Computer Associates Wednesday announced that it is changing its business model so clients will have the option to subscribe or license the company's business software.
CA will enable clients to determine the length and dollar value of their software license with discounts determined by both parameters, the Islandia, N.Y., business software company said during a morning teleconference. Flexibility is a key benefit of the change.
"For the first time, we will be able to change the mix of software the customer needs," CA President and Chief Executive Officer Sanjay Kumar said during the teleconference. "We can't do that under the current model."
While customers will gain flexibility in how they get their software, CA will no longer see all of its quarterly revenue show up at the end of those three-month periods, Kumar said. He said nearly $1 billion of the $1.68 billion reported during CA's second quarter that ended Sept. 30 came at the tail end of the quarter. That occurs because of the way current software contracts are structured, he said.
Now customers will be able to choose month-to-month or longer terms for their software contracts, Kumar said. CA already is moving some of its clients toward the new way of doing business.
"It is a faster, simpler way of doing business," Kumar said. "I believe it will cause leaders in the software community to follow."
With the change, CA said it would change the way it recognizes revenue. CA says it will now provide pro forma and pro rata financial information because of the business-model change.
CA, in Islandia, New York, is at www.cai.com/.
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