CA Needs To Vie For Customer ConfidenceCA Needs To Vie For Customer Confidence

Computer Associates faces some big challenges with its customers. In addition to keeping their confidence through ongoing investigations, now it must replace CEO Sanjay Kumar, whom many buyers associate with a more customer-friendly strategy from the software company.

Many customers say they're watching the ongoing federal fraud investigation of CA carefully and will be more guarded in future dealings with the company, according to an information online survey of 62 business-technology professionals.

While 54% of survey respondents indicate no changes are likely in their relationship with CA, 25% say they'll be less likely to license new products from the company, and 21% say they'll look for ways to lessen their dependence on CA products. Thirteen percent say existing contracts will be reviewed, and an equal number say renewals are less likely to be approved.

The CA board Wednesday reassigned chairman and CEO Kumar to the position of chief software architect. The move comes as the company remains under investigation by the Securities and Exchange Commission and the Department of Justice for irregularities in its accounting practices. Three former CA executives have already pleaded guilty to federal fraud charges, including Ira Zar, the former CFO. Nine other employees have been fired.

Yet half of those surveyed believe revenue-reporting problems such as those that existed at CA are prevalent throughout the software industry. Only 15% say the problems are not prevalent, and 35% say they are possibly prevalent.

The majority of survey respondents--68%--say they believe Kumar's resignation won't benefit CA. Two-thirds also believe rival IBM will gain the most from Kumar's reassignment, and 33% cite BMC Software as the biggest beneficiary.

Gabriel Zaldivar, network engineer for CA customer Pacific Maritime Association, says the dismissal of Kumar was shocking. "I've noticed an increase in quality and customer relationships," Zaldivar says. "CA has been putting more attention into what customer needs are and has a better approach."

That sentiment--that Kumar's tenure was marked by improved relationships with customers--was echoed by a number of CA customers interviewed by information this week. According to the online survey, 31% say they're extremely satisfied with CA's products and services, 49% say they're somewhat satisfied, and 20% say they're not satisfied at all.

James Barry, CIO of OneUnited Bank, doesn't plan to change his approach to CA. "I don't see any reason not to continue to move forward with a CA purchase decision," Barry says. "I do believe they will continue to be a valued provider of technology."

There's no clear-cut heir apparent to Kumar. Executives include Jeff Clarke, who took over as CFO in April and previously served as CFO of Compaq and executive VP of operations at Hewlett-Packard, and Mark Barrenechea, senior VP of product develop at CA since June after serving as senior VP and executive committee member at Oracle. Board members with executive experience include Kenneth Cron, CEO of Vivendi Universal Games, and Alex Serge Vieux, chairman and CEO of DASAR Inc. Board member Lewis Ranieri, a founder of Hyperion Partners L.P., was named chairman last week.