In January, the approximately 600 million Euro deal by Automic and CA Technologies was completed. Since then the automation specialist, with strong Austrian roots, is part of the CA family. We met with Automic CEO Todd DeLaughter and Ayman Sayed, President and Chief Product Officer of CA Technologies to discuss the joint future of the two companies.
Automic, headquartered in Vienna, is a specialist in business automation software, which helps companies to gain competitive advantages by automating IT and business processes. Founded in 1985 by Franz Beranek as SBB Software in Austria, later renamed UC4 Software and finally Automic, belongs to CA Technologies.
CA Technologies is almost ten years older and was founded in 1976 in New York City. The company has gone through a long series of takeovers, the first in the very first year after its founding. Since then, things have come fast.
We met Ayman Sayed, President and Chief Product Officer at CA Technologies, and the Automic CEO Todd DeLaughter, who lives in Vienna, for an exclusive interview.
The Viennese offices of CA Technologies and Automic are very close together, literally around the corner. And today we are all sitting here, not in an office in New York or Bellevue (NOTE: seat of the US subsidiary of Automic). One might almost think that the deal took its start here.
Ayman Sayed: We have been aware of Automic and considering it for quite some time. This is CA Technologies' biggest acquisition over the last decade, in terms of purchase price and volume, and it has great potential. Automic fits very well with our application economy story and digital transformation. Automic has built an excellent portfolio of automation solutions, complementing CA's portfolio and global footprint - from the technology focus, products, portfolio, or customer segments. We are very excited with the opportunities that we can now offer our collective customers, and their response to the deal has been very positive. They see that we will help them to speed up their digital transformation and their journey into the application economy.
How many of your customers have previously used solutions from both companies?
Todd DeLaughter: Quite a few. When we did the analysis, we found out, that there is an overlap. Which doesn't mean that there isn’t an opportunity in those accounts, because now we can help each other offer these customers solutions in areas that we could not address before. Approximately 25% of our combined customer base has come from only one of us. This allows us to expand the business and leverage our contacts and relationships with our customers.
In turn, does this mean that 75% of your clients have already had a business relationship with both companies?
Todd DeLaughter: But for us, and probably for CA as well, just because we had a customer that CA had, didn't mean that we were fully saturated in that account. There is a Share of Wallet (NOTE: term referring to the amount of a customer's total spending that a business captures in the products and services that it offers) which we can now lift by deepening the relationship with the customer and because we now know where to position our products.
What was the main reason for this 600 Million Euro deal?
Sayed: When you look at automation, it is a key pillar for how you build a modern software factory and making a company ready for digital transformation. Automation is a key factor here, and Automic's solutions are at the heart of digitalization. In addition, the changes in technology, business models and trends - such as migration to the public or hybrid cloud - the combination of CA and Automic portfolios is an attractive proposition for companies looking for flexibility and freedom to place their workloads wherever they want: whether in the physical or virtual datacenter, their own private cloud, the public cloud, or multiple public clouds. Our combined solutions give them the unique opportunity to automate and orchestrate the placement and management of these workloads, no matter where they are.
Did CA have anything in its portfolio that was comparable to Automic’s solutions?
Sayed: We had a very complementary offering. The particular focus that CA and Automic have placed on process automation, process orchestration and release automation, for example, dovetail very nicely and complement each other. That's part of what makes this deal a match made in heaven.
Has CA been thinking about developing such solutions by itself before the acquisition?
Sayed: CA invests a great deal in research and development (R&D), each year about one billion dollars. Over the past year and a half, we have launched more than a dozen new products and solutions, but we have also added a number of targeted acquisitions to build best-in-breed solutions and technology. Automic was one of these cases, where the two are just a very nice fit.
Will the Automic brand remain or be fully integrated into CA Technologies? Mr. DeLaughter is currently reporting directly to you as General Manager. How long will it last?
Sayed: We are still working out the details of the integration and combined roadmap. Of course, we could only start after the deal was completed (NOTE: the conclusion of the acquisition was officially announced on January, 19th). In the coming weeks, we will work out all the details about branding, the combined roadmaps and the entire product positioning.
Automic has quite a history in re-branding, starting with SBB software, then UC4 and finally Automic. So that's nothing new to you, Mr. DeLaughter. However, what does this mean for existing Automic customers - for example, will there be further support for their solutions?
DeLaughter: As Ayman said, we are working on a joint product roadmap that we can present to all of our customers. Automic customers have new benefits through the global CA brand. In some countries where we have not reached a critical mass before, we have secured them with CA. We will be able to offer products that reach out to a much broader set of people. Not only our existing customers, but also future ones, will benefit from our technology combined with CA's. I do not think our customers will notice a big change except that we have a whole new set of topics that we can talk to them about - which is positive. So far the reactions have been very good.
On the other hand, what can existing or potential CA customers expect from the combined portfolio?
Sayed: CA's customers have a lot of reason to be excited about this acquisition. Together we are able to offer them best-in-breed automation solutions. Today, several automation solutions are used, which in many cases work as isolated islands, covering the automation of a workload, a process chain or a release activity. Therefore, they use multiple solutions. Our combined portfolio will allow them to create an end-to-end platform that provides the basis for all automation and orchestration needs, allowing them to place their processes and workloads wherever needed.
This means less complexity on the one hand, to manage more complexity on the other.
DeLaughter: But hidden from the customers. It is an automation platform rather than a bundle of products and tools for individual automation. From my and Automic’s perspective, regardless of the current takeover, the productivity gains from investment in IT technology have started to flatten over the years. We believe the reason for this is that the technologies are often still limited to a kind of "island existence". A process happens, then there is a pause until a human transforms the output of a system into another system. The only way to further increase productivity is by automating end-to-end-processes. And that is exactly what we do.
You talked about the roadmap. When can we expect the first new or combined products?
Sayed: We have two guiding principles: First, we want to drive this integration with minimal disruption to the business of both companies. Secondly, we want to ensure that we protect the interests of our combined set of customers. This means we want to offer them a future-proof roadmap that also protects their current investments. At the beginning of February, our engineering teams will come together and go through each roadmap, sharing details and coming up with plans of how to combine the two. Todd and I are giving them a direction and a goal. Within a few weeks, we should have the common roadmap and solutions that we can present.
DeLaughter: Together, we will be able to offer even better solutions since we are now integrating them into a joint development. We offer this advantage to our joint customers. For Automic customers, nothing should change, but our joint customers can look forward to more integrated solutions.
An advantage for Austrian customers was that Automic’s head office was based in Vienna. What are your plans for the Austrian HQ and its employees? Will you merge the offices of CA and Automic here?
Sayed: Our plan is to continue to invest here locally. We have no plans of moving the workforce or the focus, whether it's R&D or sales, elsewhere. CA is a global enterprise with a global footprint. We already have other centers in Europe, and the center here in Vienna gives us a very good point from talent and availability of talent, from proximity to global business and European business. As you mentioned already it's kind of fortuitous that our CA office in Vienna and the Automic office are within a stone's throw, that makes it easier to integrate, and I would leave it to Todd and his team and to Mario (NOTE: Mario Reismüller, Country Manager of CA Technologies in Austria) to decide, how to best utilize the real estate here. Whether we have one office in Vienna or two.
In addition, it is important to know that CA acquired Automic not just for its solutions, but also for its talent. As with any integration, it is possible that some employee job titles and functions may change to bring alignment to both organizations. Both CA and Automic leadership teams will work closely together to determine any personnel adjustments or changes.