Computer Associates: Swallowing Project ManagementBy Baselinemag | Posted 2005-09-07 Email 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."
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."
Niku Operating Results*
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