With John Swainson at the helm, CA has emerged from scandal to record its eighth straight profitable quarter, writes Karlin Lillingtonin Las Vegas

FEW TECHNOLOGY stalwarts in recent years have needed a safe pair of hands as badly as management software company CA (formerly Computer Associates).

Co-founded by Charles Wang, CA went on an acquisition spree for many years that resulted in a classic case of acquisition indigestion - lots of companies across diverse sectors that were poorly integrated into an increasingly personality-less CA.

Then, under Sanjay Kumar, there were rumours of financial and accounting improprieties that resulted in indictments and the jailing of Kumar. Into that perfect storm sailed new chief executive John Swainson, taking on a monumental rebuilding task.

Four years later, CA has just recorded its eighth straight profitable quarter. Like HP's Mark Hurd, also drafted in to steady the helm at a faltering tech giant, Swainson is a down-to-earth chief executive - sound, not flashy.

In Las Vegas for the company's CA World conference, which is held every 18 months, Swainson is quietly upbeat. An amiable if somewhat awkward public speaker, he is confident and direct in person, discussing the economy, the recent US presidential election, and his role at CA.

Asked what the biggest topic of discussion is for delegates this year, he doesn't hesitate: "I think clearly the biggest topic is just the uncertainty surrounding the current economic environment. You can deal with certainty; you can't deal with uncertainty. It causes a certain amount of paralysis in the system. It's pretty clear we're in a period of uncharted waters. On the other hand, you do know this too will pass."

He says he has "cautious optimism" about where the economy might go next, but notes it will be a time of trial for businesses.

"People will either come out stronger or weaker. You have to be very productive, put your investments in the right place.

"What we do isn't particularly sexy," he admits - CA produces software that manages networks, systems and processes - "but it is important and keeps people's businesses working better."

Hence, he feels CA will do better than others at maintaining market share.

This is a time of consolidation across all sectors, he notes. So would he see CA - the last independent company in its sector - as a candidate for acquisition?

"We're certainly not looking to be acquired. We're looking for opportunities," he says. "We're seeing considerable opportunity at prices that were not there before. We see ourselves as big enough to be viable. We're the fifth-largest software company, the largest in our segment, and reasonably well-positioned.

"We spent the last year positioning our business. We have a strong balance sheet and no net debt. We're in a position to be aggressive, instead of just hunkering down. We'll do better than many."

Any acquisitions CA makes "are going to be in our core business", he says - businesses "that fit into our technology portfolio and give us a better solution. I think you're likely to see us sweep up small, maybe medium-sized companies."

Growth isn't all through acquisitions - CA also spends $600 million (€477 million) on research and development, Swainson adds.

One fresh focus for CA, announced at CA World, is emerging technologies - managing the increasing proliferation of networked devices in industries such as health and energy. "These are markets that haven't used a lot of devices so far, but will. They will need to be governed, managed and secured. And those things all look like extrapolations and extensions of our core business. We see a really interesting emerging opportunity."

What about the business climate under incoming US president Barack Obama? "I think the president-to-be is going to be constructive. There were a lot of things said during the campaign that wouldn't necessarily be helpful to business. But I'm quite optimistic about the prospects of the new government. The names being bandied about for roles are all capable people," he says.

But Swainson is a bit exasperated by the public mood at the moment. "People have gone from irrational optimism to irrational pessimism," he says.

He is candid too about the CA he inherited: "It had been decimated by changes, both by the previous management and the previous board. There was really no sense of direction or purpose. Among the many tasks that management had to do was pull itself together and form a new team."

Swainson is confident that the company now has that strong management. "Having a strong team enabled us to come out the other side," he says.

So what was CA's problem? "It was a company that grew very quickly through the 1990s. It was a founder-led company [by Charles Wang] and that was a problem. It hadn't put in the needed skills as it grew. I don't think it had the processes or the management skill to navigate through. And, obviously, people did bad things," he says.

"Suffice to say, we had to do a lot of work on management, and also on the culture."

Why the culture? CA "didn't have its own culture; it hadn't really gelled," he says. "It was always in crisis."

And now? "I don't think it's a John Swainson culture. I think you get a culture the organisation wants. But it takes years, maybe decades, to form. But now, I think people feel a loyalty to CA."

Swainson agrees that technology company leaders need slightly different skills from business leaders generally.

"There are some things that are unique and different. I think every successful leader of a technology company has to deal with motivating a technical employee base, and has to be familiar with technology itself."

Swainson, a bit of an engineer's engineer, has earned the stripes to lead engineers. He put in 26 years with IBM in more than a dozen roles, and was one of the key figures behind IBM's WebSphere middleware platform.

Asked what he is most pleased with about CA, he says: "I am very proud that the company is here today, better and stronger. I don't mean to sound self-serving, but that doesn't always happen. I'm proud of the fact that, four years later, we're sitting here with eight successful quarters [of profit], we rebuilt a franchise with customers that was sorely damaged, we reinvested in the business."

He'd be happier, however, if the company was now emerging into a healthy international economy as well.

"At points, we had everything in the air," Swainson says, then smiles. "But the point is, we did pull this off."