CIO UK: Does the rise of cloud mean the death of the mainframe?
Bill McCracken: I think there are cycles and particularly when a new technology comes out the discussion usually comes back to what is going to happen with mainframes, but I think the mainframe will continue to be a major driver in the industry. It continues to be a major part of our business so I don’t see it going away. It’s not growing fast, no more than 2 per cent. So, it’s about $2.5bn in terms of revenue in the mainframe for us, against in the enterprise we have low double-digit digit growth.
So cloud services can drive mainframe usage?
We see the mainframe being used in cloud implementations. One of the best ways to change the utilisation of mainframes is a private cloud implementation. We did that ourselves internally. So about three years ago, we changed our test environment. We went to a cloud implementation because we have about 35,000 developers and when they went to test-time they would have to wait as much as a week to get the resources, which was a major productivity barrier. We installed a cloud application to the test environment and now it’s ours. What it did is it took advantage of all of our mainframes we had around the world and brought everything together so we were able to reduce from the week to a number of hours.
How will cloud services impact on what businesses do with technology internally?
When I joined this industry the real value was in the application but in today’s world, the application holds a little bit less value and here’s why. If you wanted to do an ERP system you can get it from Oracle, you can get it from SAP, you can get it from so many places so the challenge is how fast you can get it up and running in your location. And the answer is you get it running more quickly because it’s in the cloud. We are a great example of that. When I joined the board of this company back in 2005 and we did not have sales data about this company. We were not going to have sales data about this company for a couple of years. We were pulling SAP in around the world and converting everything to SAP, so all our resources were dedicated to that and they were not available to put sales reporting in place. One of our board members said why don’t we install salesforce.com and two months later we were getting that sales data.
How do you think your customer base is likely to change in the next few years?
I think there’s a lot of change going on in the industry and I think service providers could be a big part of our business going forward, because they provide services around the technology that customers need but we don’t provide and we don’t plan to provide. Our customers need them but it’s oftentimes specific to their industry and to be able to provide that support you need to be an IBM. Our effectiveness in the marketplace is enhanced by partnering with many service providers, systems integrators and so on so it’s a major trend in our business and how we reach our customers. I think the reach of a partner program now is in the high single digits now. I think that will approach a third of our business over the next couple of years and grow beyond that as well.
What would you say is the one technology that will shape business in the future?
Clearly social media has a big has had a big impact on all of us, both personally and professionally. I think it’s a lower costs method of reaching people. I think it delivers your messages simply and effectively and is just changing the way we live as it changes the way businesses deal with their customers. One of the early things it happened to me in this job is one of my people came up to me and said they’d had the social media shut down. He asked me if I realised how we actually communicate with the world and how and how developers communicate. We can’t get in any other way. So, we opened up the social media the next day. There is a fear that people can use it for the bad things. We said okay if they do that then we’ll terminate their connection – though we haven’t had a single person or incident.
What makes social media such an important business tool?
It makes people that aren’t in the same physical location able to communicate with each other much better and work with each other much more effectively and efficiently than they did before. Now we know what’s going on in real time. It is changing the structure of businesses and it’s making it possible to people who aren’t in the same place to be more effective in the way they do things,
Do you think services like cloud will alter the shapes of businesses in the future?
If you look at our customers we do 90 per cent of our business with global 1000 customers, but there are 14,000 companies from $200m to $2bn in terms of revenue and that I think in some ways the number of small companies will grow because it’s easier and quicker to be able to create a business on the Internet or in the cloud. There’s more businesses being built like that and of course some of them will grow into public companies ultimately. But, I think it’s going to continue and even grow because the capability to build a business now and putting a website up is so easy to do. A decade ago, you couldn’t have even done that at all.
CA technologies only has about seven layers of managers. How does that flat structure fit with your leadership style?
A flat management structure is one of the things that I really want to drive. I like to make contact with our employees all around the world, to keep in touch with what really is going on, what the customer is really saying. For us to compete in the marketplace and keep up with the speed of business change our management has to keep up with the speed of business. And, a way to get management to run fast is to put as few stages in the decision cycle as possible and keep the people accountable and responsible for the things they do. So I wanted as few layers between me and the people down at the entry level as I can have. To talk to everybody at every level and see what they’re doing, that’s a major drive for us to change the culture and speed up our decision processes
How did you cope with having to move to a flattened management structure?
Actually I’ve been fortunate in my career that I’ve always been more engaged with changing things than I have been resisting the change so I’ve always been rather open to doing things in a new and different way. It’s one of the reasons why I came into the industry because I like technology. It’s a sort of an oxymoron that you’re in a technology company that is all about change and you don’t want to change yourself. From my point of view, that one of the things I’ve enjoyed about being in the technology industry is that that pace of change.