CA Technologies Plans Two-Year Channel Program Overhaul

CA Technologies is in the early stages of a two-year effort to rebuild its channel partner program and grow its channel sales over the next three years to reach 50 percent of the software vendor's revenue.

But those efforts require a strategic shift in the company's longtime emphasis on selling software directly to a relatively limited number of large "platinum account" customers. And that means changing the very culture of the company.

Those are the key points made by channel chief Alyssa Fitzpatrick and top sales executive Adam Elster in an extensive interview with CRN at the company's CA World 2014 conference in Las Vegas earlier this month.

[Related: CA Shows Off Expanded IT Infrastructure Management Toolset]

CA Technologies has had a less-than-stellar reputation for working with the channel, a point Fitzpatrick, Elster and other company executives acknowledged in presentations during the CA World partner sessions. In the interview, Fitzpatrick, senior vice president of CA's worldwide partner organization, and Elster, executive vice president and group executive, Worldwide Sales and Service, went into deeper detail about the changes now under way at the company.

"We have to change our strategy," Fitzpatrick said. "We have to change our company, because for the last 37 years [CA] has been built as a direct sales organization, selling large, complex software to large enterprises. What we have not done is understand how to build products and take products to market with our partners."

"I think we spent too much time thinking about what was good for CA as opposed to what was good for our partners," Elster said. The channel "is a huge lever that every other company in technology has learned to use to grow in the market. And we have not."

CA's channel efforts have been further hobbled by the fact that the channel chief post has been something of a revolving door. During the interview, Fitzpatrick noted that she's the fourth channel leader partners have seen in three years.

Solution providers have reason for skepticism, some having heard CA's vows of channel commitment, only to see little change. "There has been no change in the last six years. We have heard this before," Umair Akhlaq, senior portfolio manager at Duroob Technology, a Riyadh, Saudi Arabia-based solution provider, told company executives during a CA World question-and-answer session.

So what's different this time? CA's revenue growth stalled at $4.78 billion in fiscal 2012 (ended March 31) and declined to $4.61 billion in fiscal 2013, and then $4.52 billion in fiscal 2014. Company executives, including Michael Gregoire, CEO since January 2013, understand that in order to resume growth, the company has to break free from reliance on its existing customers for sales and grow its user base with new customers -- both large, established companies and fast-growing smaller ones.

Elster estimated that just 500 major customers account for 75 percent to 80 percent of CA's sales today -- just 1 percent of the 50,000 businesses and organizations worldwide that Elster estimates are potential customers for CA's products.

"Far too much of our revenue over the last few years has come from a small number of customers," Elster said. "And the model to sell to those customers is selling direct. When you have far too much of your revenue in an isolated group of accounts, it makes it very hard to grow. So what we needed to do was find ways to get to new customers."

CA's current partners, including systems integrators, regional solution providers and managed service providers, are sometimes involved in deals with those existing customers. Elster said CA's plan is to leverage its partner base to work with the company's sales force to reach the other 4,500 or so larger "named" accounts within its addressable market. And the company will rely almost exclusively on partners to reach the other 45,000 smaller potential customers.

"I don't have enough OpEx [operational expenditures] in my budget to possibly hire enough people to go to market," Elster said. "What we don't do as well is leverage partners to go after new accounts."

The CA executives have their work cut out for them. Fitzpatrick, who previously led McAfee's Worldwide Alliances organization, was hired in January. And while she says she took the job fully expecting to have to "reignite" the company's partner efforts, she soon came to understand the problems went deeper.

"About three months later, as I started to really dig into what was making us ineffective as a partnering company, that's when I started to understand the root of CA's problems," she said.

It wasn't just a question of fixing a broken channel program, she said. "We had to change our strategy. We had to change our company. We never built ourselves as a partner route-to-market. This was a problem much bigger than the partner organization," Fitzpatrick said.

Fitzpatrick went to Elster with her conclusions and together they went to CEO Gregoire, who gave them the green light to develop a blueprint to overhaul the vendor's go-to-market efforts.

"I mapped out a two-year strategy with four-to-six-month waves of exactly what we need to do to get there. And we took that to our executive team, and then we took it to our board. And they absolutely agreed with our strategy. They understood, finally, the root of the problem, and that's what we're building on now," Fitzpatrick said.

During the one-day partner sessions at CA World, with about 1,000 people from roughly 400 partners attending, Fitzpatrick alluded to some of the program elements her team is working on as part of the "first wave" that began Oct. 1.

NEXT: CA's Two-Year Plan: What Partners Can Expect

Topping the list are detailed rules of engagement and a code of conduct that spell how CA will work with its partners and how they will jointly service customers. CA also is providing partner education and enablement resources to make sure they understand the company's products and their value proposition. And, finally, CA is developing ways to streamline solution providers' selling efforts, including developing online price quoting and product configuration systems, and better understanding the best way CA can package its products for channel partners and their customers.

Elster has shifted some resources from the company's direct sales operations to work with channel partners to go after large-company "named account" prospects. But can he change the mind set of CA's sales force? "The sales team understands the market opportunity," he insists. "And they understand that, to be successful, we're going to have to run more than one business model."

Some channel partners already are seeing changes. "Today, I had a CA sales director asking me how he could work with me, instead of telling me how I should work with him. How about that?" said Ed Pascua, senior vice president at Simeio, at CA World.

Simeio is a CA reseller and services partner that works with the vendor's identity and access management software. What Pascua finds most attractive about CA is the company's "best-of-breed" product line. But he has taken note of the new people in key positions within CA who have a channel background "and understand what partners need and how partners can best add value," he said. "CA understands the value of our domain expertise."

Some partners think CA can do a better job of tapping into its partners' expertise, technical as well as domain, and see them as a potential resource for product innovation. In an interview at CA World, Stephen King, CEO of OpenMake Software, a Chicago-based partner that specializes in DevOps, noted that CA has actually "de-invested" in development technologies in recent years, and OpenMake can offer advice on what customers are looking for.

"There's already more expertise and technology in the ecosystem," King said. "The questions is, how [does CA] embrace that? I think it can work both ways."

Some CA partners won't make the transition. Elster notes that, because CA's product line has changed greatly in recent years, "There's some [current] partners who probably aren't the right partners for us for the future."

NEXT: Making Big Bets

Earlier this year, for example, CA spun off its ARCserve backup-and-recovery software business as a separate company. While that was a popular channel product, Elster said the packaged ARCserve application was a "box" product that didn't fit with CA's strategic portfolio.

"If you want to be a partner, you don't want to major in what we minor in," Elster said. "I want partners to major in the same things we're majoring in and make big, big bets. Because that's where they'll see the impact." Pointing to the company's key technology areas like DevOps, API management and security, Elster said, "We're getting a lot of new partners and established partners who want to bridge into new areas."

PricewaterhouseCoopers is one partner that's on board, especially given "the investments and market focus CA has put on DevOps," said Michael Pearl, a PwC principal advisory, in an interview at CA World.

"We have a historically strong relationship with CA, and that certainly continues," he said. "They are very serious about developing these partnerships to serve their customers."

Today, the channel accounts for roughly 35 percent of CA's sales, and Elster believes that, starting next year, the company can add 8 percentage points a year to that to reach 50 percent in 2018.

"If we embrace our partners and we cultivate and build the tools, the systems, the structure and the programs to support them, the opportunity is gigantic," Fitzpatrick said. "I think it's huge for them, and it's huge for us. We want to build their business."

Still, CA's executives are careful not to overpromise and note the company's channel journey will take time.

Fitzpatrick pointedly did not announce or launch a new partner program at CA World, with all the fanfare one might expect. "I want to provide content, value, tools, structure, and I want to roll it out as we deliver it," she said. "We're working on it; we're listening. I'm not going to stand up and say: "Here's the new program, here's the future state of perfection."'

"I think that when we get to April, we're going to have something to be really proud of," she said. "It's taken a lot of work to understand the root of the problem. And now we're driving for it. My actions are going to speak louder than my words."

PUBLISHED NOV. 24, 2014