Computer Associates: Swallowing Project Management

By Baselinemag  |  Posted 2005-09-07 Email Print this article Print
 
 
 
 
 
 
 

CA has snapped up Niku, worrying some customers but leaving others hoping that CA throws more money at product development.

In August, Computer Associates gobbled up Niku, a project and portfolio management software vendor whose name means "meat" in Japanese (though Niku's founders say it's Persian for "do-gooder").

That left some Niku customers with a bit of heartburn. "My first reaction was not a positive one, because over the years I've routinely see CA acquire companies and screw them up," says Mike Pritts, vice president of R&D for Misys Healthcare Systems, a developer of software for health-care providers. He adds: "I'm concerned, but I'm not freaked out."

But at online car dealer Autobytel, chief technology officer John Petrone thinks the CA takeover is promising: "From my standpoint, it was important making certain Niku has access to capital for continued development."

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As one might expect, Josh Pickus, Niku's former president and CEO who is now running it as a division of CA, insists that the deal is an all-around win. He says customers will benefit from future integration with CA's products, such as its help-desk software, so that maintenance requests are factored into a project's total cost of ownership.

"I didn't do this deal with CA lightly," Pickus says. "I looked at every opportunity." For example, he says, near the end of Niku's negotiations with CA, Mercury Interactive showed "some interest in acquiring us." (Mercury declined to comment.) He claims that merging with CA, which plans to let Niku run autonomously until at least March 2006, has barely disrupted operations, with 290 of Niku's 294 employees having joined CA.

Now, CA should help improve Niku's software testing, says Janette McKenna, chief of information technology internal services for Oakland County, Mich. "We still find a lot of bugs," she says. However, she adds that while version 6.1 of Niku's Clarity had roughly 60 bugs, none was big enough to "stop the show" and all were fixed in a subsequent patch.

For Richard Shapiro, Royal Caribbean Cruises' manager of information-technology program administration, Niku has been "an extremely responsive organization," and he hopes that continues under CA. He thinks Clarity could use some tweaks, like making it easier to set up a workflow process. But overall, Shapiro says, "We're very happy with the product the way it is."

I.T. Portfolio Management

Computer Associates
1 Computer Associates Plaza
Islandia, NY 11749
(631) 342-6000
www.ca.com

TICKER: CA (NYSE)

EMPLOYEES: 15,300

Jacob LammSenior
VP & GM, Business Service Optimization
Oversees the group that develops portfolio management, help-desk and information-technology asset management products. Joined CA in 1998 after it acquired Professional Help Desk, which he co-founded and served as CTO.

Josh Pickus
Senior VP & GM, Clarity
Formerly president and CEO of Niku. Prior to that was a partner at Bowman Capital Management, a now-defunct technology investment firm, and a partner at Venture Law Group, a Silicon Valley law firm.

PRODUCTS
Clarity software suite includes Portfolio Manager, which provides tools to analyze a group of planned or ongoing projects to determine priority; Resource Planner, which lets managers allocate staff based on work demand; and Project Manager, which provides features for creating project plans and tracking tasks.
Reference Checks

Oakland County, Mich.
Janette McKenna
Chief, I.T. Internal Services
mckennaj@co.oakland.mi.us
Project: County government uses Clarity for time-tracking andscheduling of160 employees and about 40 contractors, and for planning and budgeting.

Eastman Chemical
Brian Harmon
Mgr., Project Management
jbharmon@eastman.com
Project: Chemical manufacturer uses Clarity to manage 200 active and planned projects and the schedules of 400 information-technology staffers.

Misys Healthcare Systems
Mike Pritts
VP, R&D
michael.pritts@misyshealthcare.com
Project: Health-care software developer tracks projects involving 300 developers with Clarity.

Royal Caribbean Cruises
Richard Shapiro
Mgr., I.T. Program Administration
rshapiro@rccl.com
Project: Cruise line tracks more than 1,000 projects with Clarity, which also provides resource management.

Autobytel
John Petrone
CTO
johnp@autobytel.com
Project: Online car dealer rolled out Clarity for 200 employees in mid-2005 to handle project-approval workflow.

Manpower
Daniel Greer
Dir., Global IS Finance
daniel.greer@manpower.com
Project: Temporary- staffing firm manages 2,000 ongoinginformation-technology projects in 40 countries with Clarity.

Executives listed here are all users of Computer Associate's products. Their willingness to talk has been confirmed by Baseline.


Niku Operating Results*
2006FYTD 2005FY 2004FY
Revenue $18.89M $66.28M $45.71M
Gross margin 67.0% 72.1% 72.9%
Operating income/loss $1.35M $4.03M -$0.14M
Net income $1.45M $4.03M $0.12M
Net margin 7.7% 6.1% 0.3%
Earnings per share $0.09 $0.30 $0.01
R&D expenditure $2.20M $8.17M $7.50M
* Fiscal years ended Jan. 31; FYTD reflects first three months


THE CA ACQUISITION

Approximate deal value $350M(at $21 per Niku share)
Deal value, net of cash $280M
Niku closing share price on 6/8/05, the day before the deal was announced $16.50
Premium CA offered per share 27.3%
Niku revenue as % of CA's** 1.9%

**For Niku's FY ended Jan. 31, 2005, and CA's FY ended March 31, 2005


 
 
 
 
 
 
 
 
 
 

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