CA snaps up Concord

Computer Associates President and CEO John Swainson last Tuesday outlined a corporate reorganization designed in part to better focus the company on new opportunities in management software. Two days later, the company started making good on that plan by announcing the $330 million buyout of Concord Communications.

CA, whose strength is in systems and security management, says it is making the deal to add network management technologies to its portfolio. Concord’s flagship eHealth software is used to monitor and report on the performance of networks, including those that support VoIP, wireless and other new applications.

“When we do lose in accounts, it’s typically because of network device support. Customers are simply not buying systems management wares independently any more. . . . This acquisition will help us keep up on the network front,” said CA COO Jeff Clarke during a conference call.

In recent months, Concord has been the one making acquisitions. The company, which lost half a million dollars last year on revenue of $106 million, bought IT business service management vendor Aprisma for $93 million in January and converged network management vendor Vitel for $4 million in December.

Industry watchers say CA’s Concord acquisition could help the company better compete with HP and IBM, but that CA also will be challenged to integrate eHealth and Aprisma’s Spectrum technologies with its own Unicenter offerings. In addition, CA faces the prospect of trying to convince Concord’s 3,500 customers to stick around.

“It’s going to be an especially difficult task to work through three sets of products, all of which could be considered best-of-breed for various capabilities,” says Deb Curtis, a research vice president at Gartner. “In any acquisition maintaining the customer base is critical, but for CA, many Concord customers familiar with its past reputation and not the customer service efforts it’s been making for the past two years may be disappointed with their new owner. CA is going to have to work very hard to assure them of their new focus on customer satisfaction.”

One user of eHealth and Spectrum products says she isn’t quite sure what to make of the acquisition yet.

“My initial reaction is one of uncertainty. We have not officially heard from Concord, and CA’s reputation for how they acquire companies isn’t instilling any great trust in me at the moment,” says Kim Jahnz, lead WAN data network engineer at Aurora Health Care in Milwaukee. “We have two very good products in Aprisma’s Spectrum and Concord’s eHealth suites and are concerned about what may happen to these products going forward.”