Ca Technologies Case Study free essay sample

But CA has to face a new challenge whether it continuous to keep major business in mainframe or make a thorough transformation from mainframe to cloud computing. In the process of developing, CA met a lot of problems. Developing cloud computing needs a huge amount of money. CA needs to hire more high-tech specialists. In the meantime, maybe CA still needs to spend time on maintaining current mainframe and its clients’ data. If CA want to keep its mainframe and develop cloud computing in the same time, CA should separate the company into two major department: mainframe department and cloud computing department. Even though we think CA have a lot of challenges in the transformation process. CA still has a lot of opportunities and advantages in the technology field. We recommend CA to maintain its main business in mainframe, and increase the investment in development of cloud computing. Overview CA Technologies is one of the largest independent software corporations in the world. They have maintained its well-respected position in the mainframe and client server business for the past thirty years. CA Technologies have expended their business to Asia, Africa and South America. The company created software that runs in mainframe, distributed, virtualized environments. Early mainframe computers ran software applications to help manage and automate a company’s many processes. CA Technologies and other software management companies developed software that streamlined and automated mainframe operations, lowering cost and freeing IT staff to work on more strategic projects. As the evolution of computing technologies, cloud computing dominated IT discussions. In 2007, as a 30-year-old technology business, CA had the most complete portfolio of management software from mainframe to client server. But some insiders thought the old strategy would cause the declining of the company’s revenue. After firm-wide strategic sessions and internal surveys, CA was reorganized to a new strategy. Four strategic pillars were established and a fifth area covered all aspects of CA cloud offerings. To strengthen the cloud computing capabilities, CA made some acquisitions from 2008 to 2010. Some insiders worried about this newborn company. Concerns regarding the security of cloud offerings surfaced from critics and others and positioned CA Technologies on a test to justify that cloud is safe to use. Not only opportunities, CA still faces a lot of challenges. Many challenges for CA would be solved like how to communicate the nature of CA Technologies’ strategy and transformation to its customers or something about technology and organizational issues still need to be done. Despite all the problems and challenges, CA’s leaders strongly believed the cloud computing will make the company to become the pioneer of this field. Problems Technology Issue: 1. Uncertainty of CA’s capability to do the cloud computing. As we all known that the main business of CA technologies was mainframe, and it accounted for over 60% revenue and majority of its profits. Furthermore, CA technology has possessed a good reputation in the mainframe market. As the new technology developed and the evolution of the industry, cloud computing appeared and has become the trend for the present business world. In order to develop its promising succession plan and maintain its highly competitive strength in the market, CA would like to transform its mainframe business to new technologycloud computing. Nevertheless, they do not have enough capability to get into the cloud computing market because cloud computing was based on nearly all of the concepts that were different from the mainframe environment, so this will be a challenge for the CA Technologies to get involved in the market. That is to say, the company needs talents to build up related technique and marketing experience inside the company. Also, the company needs to consider whether they have already had the enough capability to do the cloud computing by themselves. Alternative 1a. Acquisition Large corporations don’t easily innovate, so CA Technologies can choose some small companies or even integrate some startups, such as some cloud computing platform software companies, some cloud-based authentication software companies and cloud infrastructure consulting company etc. By using acquisition strategy, CA can acquire more experienced workers and gain more related resources from those small cloud computing companies. This implementation would make CA Technology get into the cloud computing market more easily. Also, Acquisition is a more efficient way that won’t take CA Technologies too much time. 2b. Self-develop research team CA technologies has already acquired several small cloud computing firms since the company changed its target from the mainframe market to the cloud computing market. Perhaps, the company can decide build its own research and developing team based on their previous acquisition to keep growing its key cloud computing technique under its market strategy. After all, after the acquisitions, CA Technologies has already had related technologies and recourses, and they do not need to do acquisitions all the time. Moreover, acquisition needs rich cash flow, and it takes time to evaluate the effect. The priority thing for CA Technologies is to integrate the technique and knowledge it acquired from those start up cloud computing companies. The company can use what they have gotten from the various acquisitions, such as the cloud computing platform, the security software solutions and some data to build up its competitive advantage. By building its own research team and growing the firm’s young talents, the company will ensure its innovation and ability to fit in the competitive cloud computing market. 2. Cloud computing security problems When the cloud computing first launched in the market, not all the people trust this new technology. Security was one of the major concerns. For the public, mainframe looks like a safer way to store data. At least, customers can see there is a mainframe in real, and the mainframe system is considered the company’s asset. On the contrary, cloud computing is entirely based on the Internet which seems vulnerable to virtual attacks. That is why some big companies refused to use cloud computing system in their business. For CA Technologies aspect, in the new era of cloud computing, any incident pertaining to privacy or security even a minor one is the fastest way to erode brand equity and consumer trust. As more and more information on individuals and companies in placed in the cloud, concerns are beginning to grow about how safe an environment it is. If the security issue doesn’t be solved, the cloud computing market will lose customers and CA Technologies will get in trouble. Alternative 2a: Strengthen the ability on solving the security issue Although cloud computing system is a new helpful technology, there is still plenty of security issues associated with this innovative technique. The security issues can be divided into two categories, security issues faced by cloud providers and security issues faced by their customers. Since now, the could computing system is based on the internet and users will be easily exposed to any kind of online threatens. Hackers can steal a lot of customer information in clouds and they will be more willing to do this since their effort can bring more profits if they succeed. For CA Technologies, the company should develop highly protective security approaches and techniques to prevent data breach and privacy issues which is more considered by the users. Alternative 2b: Eliminate misunderstandings on security issue In fact, for numerous cloud computing providers, they will not put eggs in one basket. The clients’ data might be stored separately in different places. This implementation can highly reduce the risk the clients consider the cloud computing technique. Besides developing solutions for security, correcting the stereotype of the public is also an important part for marketing department to address. Marketing Issue: 1. The change of the market. Historically, around 85% of CA Technologies’ revenues came from roughly 1000 companies that are $2 billion and above. That is to say, the traditional mainframe business strategy of the CA technology is almost focusing on big companies. However, by considering the high switching cost and the security problems, the big companies are reluctant and react slowly on making changes. What’s more, lots of mainframe fans believe that the mainframe is still the best place to store and secure data. And many think that cloud computing is â€Å"overblown†. On the other hand, more and more small businesses highly rely on online platform, signing up with private providers that make sophisticated applications more affordable. Because cloud computing can offer small businesses significant cost-saving benefits—namely, pay-as-you-go access to sophisticated software and powerful hardware, so those small and media companies are increasing more needs for cloud computing. Thus, facing the external change, CA Technologies should think of how to balance its previous mainframe business and expanding new could computing market. Alternative 1a: Develop proper market segment and maintain its previous mainframe service Different companies have different needs. CA Technologies can divide a board target market into subsets of consumers who have common needs, and then design and implement strategies to fulfill their needs and desires. Although CA Technologies reengineered itself and has gone forward to cloud computing market step by step, it doesn’t mean that CA Technologies should give up all its mainframe customers. CA Technologies still can retain their strong point-mainframe, and do business with the big companies who are reluctant to move to the cloud computing environment. Perhaps in the future when those companies find out that they should also dapt cloud computing technology, their first choice will be the CA Technologies since the company is their loyal and responsible provider. Alternative 1b: Arouse cloud computing awareness Because CA Technologies is a newcomer in the cloud computing market, not all potential customers are familiar with the company. Developing a suitable marketing strategy is critical to arouse its brand an d awareness in the market. For the B2B market, building a positive reputation is the key since the way of word of mouth can easily bring more possible customers to the company. Moreover, CA Technologies can use social media to let people know and trust the company. By using the social media, CA Technologies can tell their customers that they are not only good in the mainframe market but are also ready for the new technology, cloud computing. This can create certain impact, attract more customers and build the brand loyalty. Alternative 1c: Convince big companies to use the cloud computing To win the business deal for cloud from big companies, CA Technologies first needs to change traditional and stubborn ideas of those big companies and convince them that cloud computing is the trend in the future. Advertising the convenience of the new technology and how helpful the cloud computing is to their business will be a persuasive strategy to make them become the customers of CA Technologies. Also, reducing their worries-lower the switching cost and reducing the risk is another convincing way. After all, the main concern for all companies is to increase the revenue and reduce the cost. Furthermore, helping the big company to adapt to the cloud computing environment quickly is critical. When the movement is easy and rapid, the big companies will be willing to make the change. . Sharp competition A range of competitors has offered cloud computing products and services, including traditional software and storage management firms, security and data management firms, software service providers, or application software firms, but also hardware manufactures, and even web services companies. Lots of large companies, such as HP, IBM, Microsoft and Amazon etc are trying to seize the market shar e. Alternative 2a: More focus on some specific area such as HRIS. CA Technologies need to develop their own characteristic cloud computing products and service. We can see the form in the case Exhibit 9, the forecasting market size of SaaS is the highest in the projections for Cloud Computing. It means that there are more opportunities for CA Technologies to gain market shares in SaaS. So developing is critical. CA technologies can focus on SaaS, and there are lots of more specific software in SaaS, such as Human Resource Information System, which is software for the data entry, data tracking, and data information needs of the Human Resources, payroll, management and accounting function within a business. If CA Technologies can focus on some specific software and service, it can help the company to improve the brand image and gain more competitive advantage. Alternative 2b: global extension Cloud computing technology is the trend for the future, but it’s not widespread the entire world. In US. , the technology is developing faster than the other countries, and the competition is even sharper, so in order to increase the market share, CA Technologies can expand its market internationally, such as launching in some developing countries, helping them finding out their needs and meet their need of the new technology. Internal issues: 1. Perception from the insider We cannot deny the trend of cloud computing. Analysts pegged potential savings for enterprises using the cloud at about 40%; one analyst projected cloud computing would save Europe’s five largest economies as much as $ 920 billion from 2010-2015. CA technology should reap the benefits of the new technology. However, the industry insiders hold negative view on switching the core business to cloud computing and questioned the significance of cloud-based opportunities, they thought cloud computing has some issues concerning security, which mainframe had less. They are reluctance to accept the new technology in views. So this reluctant view impeded the development of cloud computing at full tilt. The reluctant view is demonstrated in the conservative investment in this technology, and the strategic choice in the development. Alternatives 1a: Change the perception of industry insiders by training. The industry insider questioned and suspect the cloud computing. By proper training sessions, employees will hold a common goal with the corporation, and develop the cloud computing without hesitation. Alternatives 1b: Hire talents who focus on cloud computing Hiring new talents who are specialized in the development of cloud computing is like insert new blood to the company. They will bring new ideas into the corporation. This strategy will vitalize the whole department. Alternatives 1c: Reorganized the organizational structure, and divide into two departmentsone focus on mainframe, the other focus on cloud computing. Cloud computing is the future trend of IT technology, so the company should slowly adapt to this trend, and then switch the mainframe to computer clouding. However, this transition process may take time. Now what the company can do is to set apart of the two business, and research and develop on both subjects. Because now, mainframe contributes a great deal to the annual revenue, it is unwise to give up the investment and totally switch to cloud computing. Setting up different department for the two technology development may be a choice. 2. Resource allocation Although mainframe contributes a lot to the annual revenue, it is the age of cloud technology. CA technology should newly determine the allocation of resources between mainframe and cloud computing. Alternative 2a: Continuously maintain the mainframe Mainframes may be 1960s’ technology, it did not be replaced by other new technology in more than 60 years, because it is in continuously development and improvement. And Mainframe still plays the main role in the CA technologies. Some advanced mainframes can potentially be used to build private clouds, those nebulous networks with closely delimited borders but offering several advantages of cloud computing. By maintain the mainframe, new versions of mainframes will be announced in future with customized and novel features. Alternative 2b: Enhance the investment in cloud computing. As a world-class large-scale mainframe provider, CA technology has a certain reputation and professional technical quality, so the company can on this basis to develop the cloud technology. The two technology are not excluded each other. And cloud computing is the future strategic direction. Scenarios 1. Information security risk (Likely) In the modern society, information security becomes more and more important. Massive size of data means that well operated security has to be considered, especially in the virtualized field. If an information company reveals clients’ data, it will be a huge disaster. So CA Technologies should invest some money into information security field. They can establish a network security department to deal with emergencies such as hacker’s invasion and virus. 2. Political risk (Likely) Cloud computing was created in the information era. There are still many deficiencies in legislation and management. As is known to all, sharing is a symbol of information era. 115 Cloud Drive, pioneer of Chinese cloud drive market, closed its public sharing function and lost 40% market share. 115 Company was destroyed by intellectual property law in China. So CA has to take care of new law and policies to prevent possible events. 3. Abandoning traditional service The biggest characteristic in information era is fast. System evolution, hardware update and many other things about computer are all in high-speed change. CA’s mainframe system is a good example. Although it has some advantages that cloud computing cannot struggle with now like security and liability, it’s an old toy from last century. Abandoning traditional service and offer new and more reliable ones are most important. 4. Merged by a large IT company Cloud computing are becoming more and more important and popular today. As a top 10 leading IT company, CA Technologies must be a target by other companies that want to enter the cloud computing market or expand their market share. However, it’s costly and risky to merge a company like CA Technologies. If CA want to expand its business to other fields, merging can be a good option. Appendix I: SWOT Analysis Strengths: 1. Reliable customer resources CA technologies offer products and services for various industries such as government, banks, retailers, medical companies and technology companies. They have maintained a strong relationship with major companies of these industries since 1990s. For example, they formed partnerships with Microsoft and Netscape in the mid-1990s. At the same time, their business scope extended to other countries including China, South Africa, Japan, etc. 2. Strong Ramp;D capabilities As a technology based company, CA always focuses on the latest technologies. With the strong support of research and development ability, CA technologies are always the first mover in the industry and always launch new products or lead technology revolution in the first place. The first mover advantage ensures that CA maintains its pioneer position in the whole industry. In addition, CA acquires some companies that already license or develop products of new technology. Therefore, CA can supplement its Ramp;D capabilities quickly. Weaknesses: 1. Lack of diversified business Nearly half of the revenue comes from CA’s mainframe solution business, which account for a high proportion of the profits. This situation illustrates that CA is depending too much on its matured markets. If mainframe solution business is affected, CA’s profit will also be negatively affected. . High risk of incompatibility CA Technologies depend on acquisitions to achieve new technologies. However, acquisitions may cost too much time and efforts. On the other hand, there may be inevitable difference and conflict of enterprises culture after merge. Opportunities: 1. New growth opportunities of cloud computing CA decided to turn to go after cloud computing, which is the most popular discussion in IT industry. Cloud computing is disruptive evolution that enables the delivery of virtually limitless IT capacity as a service over the Internet. Therefore the demand for cloud computing services is enormous. This trend can bring CA technologies new profit growth opportunities except mainframe business. 2. New customer market Before CA’s new choice, the customers of its mainframe business are big companies such as Microsoft and Netscape. After turning to cloud computing business, CA has more access to small and medium companies. It may expand the scope of business of CA. Threatens: 1. Doubts of industry insiders Some insiders still have doubts about cloud computing. Many conservatives may prefer mainframe rather than cloud computing. As a completely new approach to IT industry, cloud computing may need more time to be accepted. 2. High competition There exists intense competition in cloud computing business. CA’s competitors, such as IBM and EMC, all have solid financial support, rich technology resources and strong Ramp;D ability. Moreover, increasing number of companies join into the new market. Appendix II: Porter’s Five Forces Level of Competition: High Many IT companies, whether they are big companies or not, are involved in cloud computing business. Suppliers’ Bargaining Power: Low There are a lot of suppliers in the market, and most of them can offer competitive products and services. Customers’ Bargaining Power: Middle There are large amount of customers in the market, while the cloud computing services of IT companies are similar to some degree. Threat of New Entrance: High The entrance level of cloud computing is low. Even with limited resources, small-scale companies can provide such services. Threat of Substitutes: Low It is difficult to substitute all the hardware for cloud computing.