US-based software developer Computer Associates has altered its direct licensing model to a month-by-month lease rather than the mandatory three to five years in an effort to capture SME business.
The hefty cost of CA's long-term licences has previously locked the vendor into the Fortune 500 space. However, with SME representing more than 60 per cent of the market place, CA feels its future relies on positioning itself to capture this business.
The new model has limited impact on the company's channel partners who traditionally sell shorter-term licences, according to CA. The vendor's channel partners appear to be unanimously in favour of the changes, with many saying the vendor's price structuring needed revisiting.
John Palfreyman, managing director of Baltimore Technologies which sells CA software as part of its outsourcing solutions, says the new model has the potential to generate new business for Baltimore. CA resells Baltimore's PKI security solution as part of its software entourage and the sales-push into SME may create opportunities for Baltimore to manage the PKI licence.
Terry Carter, manager of services marketing for CA channel partner Fujitsu Australia, adds that CA's rebranding initiative, which includes a new logo, is making business more straightforward for CA partners. "We know exactly what they're bringing to a deal and it makes it that much easier to manage," says Carter.
CA's new branding emphasises the vendor's focus on e-business in six specific areas: enterprise management, security, storage, portal and knowledge management, e-business transformation and integration, and predictive analysis and visualisation.
Meanwhile, CA is looking to recruit as broad a channel as possible to access the niche sales and vertical markets.
The new business model will see CA's growth earnings slashed from the $US7.7 billion it posted for the 2001 financial year to $3 billion. But this initial loss will secure the company's future health, according to Stephen Richards, CA executive vice president and general manager of sales.
Richards says the old accounting model drove the company to act unnaturally, cramming all its transactions into the last week of a specific quarter.
"It got away from the value the technology represented to a customer's business. We were simply conforming to the regulations the government imposed because that's the way business is measured," he says.
"Wall Street has always looked for certainty in the technology industry. This model brings predictability to the revenue stream while giving the customer better purchasing options."
Richards expects other software companies to follow in CA's footsteps, however the move requires the ability to "take it on the chin" and he feels the inflated egos of some companies will make the transition difficult.
Photograph: Baltimore Technologies MD John Palfreyman