Computer Associates (CA) is the computer industry's equivalent to Star Trek's Borg, assimilating companies as it grows. Through acquisition, CA's Chairman and CEO Charles Wang has grown CA into the world's fourth-largest software company. CA uses its acquisitions and core competencies to create some very important and interesting products in the areas of mainframe and object-oriented database management systems (OODBMSs), system and storage management, Year 2000 (Y2K) remediation, application development, and business applications.

Network management has long been one of CA's strengths. CA has grown Unicenter TNG from its roots as a Digital Equipment product into a framework that reaches into nearly every OS and important enterprise-class application. Unicenter TNG represented about 50 percent of CA's revenue in 1997.

The recently announced $3.5 billion merger of CA and PLATINUM Technology consolidates two network-management product portfolios into one. Combined, CA and PLATINUM have something near a 50 percent share of the network-management market, a market that Dataquest estimated was $11.3 billion in 1998 and will grow to $23 billion in 2002. This merger creates a software company with $6.5 billion in revenue, 600 products, 20,000 employees, and 4000 consultants. The deal is classic CA—it rescues a company that has a strong product base but 5 consecutive years of loss, then cuts costs to make the business profitable.

CA President and Chief Operating Officer Sanjay Kumar said, "At the end of the day, when you look beyond the competitive rhetoric, it is amazing the value PLATINUM will bring to us. Only a small piece of each company competed. PLATINUM specializes in data warehousing, database management, application life-cycle development tools, Internet commerce, Y2K, security, and system management."

Closer analysis of both companies' network-management products shows considerable overlap between them. Table 1 lists the competitive network-management products of PLATINUM and CA.

This merger dramatically reduces the number of significant players in the network-management enterprise arena. The three other large network-management portfolios are BMC Software, HP, and Tivoli Systems, an independent business unit of IBM. Although some of PLATINUM's potential customers might migrate to another vendor for future contracts, current customers might choose to stay with PLATINUM because replacing network-management software in an enterprise setting is difficult. The other major network-management vendors might come under increased competitive pressure from CA. To better its position, BMC recently acquired Boole & Babbage and New Dimension Software.

Historically, PLATINUM's corporate culture has been very competitive with CA's culture—some analysts might say hostile. In the past, PLATINUM President and CEO Andrew Filipowski stated several times that he intended to oppose a CA takeover bid. Many of PLATINUM's customer agreements contain escape clauses that provide free maintenance in the event that CA acquires PLATINUM. Therefore, CA might have difficulty managing this merger.

Database technology is one area of synergy between the companies. CA wants to use PLATINUM's data warehousing, business intelligence, meta data, and repository management experience to build an enterprise knowledge portal using CA's Jasmine OODBMS. The acquisition also gives CA important database tools for its Ingres II relational database-management system.

CA paid more than three times the share price for PLATINUM, an amount that CA claims is the largest amount any company has ever paid for a pure software company. Without an ulterior motive, the technology wouldn't be worth the acquisition's cost.

The real value PLATINUM brings to CA is a first-class 1000-person service organization that boosts CA's 1-year-old Global Professional Services (GPS) organization up to a 4000-person level and gives CA's network-management component critical mass. CA will try very hard to keep all of PLATINUM's service staff.

To build its service organization, CA has acquired a range of talent, primarily from business and channel partners such as Realogic, LDA Systems, Computer Management Sciences Incorporated (CMSI), QXComm (a Lotus Notes house), and Adventura (an e-commerce house). CA has service expertise in messaging, enterprise resource planning (ERP), e-commerce, Y2K, document management, project management, and almost any other area you can imagine.

I have long appreciated CA's agnostic approach to computing. CA's GPS will sell you NT or UNIX, Microsoft Exchange Server or Lotus Notes, or SQL Server or Oracle—whatever CA perceives to be best. CA's intent is to assess, implement, and complete projects quickly. This philosophy, coupled with a stronger service organization in network management, makes CA's GPS a most interesting player in the service marketplace and one to watch.