Computer Associates 2005 Annual Report Download - page 8

CA’S POSITION IN THE MARKET
The IT software market is projected to continue to grow ( 6.5 percent growth in calendar 2005
according to IDC ), but at a slower rate than in the past. This outlook, combined with the propensity of
customers to reduce cost and complexity by reducing the number of vendors and partners, is a
clear sign of a maturing technology market.
We are heading for an industry structure made up of a few large platform providers (
IBM ,
Microsoft, etc.); one or two category leaders in segments like Systems Management, Security, Content
Management, Database and Applications Development; and a much larger number of niche
vendors with small market shares and uncertain prospects.
I believe that
CA is poised to take its place among the category leaders if we pick our spots and
make some tough choices on where to invest. The good news is that through a combination
of foresight and luck we have accumulated a strong set of products in Systems Management and
Security, which happen to be among the fastest growing categories in the software industry.
Today we are in a leadership or strong number two position in each.
Furthermore, we have developed an Enterprise
IT Management (EIM) strategy for governing,
managing and transforming the business-
IT relationship. EIM builds a business-driven IT
environment that is fully aligned to support business needs.
CA is in a great position to deliver real value to our customers, and, consequently, I believe that
the right strategy for
CA is to invest to:
 Grow in Systems Management (storage, database, servers and networks, for both
mainframe and open systems platforms) and Security (from wireless devices
through servers and mainframes);
 Build our position in a new business area we call Business Service Optimization; and
 Maintain the rest of our very important software portfolio.
A COURSE FOR GROWTH
These investments, and the management disciplines that go with them, are at the heart of our fiscal
2006 six-point strategy for growth:
 Focus on customer success. In recent years our sales leadership has been actively
transforming the sales organization from one that focused on products and transactions to one that is
based on relationships and solutions. Customer satisfaction (as measured by an independent
survey company) will become part of the incentive compensation for all employees on such plans
going forward.
 Focus on markets we can lead. As I noted earlier, I believe we have a unique opportunity
to be the market leader in helping customers securely manage their increasingly complex
IT infrastructures from end to end. This means we need to concentrate on Systems Management,
Security and the emerging market for Business Service Optimization. Our internal investments
as well as acquisitions will be concentrated on these opportunities.
 Align the company around these growth initiatives. Today, CA doesn’t fully leverage its mar-
ket position because the various parts of the company don’t work together well enough. To improve
integration and coordination and get better development focus on our growth markets, we have
aligned our development and product marketing teams into business units, all of which will have internal
Profit-and-Loss responsibility for their specific markets. Led by executives with broad experience
in both development and customer facing roles, these teams will be given responsibility for growing
our business and making the specific investments to do that, within an overall strategic and
affordability envelope defined by the company.
 Expand our markets with business partners. CA historically has sold its products almost
exclusively through its direct sales organization. Less than 10 percent of the company’s revenue
is generated through indirect channel sales. We know that in order to reach smaller and medium-sized
Letter from President and Chief Executive Officer John Swainson