Ca technologies bringing the cloud to earth case analysis

9-611-047 JUNE 27, 2011 MARCO IANSITI KERRY HERMAN CA A Techn nologie es: Brin nging th he Clou ud to Eaarth ve watched every evolution and a revolution in this industtry, and we’re at another infflection point. Cloud I’v compu uting is going to t happen for sure. s Write it down. d Put my n name on it if yyou want to. — William m McCracken, CEO1 It was barely 7:00 7 a.m. on a cold mid-M March 2011 m morning. Adam Famularo,, general man nager, Cloud d Computing g business, CA A Technologiies, had just spent 30 min nutes with Daavid Dobson n, EVP and group execu utive, Custom mer Solution ns Group, aat the comp pany’s Manh hattan officess. CA Techn nologies, a $4.4 $ billion company c hea adquartered in Islandia, New York, sells inform mation technology (IT) sy ystems mana agement and security sofftware solutio ons, primarilly to Fortunee 2000 companies and go overnments su upporting th hese organizattions’ IT env vironments. O Over the pastt year, CA Teechnologies had h launched a new strateg gy and underrtaken a restrructuring to reeorganize thee firm, and had h made a nu umber of stra ategic acquisitions—includ ding softwaree firms 3Tera,, NetQoS, Nim msoft, and Arcot A Systemss—which strengthened its cloud compu uting offerings. Fa amularo had been b working g on a strateg gy presentatio on Dobson w would deliverr to an audien nce of prominent CEOs, chief inform mation officerss (CIOs), and d chief techno ology officerss (CTOs) in a few weekss. The presen ntation focuseed on commu unicating and positioning CA Technolo ogies’ new strrategy for cloud c compu uting. Cloud computing,, described by some ass revolutionary, by som me as evolu utionary, and by b some even n as “disruptiive,” enabled the delivery of virtually liimitless IT cap pacity as a seervice over th he Internet. Fa amularo and Dobson had reviewed sev veral analystt reports as th hey prepared d the presenttation. 2 Analy ysts valued CA C Technolog gies at about $12.45 $ billion in early Janu uary 2011; ho owever, the reeports were a bit of a mixed m bag ov verall. On thee one hand, m many analyssts had been bullish abou ut CA Techn nologies in thee summer and fall of 2010,, citing the firrm’s tradition nal mainframee business, itss suite of virrtualization an nd security products, p the increasing m move of enterp prises to the ccloud, as welll as a new mainframe platform p releease from IB BM that wou uld mean ren newals and upgrades fo or CA Techn nologies clien nts. Additiona ally, analysts had h called ou ut the several 2010 acquisittions—particu ularly 3Tera a and Nimsofft—as strateg gic additions to the comp pany’s portfo olio. On the other hand, some analysts had voiceed caution, highlighting h CA C Technolo ogies’ need to o clearly statte its strategy y and objecttives and ideentify a com mpelling way to position and differen ntiate its clo oud offeringss. The indusstry was rife with mergeers and largee companies gobbling up p smaller staartups, often n as a defen nsive move, ra ather than forr any strategic or product alignment reeasons. Witho out a clear straategy, these kinds of acqu uisitions weree likely to fail. _______ _______________ _______________ ________________ ___________________________________________________________________ Professo or Marco Iansiti and Assistant Directo or Kerry Herman, Global G Research Grroup, prepared thiis case. HBS cases aare developed solelly as the basis forr class discussion. Cases are not inteended to serve as endorsements, e sou urces of primary daata, or illustrationss of effective or ineeffective management. Copyrig ght © 2011 Presiden nt and Fellows of Harvard H College. To T order copies or request permission n to reproduce maaterials, call 1-800-5545-7685, write Ha arvard Business School Publishing, Bo oston, MA 02163, or o go to www.hbsp p.harvard.edu/edu ucators. This publicaation may not be d digitized, photoco opied, or otherwise reproduced, posteed, or transmitted, without w the permisssion of Harvard Bu usiness School. This document is authorized for use only by Jennifer Armatis (JARMATIS1973@GMAIL.COM). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 611-047 CA Technologies: Bringing the Cloud to Earth Famularo thought back over the criticism CA Technologies had weathered; industry pundits claiming that the mainframe—CA Technologies’ bread and butter—was dead and would go away.