Computer Associates Confidently Pursues Feds

Wang, who has acquired 60 companies since 1976, actually plans to lay low for the next six months. Unless, that is, he changes his mind. "I don't think I'll ever be content," Wang says, smiling.

When it comes to plugging the latest version of software in Computer Associates' enterprise management line, Wang puts jokes aside and boldly predicts Unicenter TNG will become the standard in the federal marketplace.

"All the federal agencies are going to want it. There's no question they will," says Wang, 52, chairman and CEO of the Islandia, N.Y.-based company that had $3.9 billion in revenue for 1996.

Computer Associates officials say one unnamed Department of Defense customer formerly had two employees overseeing a single server. Six months ago the workplace was transformed, and a single employee now monitors 15 servers using TNG software.

"If you want to drive the cost of computing down, which is the aim of what the government is trying to do, you have to [use the software]. You're crazy not to. The cost will zoom through the roof if you don't use it," Wang says.

The world's third-largest independent software company is staging a full-court press to promote Unicenter TNG as the dominant solution for the increasingly complex commercial and government computing workplace. The product is designed to provide an end-to-end management tool to monitor and control IT systems from the desktop to the mainframe, from the local area network to the Internet.

Unlike other function-specific products that only manage a single resource such as a single network or system, Unicenter TNG looks at the big picture, using three-dimensional graphics to stay on top of networks, systems, databases and other parts of the infotech structure regardless of location.

Currently, federal agencies make up only a handful of the 200 companies using TNG. But the Unicenter software line accounts for half of Computer Associates' federal product sales. The company expects to do $200 million in federal business this year. Federal agencies have reported saving at least 50 percent on systems/network operating costs using Unicenter, company officials say.

The company's Unicenter enterprise management line has enjoyed market acceptance since its introduction more than four years ago. CA has roughly 25 percent of the total market with $700 million in sales, according to the market analysis firm Gartner Group. However, CA officials claim the company's share is closer to 30 percent.

But trouble may be brewing for Computer Associates as TNG's closest competitor, TME 10, looks to take the lead, according to a new Gartner report. It is produced by Tivoli Systems Inc., an Austin, Texas, company that IBM bought a year ago.

"Tivoli is a significant force," says Igor Stenmark, an analyst with Gartner, based in Stamford, Conn. "They are something CA has to reckon with. They had virtually no revenue three or four years ago, and now IBM has purchased them. IBM, in terms of revenue, is 20 times the size of CA."

The Gartner report indicated that CA received unusually negative feedback at its EuroSymposium in November with regard to Unicenter's product satisfaction. While initial response to TNG has earned high marks, Gartner has predicted that TNG won't be production-ready for mainstream customers for another year, setting the stage for Tivoli to make up ground.

But analyst M.K. Agarwala of UBS Securities in San Francisco gave Computer Associates a glowing forecast. Shifting away from a mainframe-based market that is only seeing single-digit growth, TNG will increase the company's hold on the client/server market, where current annual growth estimates are at about 40 percent, he says.

"For the maximum bang for your buck, you need a comprehensive management system," Agarwala says. "[TNG] will enable them to deliver there."

Group Editor Jack Sweeney contributed to this report.