CA’s business practices. “We’re a very conservative company,” Kumar answered, saying that the debt is largely because of CA’s many acquisitions, all but one of which have been done with cash rather than stock. “I have never had a single customer raise a concern about the balance sheet,” he said.

Kumar also disagreed with Burton that CA’s revenue is down. He maintained that the company’s change to a new licensing method 18 months ago, in which customers can essentially lease software rather than purchasing it, have made revenue comparisons unequal. “It’s unfair to say that revenues are down when you’re comparing apples and oranges,” he added.

“I have over 17,000 employees. I generate over a billion dollars in real cash a year,” Kumar said. “[We’re] not a company that’s about to go bankrupt.”